Alabama retirement taxes in 2026: what retirees pay
Alabama taxes income at up to 5% in 2026. Three example retirees, worked through Alabama's rules.
Monte Climb3 min readAlabama taxes income using brackets, but it treats retirement money in two very different ways. Social Security benefits aren't taxed by the state. Income from a traditional pension, the kind that pays a set monthly benefit, is exempt too. Withdrawals from IRAs and workplace savings plans are a different story: Alabama counts them as taxable income. So what you'll owe here depends less on how much you take in and more on where it comes from.
Alabama retirement taxes at a glance (2026)
| State income tax | 3 brackets from 2% to 5% 1 |
| Social Security | Not taxed 1 |
| Pensions and IRA withdrawals | Pensions exempt, IRA withdrawals taxed 1 |
Alabama income tax rates for 2026
Single filers 1:
| Taxable income | Rate |
|---|---|
| $0 to $500 | 2% |
| $500 to $3,000 | 4% |
| $3,000 and up | 5% |
Married couples filing jointly 1:
| Taxable income | Rate |
|---|---|
| $0 to $1,000 | 2% |
| $1,000 to $6,000 | 4% |
| $6,000 and up | 5% |
How Alabama treats retirement income
Alabama exempts traditional (defined-benefit) pension income. IRA and 401(k) withdrawals are taxed. 1
What three retirees would pay in Alabama
These are estimates from Monte Climb's planner on 2026 law, for three example households. They start, as the app does, from federal taxable income: the 2026 standard deduction plus the extra amount at 65 4, the taxable part of Social Security 5 and the senior deduction 6. Those federal deductions are already taken off, and most states allow less of their own, so Alabama's real bill can be higher than shown.
| Single, 67 | Couple, both 67 | Couple, both 62 | |
|---|---|---|---|
| Social Security | $24,000 | $42,000 | $0 |
| Pension | $0 | $24,000 | $0 |
| IRA withdrawals | $30,000 | $36,000 | $70,000 |
| Interest and dividends | $0 | $4,000 | $6,000 |
| Federal taxable income | $17,150 | $52,200 | $43,800 |
| Alabama subtractions | $11,300 | $59,700 | $0 |
| Income Alabama taxes | $5,850 | $0 | $43,800 |
| Alabama tax | $253 | $0 | $2,110 |
| Share of total income | 0.5% | 0% | 2.8% |
- A single retiree, 67 with $54,000 of income would owe about $253 to Alabama and $11,300 of taxable Social Security is left out.
- A married couple, both 67 with $106,000 of income would owe about $0 to Alabama, after $24,000 of retirement income is excluded and $35,700 of taxable Social Security is left out.
- A married couple, both 62, before Social Security with $76,000 of income would owe about $2,110 to Alabama.
The same couple next door
The married couple, both 67, with $106,000 of income, in Alabama and the states around it:
| State | State tax |
|---|---|
| Alabama | $0 |
| Florida | $0 |
| Georgia | $0 |
| Mississippi | $0 |
| Tennessee | $0 |
Every figure here starts from federal taxable income, as above, so a state whose own deductions are smaller can tax more than shown.
What these estimates leave out
- Alabama's own standard deduction, exemptions and credits: the estimate starts from federal taxable income instead, which takes off the larger federal deductions.
- City income taxes, and capital gains rules a state applies apart from its rate.
- Rules for military and public-employee pensions that some states treat separately.
What this means for your plan
If most of your retirement income will come from Social Security and a traditional pension, Alabama's tax may barely touch it. If you're relying more on withdrawals from savings accounts, those amounts go through the state's brackets, and the order and size of your withdrawals start to matter. Monte Climb applies Alabama's rules to your own mix of income, so you can see how the state's tax changes as that mix shifts over the years.
Sources
- Alabama income tax for 2026 (Monte Climb's audit grades it high)
- Alabama: a further official source for the 2026 tables
- Alabama: a further official source for the 2026 tables
- Rev. Proc. 2025-32 §4.14(1) and §4.14(3): the 2026 standard deduction and the additional amount at 65
- IRC §86 and IRS Publication 915: how much of Social Security is taxable (thresholds set by statute, not indexed)
- P.L. 119-21 (One Big Beautiful Bill Act) §70103: the $6,000 deduction for each person 65 or older, 2025–2028
Figures computed by code from Monte Climb's 2026 state tables (snapshot f024e17). An illustration, not tax advice.
Frequently asked questions
Does Alabama tax Social Security?
In 2026, Social Security is not taxed in Alabama.
What is Alabama's income tax rate in 2026?
Alabama has 3 brackets from 2% to 5% for 2026.
How much state tax would a retired couple pay in Alabama?
A married couple, both 67, with $106,000 of Social Security, pension and IRA income would owe about $0 to Alabama in 2026, by Monte Climb's estimate.
Part of Retirement taxes by state (2026).
When can you actually retire?
Three numbers. We run your savings through 1,000 simulated futures, the same engine behind the app, and give you one clear answer.
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