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Personal Exemption And Dependent Exemption

Personal Exemption

The Alabama personal exemption amount is tied to the filing status of the taxpayer. A single taxpayer, or a married taxpayer filing a separate return, will be entitled to a personal exemption amount of $1,500. Married couples filing jointly and taxpayers filing as Head of Family will have a personal exemption amount of $3,000. The personal exemption is deductible from taxable income regardless of whether or not the taxpayer itemizes deductions, and there is no "phase-out" of the exemption under Alabama law for high income taxpayers as there is on the federal return.

Dependent Exemption

The Alabama dependent exemption amount increased significantly for some taxpayers beginning in 2007, as a result of a tax reform measure passed by the Legislature in 2006. Beginning with the 2007 tax year, Alabama resident taxpayers with Adjusted Gross Income (AGI) of $20,000 or less are able to deduct $1,000 for each dependent other than the spouse. Those with AGI between $20,000 and $100,000 can deduct $500 per dependent, and taxpayers with AGI greater than $100,000 will continue to deduct $300 per dependent. In general, if someone qualifies as a dependent on the federal return, they will also be a dependent on the Alabama return. Dependent exemptions are deductible regardless of whether or not the taxpayer itemizes deductions, and they do not vary according to filing status.

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Non-Resident Taxpayers

An individual or married couple filing a non-resident Alabama return is required to pro rate their personal exemption amount and their dependent exemption amount based on a fraction. The numerator of the fraction is their AGI from Alabama sources, and the denominator is AGI from everywhere. Assume, for example, a married couple with two children living in Georgia all year that has Alabama source income of $6,000 in 2006, and total income from all sources of $30,000. The personal exemption amount allowed on their Alabama non-resident return is $600, and their Alabama deduction for dependents is $200, as shown in the table below.

Part-Year Residents

Taxpayers who live in Alabama for only a part of the year are entitled to the full personal exemption amount and the full dependent exemption amount on their Alabama return. If the part-year resident has Alabama source income during the non-resident portion of the year, he must file an Alabama Non-Resident Return (Form 40NR) for that period in addition to a part-year resident return. He will claim the full personal exemption amount and dependent exemption amount on the part-year resident return, and he will claim no personal exemption or dependent exemption on his non-resident return.

This page last updated 2/8/13

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