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View All Income Tax Questions, Individual Income Tax FAQs

What are the limitations on my IRA deduction?

Contributions: Contributions to an individual retirement arrangement (IRA) may be taken as an adjustment to income, the same as for federal tax purposes. These deductible contributions represent a deferral of tax on a portion of your income.
Distributions: At the time funds are distributed from these IRA accounts, the amount on which tax has been deferred cannot be claimed as part of the cost basis in the fund.
Since Alabama income tax law prior to 1982 did not conform to federal tax law in this area, you may have a cost basis in the fund for amounts contributed prior to 1982.
Roth IRA: Alabama recognizes Roth IRA’s.

Contributions: Contributions to an individual retirement arrangement (IRA) may be taken as an adjustment to income, the same as for federal tax purposes. These deductible contributions represent a deferral of tax on a portion of your income.
Distributions: At the time funds are distributed from these IRA accounts, the amount on which tax has been deferred cannot be claimed as part of the cost basis in the fund.
Since Alabama income tax law prior to 1982 did not conform to federal tax law in this area, you may have a cost basis in the fund for amounts contributed prior to 1982.
Roth IRA: Alabama recognizes Roth IRA’s.

Related FAQs in Income Tax Questions, Individual Income Tax

For single persons, heads of families, and married persons filing separate returns:

2% First $500 of taxable income

4% Next $2,500 of taxable income

5% All taxable income over $3,000

For married persons filing a joint return:

2% First $1,000 of taxable income

4% Next $5,000 of taxable income

5% All taxable income over $6,000

Certain taxpayers are eligible to contribute funds to a special savings account to save funds for a down payment and closing costs on the purchase of a first home in Alabama. Contributions up to $5,000 for a single taxpayer or $10,000 for married couples filing a joint return to this account may be deductible and earnings are tax free if all the requirements are met. The deduction is available for the 5 years in which deposits were made into a first time and second chance home buyer savings account.

Information about the Alabama First-Time and Second Chance Home Buyer Savings Account

Taxpayers using the Single and Married Filing Separately filing statuses are entitled to a $1,500 personal exemption. Taxpayers using the Married Filing Jointly and Head of Family filing statuses are entitled to a $3,000 personal exemption.

Part year residents are entitled to the full exemption amount. A dependent or student may claim a personal exemption even if claimed by someone else.

For information on who qualifies as your dependent for Alabama Income Tax purposes, go to: Information about dependents

There are four different filing statuses available under Alabama law:

Single
Married Filing a Joint Return
Married Filing a Separate Return
Head of Family
Explanation of the filing statuses

For a list of income exempt from Alabama Income Tax, go to: Listing of exempt income items