Alabama State's Standard Deductions

Subtracting the standard deduction from gross income helps to significantly reduce the tax burden for many filers. While the federal government assigns standard deduction amounts based on filing status, the state of Alabama relies on both filing status and income level when calculating the deduction. Understanding how to determine your standard deduction can help take some of the mystery out of tax time and allow you to complete your tax return more effectively.

History

Prior to the 2007 tax year, taxpayers in Alabama calculated the standard deduction by taking 20 percent of adjusted gross income, with a maximum deduction of $4,000 for married couples and $2,000 for all other filers. Beginning in the 2007 tax year, the state enacted a graduated standard deduction that raised the deduction for low-income income taxpayers while keeping it relatively stable for high-income filers.

Standard Deduction Amount

For the 2012 tax year, the Alabama deduction for single filers ranges from $2,000 to $2,500 while head of household filers can take between $2,000 and $4,700. Married couples filing jointly can deduct between $4,000 and $7,500, while married couples who file separately can take between $2,000 and $3,750. To determine the exact amount of your standard deduction, refer to the table on Page 9 in the Alabama Form 40 booklet and find the range that matches your adjusted gross income.

Considerations

While many states require taxpayers who itemize federal tax deductions to itemize state deductions, Alabama has no such rule. You can itemize on your federal return, then take the standard deduction in Alabama, or vice-versa. Married couples filing separately must agree to itemize or claim the standard deduction on both tax returns. Both part- and full-time residents of the state qualify for the full standard deduction. Students and dependents may also take the full deduction, even when they are claimed on someone else's tax return.

Personal and Dependent Exemptions

In addition to the standard deduction, Alabama allows taxpayers to take a personal exemption of $1,500 as of 2012. If you are married, you may take another $1,500 deduction for your spouse. You may also take a deduction of $300 to $1,000 for each dependent. This deduction amounts to $1,000 for taxpayers with an AGI of less than $20,000, decreases to $500 for those with an AGI of $20,001 to $100,000, and falls once more to $300 for those with an AGI of $100,001 or more.

State Tax Rates

State income tax rates in Alabama range from 2 to 5 percent depending on taxable income. Single filers pay 2 percent on the first $500 of taxable income, 4 percent on income between $501 and $3,000 and 5 percent on income of more than $3,001 as of the 2012 tax year. Married filers pay 2 percent on taxable income up to $1,000, 4 percent on taxable income between $1,001 and $6,000, and 5 percent on income of more than $6,001 as of 2012.

Photo Credits

  • Creatas/Creatas/Getty Images

About the Author

Emily Beach works in the commercial construction industry in Maryland. She received her LEED accreditation from the U.S. Green Building Council in 2008 and is in the process of working towards an Architectural Hardware Consultant certification from the Door and Hardware Institute. She received a bachelor's degree in economics and management from Goucher College in Towson, Maryland.

Zacks Investment Research

is an A+ Rated BBB

Accredited Business.