October 17, 2018

Alabama: Who Pays? 6th Edition


ALABAMA

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ALABAMA STATE AND LOCAL TAXES

Taxes as Share of Family Income

Top 20%
Income Group Lowest
20%		 Second
20%		 Middle
20%		 Fourth
20%		 Next
15%		 Next
4%		 Top
1%
Income Range Less than $18,600 $18,600 – $32,000 $32,000 – $50,900 $50,900 – $86,100 $86,100 – $171,300 $171,300 – $448,000 More than $448,00
Average Income $12,100 $25,000 $41,900 $64,000 $117,700 $250,100 $955,600
Sales & Excise Taxes 7.1% 6.4% 5.4% 4.2% 3.2% 1.9% 1.0%
General Sales – Individuals 3.7% 3.4% 3.0% 2.4% 1.9% 1.1% 0.6%
Other Sales & Excise – Ind. 1.8% 1.5% 1.2% 0.8% 0.6% 0.3% 0.1%
Sales & Excise on Business 1.6% 1.5% 1.2% 1.0% 0.7% 0.4% 0.2%
Property Taxes 1.4% 1.3% 1.3% 1.2% 1.0% 1.1% 1.2%
Home, Rent, Car – Ind. 1.4% 1.2% 1.2% 1.1% 0.9% 0.9% 0.4%
Other Property Taxes 0.0% 0.0% 0.1% 0.1% 0.1% 0.2% 0.8%
Income Taxes 1.3% 2.1% 2.4% 2.5% 2.7% 2.7% 2.9%
Personal Income Tax 1.3% 2.1% 2.4% 2.5% 2.7% 2.7% 2.7%
Corporate Income Tax 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.2%
TOTAL TAXES 9.9% 9.8% 9.0% 7.9% 6.9% 5.7% 5.0%

Individual figures may not sum to totals due to rounding. Download the table

TAX FEATURES DRIVING THE DATA in Alabama


Progressive Features
Regressive Features
  • Graduated personal income tax structure; however, top rate kicks in at $3,000 (single filers) so virtually flat
  • Provides a large property tax homestead exemption
  • Narrow income tax brackets mean majority of taxpayers pay top income tax rate
  • Sales tax base includes groceries
  • Provides an income tax deduction for federal income taxes paid
  • Fails to provide refundable income tax credits to offset sales, excise, and property taxes
  • Does not levy a tax on estates or inheritances

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, which measures the impact of each state’s tax system on income inequality, Alabama has the 18th most unfair state and local tax system in the country. Incomes are more unequal in Alabama after state and local taxes are collected than before. (See Appendix B for state-by-state rankings and the methodology section for additional detail on the index.)

Note: Figures show permanent law in Alabama enacted through September 10, 2018 at 2015 income levels. Top figure represents total state and local taxes as a share of non-elderly income. The sixth edition of Who Pays does not include the impact of the federal deduction for state and local taxes (SALT) because policy changes in the 2017 federal Tax Cuts and Jobs Act temporarily limited the extent to which the SALT deduction functions as a generalized offset of state and local taxes.