Income tax withholding
| Imposes wage income tax | Yes |
|---|---|
| Rate structure | Graduated, top marginal rate 5% |
| Withholding certificate | A-4 Employee's Withholding Tax Exemption Certificate |
| Accepts federal Form W-4 | No |
| Convenience-of-the-employer rule | No |
| Nonresident withholding threshold | 30 days Effective for tax years beginning on or after January 1, 2026 (L.2025, HB379), a nonresident who works in Alabama less than 30 days in a calendar year is exempt from Alabama income tax and withholding, provided the employee works in more than one state during the year and the employee's home state provides a substantially similar exemption or imposes no income tax. Does not apply to professional athletes, entertainers, or public figures. |
| Local income taxes | Yes Municipal occupational license taxes are withheld by employers in a number of cities (e.g., Birmingham 1%, Gadsden 2%, Auburn 1%). These are city-administered, not administered by the Alabama Department of Revenue, and are NOT covered by any state-level exemption. |
Reciprocity
States that exempt Alabama residents
A Alabama resident working in these states files that state's certificate and is taxed only by Alabama.
Unemployment insurance and paid leave
| Taxable wage base 2026 | $8,000 2025 base was $8,000. |
|---|---|
| New employer rate | 2.7% 0.20%-6.80% is the statutory range across Alabama's four rate schedules per ADOL; US DOL ETA reports 0.20%-5.40% for the schedule actually in effect for January 2026. A 0.06% Employment Security Enhancement Assessment (ESA) and any shared-cost charge apply on top of the experience rate. |
| Experience rate range | 0.2% – 6.8% |
| Experience-rating method | benefit ratio |
| Employee UI contribution | No |
| Paid family / medical leave | No |
Employer registration
- Tax agency
- Alabama Department of Revenue
- UI agency
- Alabama Department of Labor
Sources
revenue.alabama.gov · taxfoundation.org · huschblackwell.com · oui.doleta.gov · oui.doleta.gov · oui.doleta.gov · adol.alabama.gov