Retirement income in Alabama
Varies
Does Alabama Tax Retirement Income?
Short answer: Partly. Defined-benefit pensions (public and private) are fully exempt. Taxpayers 65+ may also exclude the first $6,000 per person of other taxable retirement income such as 401(k) and IRA withdrawals. A 2025 bill (HB388) to raise the $6,000 exclusion did not pass;.
Government pensions: Federal, state, and local government defined-benefit pensions are fully exempt, as are qualifying private defined-benefit plans. Pensions, traditional IRA and 401(k) withdrawals are taxable federally either way; Roth withdrawals after 59½ (5-year rule met) are tax-free.
Records to keep: Keep your state return, W-2s and 1099s (1099-R, SSA-1099), and any state credit worksheets. Check your state revenue department's current-year instructions before you file.
Retirement income in Alabama
Varies
Individuals / Personal Taxes
Partly. Defined-benefit pensions (public and private) are fully exempt. Taxpayers 65+ may also exclude the first $6,000 per person of other taxable retirement income such as 401(k) and IRA withdrawals. A 2025 bill (HB388) to raise the $6,000 exclusion did not pass;.
Business justification
Partly. Defined-benefit pensions (public and private) are fully exempt. Taxpayers 65+ may also exclude the first $6,000 per person of other taxable retirement income such as 401(k) and IRA withdrawals. A 2025 bill (HB388) to raise the $6,000 exclusion did not pass;. Government pensions: Federal, state, and local government defined-benefit pensions are fully exempt, as are qualifying private defined-benefit plans. Pensions, traditional IRA and 401(k) withdrawals are taxable federally either way; Roth withdrawals after 59½ (5-year rule met) are tax-free.
Category
- Personal Tax Deductions