Alabama collects a state income tax, with rates of 2%, 4% and 5%. They were already exempt … The rates are 2%, 4% and 5%, and your marginal tax rate will depend on your income and filing status. Learn how filing status affects your tax bill Alabama income tax rates. 1/99 FULL NAME SOCIAL SECURITY NO. Kay Ivey signed an emergency proclamation today making the payments of up to $1,200 for individuals and $2,400 for married couples exempt from state income tax. Form 40 is the Alabama income tax return form for all full-time and part-time state residents (non-residents must file a Form 40NR). Here's an excerpt taken directly from the State of Alabama web site: I AM OVER 65. Also, the amount of the exempt severance payments should not be included in Alabama taxable wages (box 16) of the employee W-2 form, but should be disclosed in box 14 (Other) of the W-2 as exempt severance payments. The Alabama Department of Revenue offers a FREE electronic service, My Alabama Taxes (MAT), for filing and remitting withholding tax. The top rate can’t go above 5% because of the limit imposed by the state Constitution. If you live in Alabama, you pay a state income tax in addition to filing your federal income taxes. Alabama's income tax brackets were last changed twelve years ago for tax year 2008, and the tax rates have not been changed since at least 2001.. Alabama has three marginal tax brackets, ranging from 2% (the lowest Alabama tax bracket) to 5% (the highest Alabama tax bracket). Fax the approval letter to (334) 242-0112. You won’t have to worry about rising income tax rates in Alabama. In addition to a state sales tax, counties and cities are allowed to collect taxes on purchases made in their jurisdictions. File Schedules 3 & 4 to itemize your tax exemptions, and additional taxes paid. The Alabama dependent exemption amount increased significantly for some taxpayers beginning in 2007, as a result of a tax reform measure passed by the Legislature in 2006. Military income: Up to $15,000 of military basic pay received during the taxable year may be exempted from Virginia income tax. Alabama income tax must not be withheld when exempt severance payments are made. Generally, the Alabama state tax rate on income is 2 percent on the first $500 of income, 4 percent on the next $3,000 and 5 percent of all income … HOME ADDRESS CITY STATE ZIP CODE If you had no Alabama income tax liability last year and you anticipate no Alabama income tax liability this year, you may claim ''exempt'' from Alabama withholding tax. FORM ALABAMA DEPARTMENT OF REVENUE A-4 Employee's Withholding Exemption Certificate REV. The good news is that if you are age sixty-five or older you are exempt from paying state property taxes. 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