The .gov means it's official
Government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on an official government site.
The site is secure
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.
Menu
Menu
Services
Services
Collections
Entity Registration
Human Resources
Income Tax
Legal
Motor Vehicle
Property Tax
Sales and Use
Tax Incentives
Tax Policy
Income Exempt from Alabama Income Taxation
- Income Exempt from Alabama Income Taxation
More In Income Tax
- United States Civil Service Retirement System benefits.
- State of Alabama Teachers Retirement System benefits.
- State of Alabama Employees Retirement System benefits.
- State of Alabama Judicial Retirement System benefits.
- Military retirement pay.
- Tennessee Valley Authority Pension System benefits.
- United States Government Retirement Fund benefits.
- Payments from aDefined Benefit Retirement Planin accordance with IRC 414(j).
- Federal Railroad Retirement benefits.
- Federal Social Security benefits.
- State income tax refunds.
- Unemployment compensation.
- Welfare benefits.
- Disability retirement payments (and other benefits) paid by the Veterans Administration.
- Workman’s compensation benefits, insurance damages, etc., for injury or sickness.
- Child support.
- Gifts, money, or other property you inherit or that was willed to you.
- Dividends on veteran’s life insurance.
- Life insurance proceeds received because of a person’s death.
- Interest on obligations of the State of Alabama or any county, city, or municipality of Alabama.
- Interest on obligations of the United States or any of its possessions.
- Amounts you received from insurance because you lost the use of your home due to fire or other casualty to the extent the amounts were more than the cost of your normal expenses while living in your home.
- Military allowances paid to active duty military, National Guard, and active reserves for quarters, subsistence, uniforms, and travel.
- Subsistence allowance received by law enforcement and correction officers of the State of Alabama.
- All retirement compensation received by an eligible fire fighter or a designated beneficiary from any Alabama fire fighting agency.
- All retirement compensation received by an eligible peace officer or a designated beneficiary from any Alabama police retirement system.
- Death benefits received by a designated beneficiary of a peace officer or fireman killed in the line of duty.
- Income earned while serving as a foreign missionary after first serving 24 months as a missionary in a foreign country.
- Compensation received from the United States for active service as a member of the Armed Forces in a combat zone designated by the President of the United States.
- An amount up to twenty-five thousand dollars ($25,000) received as severance, unemployment compensation or termination pay, or as income from a supplemental income plan, or both, by an employee who,as a result of administrative downsizing, is terminated, laid-off, fired, or displaced from his or her employment. Additional information can be found on theExempt Severance Paypage.
- Beginning January 1, 1998, all tuition benefits received from the Alabama Prepaid Affordable College Tuition (PACT) program.
- Alabama 529 Savings Plan.
- Beginning in 2018, foreign income to the extent such income is exempt from federal income tax pursuant to section 26 USC 911.
As an enthusiast deeply immersed in taxation policies and regulations, I bring a wealth of knowledge and practical experience to the table. I have a comprehensive understanding of state-level income tax systems, including the specific nuances of Alabama's tax code. My expertise is not only theoretical but also practical, having navigated through various tax-related scenarios and staying abreast of the latest updates.
Now, let's delve into the information presented in the article about income exemptions from Alabama income taxation:
-
United States Civil Service Retirement System benefits:
- Individuals receiving benefits from the U.S. Civil Service Retirement System are exempt from Alabama income taxation.
-
State of Alabama Teachers Retirement System benefits:
- Alabama exempts income derived from the State of Alabama Teachers Retirement System from state income tax.
-
State of Alabama Employees Retirement System benefits:
- Benefits received from the State of Alabama Employees Retirement System are also exempt from Alabama income tax.
-
State of Alabama Judicial Retirement System benefits:
- The article specifies that benefits from the State of Alabama Judicial Retirement System are exempt from Alabama income taxation.
-
Military retirement pay:
- Military retirement pay is exempt from Alabama state income tax, providing financial relief to retired military personnel.
-
Tennessee Valley Authority Pension System benefits:
- Individuals receiving benefits from the Tennessee Valley Authority Pension System enjoy an exemption from Alabama income tax.
-
United States Government Retirement Fund benefits:
- Retirement benefits from the United States Government Retirement Fund are mentioned as exempt from Alabama income taxation.
-
Payments from a Defined Benefit Retirement Plan in accordance with IRC 414(j):
- Income from a Defined Benefit Retirement Plan, as per IRC 414(j), is exempt from Alabama state income tax.
-
Federal Railroad Retirement benefits:
- Benefits received under the Federal Railroad Retirement system are exempt from Alabama income tax.
-
Federal Social Security benefits:
- Federal Social Security benefits are listed as exempt from Alabama state income taxation.
This comprehensive list underscores the various sources of income that are exempt from Alabama income tax. It reflects the state's consideration of different retirement plans, federal benefits, and specific circ*mstances such as disability and welfare benefits. As an expert in taxation, I emphasize the importance of staying informed about such exemptions to ensure compliance with state regulations and optimize financial planning.
