Filing your Alabama tax return is more than an annual task—it’s part of how the state funds essential services and balances revenue amid economic changes. In the Alabama Annual Report for Income Tax Year 2023, Alabama is expected to see its first decline in gross sales tax receipts since 2009. Unlike the Great Recession’s impact that year, this drop stems from a reduction in the state’s grocery sales tax and a return to more typical growth after the unusually high post-COVID rates in 2021 and 2022. With the state’s tax base shifting, it's more important than ever for individuals, families, and small businesses to understand how to file their Alabama tax return correctly.
This guide is here to help. Whether you're a full-year Alabama resident, a part-time filer, or someone with income from Alabama sources, this step-by-step overview will walk you through what to do for the 2023 tax year. We’ll cover who must file, what forms to use, how to calculate your taxable income, and how to take advantage of deductions and credits that can lower your tax liability. You'll also learn how to file electronically through the Alabama Department of Revenue and how to track your refund or payment.
Whether you're filing for the first time or reviewing the latest rules, this guide breaks down Alabama state taxes into manageable steps that are easy to follow.
Before diving into forms or deductions, it’s essential to determine whether you must file a state income tax return in Alabama for the 2023 tax year. The Alabama Department of Revenue sets minimum gross income thresholds for filing based on your filing status. If your income meets or exceeds these thresholds, you must file—even if you don’t owe taxes.
Here are the 2023 minimum gross income levels based on filing status:
These rules apply to full-year Alabama residents, part-year residents, and nonresidents who earned income from Alabama sources. If your Alabama income is below these levels, you may still want to file a return to claim a refund, especially if taxes were withheld from your pay.
For nonresidents, filing is required if you had income from Alabama sources, such as wages, business earnings, or rental property within the state. Even if you live in another state, this income is subject to Alabama income tax.
Remember: gross income includes all income before deductions—such as wages, tips, business profits, and investment income—and is not the same as adjusted gross income.
Once you’ve confirmed you need to file, choose the correct Alabama income tax form. The form you use depends on your residency status, income sources, and the complexity of your return. The Alabama Department of Revenue provides three main options for individuals, plus several schedules for more specific situations.
Use Form 40 if any of the following apply to you:
This is the most comprehensive individual income tax form, allowing you to report your income, deductions, and credits in full.
You may qualify to use the short form (Form 40A) if all of these are true:
This option is ideal for simple situations and helps reduce filing time.
Use Form 40NR if you are a nonresident but received income from Alabama sources, such as a rental property or a business in the state. Only income derived from Alabama is reported on this form, and you'll need to prorate your deductions accordingly.
Depending on your situation, you might also need to include:
Be sure to attach all relevant schedules when filing your Alabama return.
Understanding what qualifies as taxable income is essential when filing your Alabama return. While the IRS and the state tax many types of income, there are differences in how Alabama state taxes are calculated.
In general, Alabama uses your federal return as a starting point. Most of the income reported on your federal return will also be reported on your Alabama return unless it is specifically exempt under state law.
If you earned money in 2023, there's a good chance it’s subject to Alabama income tax. Examples of taxable income include:
Alabama nonresidents must also report any income from Alabama sources, such as rental properties or income earned while working temporarily in the state.
Many filers confuse adjusted gross income (AGI) with taxable income, but they are not the same. AGI is your total income after adjustments like student loan interest or IRA contributions. Taxable income is what’s left after subtracting deductions and exemptions. This is the number used to calculate your final tax liability. Be sure to include all income that applies to your situation. Omitting a source of income—even unintentionally—can delay your refund or trigger penalties.
After reporting your income, the next step is to lower your tax liability through deductions and exemptions. These help reduce the taxable income, leading to a smaller tax bill or a larger refund.
Alabama allows you to take either the standard deduction or itemize your deductions—whichever offers the greater tax benefit. The standard deduction is a fixed amount based on your filing status:
The actual amount may vary based on your adjusted gross income and whether you're claiming dependents. If you choose to itemize, you’ll need to complete Schedule A. This may be worthwhile if you have significant expenses in any of these categories:
Alabama also offers personal exemptions that reduce your taxable income:
These exemptions are claimed directly on your Alabama tax return and can make a significant difference—especially for families with children.
You should itemize if your total deductible expenses exceed the standard deduction. This is often true for homeowners, those with large medical bills, or people who made significant charitable donations during the tax year.
Tax credits work differently from deductions. While deductions reduce your taxable income, credits reduce your tax liability dollar for dollar. Alabama offers several state-specific tax credits that can help lower what you owe—or increase your refund.
If you qualify, the following credits can be applied directly to your 2023 Alabama return:
Each credit has eligibility criteria; some may require additional schedules, like Schedule CR, to be included with your return.
The Alabama Department of Revenue introduced or expanded several credits for the 2023 filing season, including:
Even if your adjusted gross income is modest, credits can significantly reduce what you owe—or result in a refund if your tax was overpaid during the year. These benefits benefit families, small business owners, and those with qualified expenses. Don’t assume you don’t qualify. Many of these credits are underused simply because filers aren’t aware they exist.
A smooth tax filing experience starts with solid preparation. Gathering your documents and double-checking information ahead of time can prevent delays, rejected returns, and missed deductions and credits. Whether you plan to paper-file or e-file, having the correct details in front of you makes the process more efficient.
Before starting your Alabama return, make sure you have:
Your federal return often serves as the foundation for calculating your Alabama income. Items like your adjusted gross income, dependents, and deductions flow directly from federal forms to your state return. Double-check those figures to ensure consistency.
Mistakes can slow your refund or even cause the Alabama Department of Revenue to reject your return. Watch out for:
Spending a few extra minutes on preparation can save weeks of hassle.
Filing your Alabama tax return doesn’t have to be overwhelming. Whether using a paper form or filing electronically, following a transparent process can help ensure everything is submitted correctly. Here’s a breakdown of the main steps most filers will follow for the 2023 tax year.
Start with your basic details:
Be sure to double-check this section. Typos in names or ID numbers are among the most common reasons for processing delays.
Enter all income earned during 2023. This includes:
Attach schedules (like B, C, D, or E) if your income includes more than basic wages.
Adjustments can reduce your adjusted gross income, which lowers the income subject to tax. Common adjustments include:
Choose between:
Only one can be used—choose the option that gives you the lower taxable income.
Subtract deductions and exemptions from your income to calculate taxable income. Then:
If you're e-filing, most of this is handled digitally—but always save a copy of the return.
Alabama offers two main options for submitting your state tax return: e-filing online or mailing a paper form. The Alabama Department of Revenue accepts both, but each has pros and cons depending on your situation.
E-filing through My Alabama Taxes is the fastest and most efficient method available to individuals, families, and small businesses. It’s especially recommended if you want your return processed quickly or expect a refund.
Advantages include:
Regardless of income, all Alabama taxpayers can file electronically for free using the official system.
You may choose to file a paper return if:
Just be aware that paper filing takes longer to process. Refunds may take up to 90 days, and you’ll need to follow mailing instructions carefully to avoid delays.
Choosing the method that aligns with your comfort level can reduce errors and give you more confidence in your filing process.
Once you’ve completed your Alabama tax return, the next step is to submit a payment or wait for your refund. Alabama provides several convenient options to help you manage your balance, whether you owe or are due money back.
You can pay your balance in one of two ways:
1. Online via My Alabama Taxes (MAT)
The Alabama Department of Revenue offers a secure payment portal at myalabamataxes.alabama.gov. You can pay using:
This is the fastest and safest way to pay. You’ll receive confirmation immediately, and your payment will be processed without mailing delays.
2. By Mail
If you prefer to pay by check or money order, include Form 40V with your payment. Make checks payable to Alabama Department of Revenue, and include your Social Security number and the tax year on the memo line.
Mail to:
Alabama Department of Revenue
P.O. Box 2401
Montgomery, AL 36140-0001
Payments must be postmarked by April 15, 2024, to avoid penalties and interest—even if you file later with an extension.
You're eligible for a refund if your tax liability is lower than what you paid during the year. To speed things up:
Refunds from e-filed returns typically arrive much faster than paper returns. Allow at least 90 days for paper filings.
Before submitting your Alabama tax return, take a moment to review everything. A simple oversight—like a missing form or signature—can delay your refund or trigger a notice from the Alabama Department of Revenue.
Use this checklist to catch common mistakes and confirm your return is complete:
A quick review can save you weeks of processing time—and help you avoid unnecessary follow-ups later.
Individual income tax in Alabama applies to earnings such as wages, self-employment income, interest, dividends, and other taxable sources. It’s assessed annually by the Alabama Department of Revenue. Both residents and nonresidents with Alabama-sourced income may be subject to it. The tax you owe is based on your taxable income after applying deductions, exemptions, and any credits for the year.
If you’re a nonresident with income from Alabama sources—such as rental properties, freelance work, or business earnings—you must use Form 40NR. This form is specifically designed to report income tied to Alabama and allows for prorating deductions. Always review your income source carefully to determine whether a filing requirement applies to you.
If you're an Alabama resident, income earned in other states may still be subject to Alabama tax. However, you can claim a credit for taxes paid to those states by filing Schedule CR. This helps avoid double taxation. Note: The credit only applies if the other state taxed the income and reported it correctly on your Alabama return.
If your income for the tax year was below Alabama’s filing thresholds, you may not be required to file. However, it’s still worth filing if Alabama tax was withheld from your pay or if you qualify for refundable credits. Many filers who don’t legally have to file are still eligible for a refund, especially if they had a job during the year.
If you miss the deadline, Alabama automatically grants a filing extension until October 15. However, this extension only applies to the filing, not tax payments. You must pay your estimated balance by April 15 to avoid penalties and interest. Late filing without payment could incur additional costs, so plan if you need more time.
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