Alabama allows individual taxpayers to deduct either their itemized deductions or a Standard Deduction. If a married couple files separate returns, and one spouse itemizes deductions, both spouses must itemize. Part-year Alabama residents may deduct the full Standard Deduction. Nonresident taxpayers compute their Standard Deduction based on their Adjusted Gross Income (AGI) from all sources, and then pro rate the Standard Deduction based on their Alabama AGI Percentage. The Alabama AGI Percentage is computed by using Alabama-source gross income as the numerator, and gross income from all sources as the denominator.
Tax Years Beginning in 2006 or Earlier
For all tax years beginning before January 1, 2007, the Standard Deduction was computed as 20% of Adjusted Gross Income, but not to exceed (a)$4,000 for a married couple filing a joint return, or (b)$2,000 for all other taxpayers.
Tax Years Beginning in 2007 or Later
The 2006 Tax Reform Bill increased the Standard Deduction for lower income Alabama taxpayers, without reducing the Standard Deduction for other taxpayers. For tax years beginning in 2007 and later, the table below (reproduced from the Form 40 Instructions) applies.
This page last updated 2/8/13
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