Taxation in Alabama

Updated on Tuesday 19th June 2018

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Companies with establishments in Alabama need to respect and align with the requirements of the tax regime imposed on each type of business. For a better understanding of how taxation is made in Alabama for both companies and individuals, we suggest you address your inquiries to our team of company formation agents in USA. Also, if you want to start a business in USA, our team is at your disposal with complete information.

What is the sales tax in Alabama?

The sales tax in Alabama is imposed on companies which intend to sell products and services on the market and it is settled at 4%. The Department of Revenue in Alabama collects such tax from businesses registered in this state. This is an important tax that foreign entrepreneurs should bear in mind when opening a company in Alabama, USA.

What is the corporate income tax in Alabama?

Corporations in Alabama are subject to a corporate income tax of 6.5% of the net incomes registered in this state. We mention that the tax year in Alabama ends on the 30th of June, the time in which companies need to align with the tax requirements as imposed for each kind of company registered in this state.

What is the business privilege tax in Alabama?

The business privilege tax in Alabama is paid each year and it is imposed on limited liability companies, S corporations, and partnerships established in Alabama. Such tax varies from $0.25 to $1.75 for each $1,000 of net worth registered by your business in Alabama. It is good to know that the minimum tax is set at $100.

Taxation for individuals in Alabama

Citizens in Alabama need to pay the income tax imposed on their declared revenues. It is good to know that individuals can demand deductions summing up no more than $7,500. The income tax for individuals in Alabama is shown in the table below:

Natural Persons Taxable Income Tax Rate
Single persons 0$ - $500 2%
Single persons $500 - $3,000 4%
Single persons over $3,000 5%

For a proper understanding of how taxation is made in Alabama, please feel free to talk to one of our specialists in company formation in USA. They can also help you if you wish to open a company in USA, including in Alabama.

Do I need to pay the inheritance tax in Alabama?

No, the state of Alabama does not impose an inheritance tax or the gift tax. We mention that the Department of Revenue in Alabama offers the possibility of registering for taxes (companies and individuals) through the official website for an online filing and related information.

If you want to register a company in Alabama and you want to know information about the taxes you need to pay in this state, we invite you to contact our team of company incorporation agents in USA.