Taxable net income earned from all sources by residents and that earned from Alabama sources by non-residents.

CONSTITUTIONAL PROVISIONS

Amendment No. 25 to the Constitution of Alabama of 1901 (proclaimed ratified August 2, 1933) authorized the legislature to levy and collect taxes on taxable, individual income at a rate not to exceed 5 percent. It further provides for minimum personal exemptions of $1,500 for single taxpayers, $3,000 for joint filers; and a minimum dependent exemption of $300 for each dependent.

Amendment No. 61 to the Constitution of Alabama of 1901 (proclaimed ratified September 11, 1947) provided for distribution of income tax receipts to (1) replace revenue lost to the funds affected by the state homestead exemption; and (2) the Education Trust Fund to be used only for the payment of public school teachers’ salaries.

Amendment No. 225 to the Constitution of Alabama of 1901 (proclaimed ratified December 13, 1965) provided deduction for federal income taxes paid by individual taxpayers.

Single persons with adjusted gross income of $4,000, head of family with adjusted gross income of $7,700, and married persons filing separate returns with adjusted gross income of $5,250 or more:

• 2 percent on first $500 of taxable income
• 4 percent on next $2,500
• 5 percent on all over $3,000

Married persons filing a joint return with adjusted gross income of $10,500 or more:

• 2 percent on first $1,000
• 4 percent on next $5,000
• 5 percent on all over $6,000

Portion necessary to reimburse the Property Tax Relief Fund for Homestead Exemptions. The remaining balance to the Education Trust Fund.