Alabama State & Local Taxes - ITEP

Alabama State & Local Taxes

Shares of family income for non-elderly taxpayers

10%

10.2%

10.4%

9.6%

8%

8.3%

6%

6.7%

5.1%

4%

3.8%

2%

--

Lowest 20% Second 20% Middle 20% Fourth 20%

Next 15%

Next 4%

Top 1%

8% 7.7% 7% 6% 5% 4%

Sales & Excise Tax Share of

7.0%

Family Income

5.9%

4.6%

3.5%

3%

2.1%

2%

1.1%

1%

0% Lowest Second Middle Fourth Next 15% Next 4% Top 1% 20% 20% 20% 20%

8%

Personal Income Tax Share of

Family Income

7%

6%

5%

4%

3%

2.1%

2.5%

2.8%

2.7%

2.5%

2.4%

2% 1.0%

1%

0% Lowest Second Middle Fourth Next 15% Next 4% Top 1% 20% 20% 20% 20%

8%

Property Tax Share of

7%

Family Income

6%

5%

4%

3%

2% 1.6%

1.3%

1.3%

1.2%

1.1%

1.3%

1.2%

1%

0% Lowest Second Middle Fourth Next 15% Next 4% Top 1% 20% 20% 20% 20%

6%

5%

Federal Deduction Offset Share of

4%

Family Income

3%

2%

1%

0%

-1% -2%

?0.0%

?0.0%

?0.2%

?0.3%

?0.6%

?0.9%

?1.0%

Lowest Second Middle Fourth Next 15% Next 4% Top 1% 20% 20% 20% 20%

Note: Figures show permanent law in Alabama enacted through January 2, 2013 at 2010 income levels. Top figure represents total state and local taxes as a share of income, post- federal offset.

Institute on Taxation & Economic Policy, January 2013

Alabama State & Local Taxes

Details, Tax Code Features, & Recent Developments

Income Group Income Range

Average Income in Group

Lowest 20% Less than $16,000

$10,700

Sales & Excise Taxes

General Sales--Individuals Other Sales & Excise--Ind. Sales & Excise on Business

Property Taxes

Property Taxes on Families Other Property Taxes

Income Taxes

Personal Income Tax Corporate Income Tax

7.7%

4.1% 1.8% 1.7%

1.6%

1.5% 0.0%

1.0%

1.0% 0.0%

Total Taxes

10.3%

Federal Deduction Offset

0.0%

OVERALL TOTAL

10.2%

Note: Table shows detailed breakout of data on previous page.

Second 20% $16,000 ? $26,000 $21,400

7.0%

3.8% 1.6% 1.6%

1.3%

1.2% 0.0%

2.1%

2.1% 0.0%

10.4%

0.0%

10.4%

Middle 20% $26,000 ? $47,000 $35,000

5.9%

3.3% 1.3% 1.3%

1.3%

1.2% 0.1%

2.6%

2.5% 0.0%

9.7%

-0.2%

9.6%

Fourth 20% $47,000 ? $77,000 $59,200

4.6%

2.7% 0.9% 1.0%

1.2%

1.1% 0.1%

2.8%

2.8% 0.0%

8.6%

-0.3%

8.3%

Next 15% $77,000 ? $146,000 $100,600

3.5%

2.1% 0.6% 0.8%

1.1%

1.0% 0.1%

2.7%

2.7% 0.0%

7.3%

-0.6%

6.7%

Top 20% Next 4% $146,000 ? $371,000 $199,300

2.1%

1.3% 0.4% 0.5%

1.3%

1.1% 0.2%

2.6%

2.5% 0.1%

6.0%

-0.9%

5.1%

TOP 1% $371,000 or more $900,400

1.1%

0.7% 0.2% 0.3%

1.2%

0.6% 0.6%

2.5%

2.4% 0.2%

4.8%

-1.0%

3.8%

Progressive Features

Provides one of the largest property tax homestead exemptions in the country

Regressive Features

Narrow income tax brackets mean majority of taxpayers pay top income tax rate

Sales tax base includes groceries

Fails to provide a credit designed to offset sales tax on groceries

Offers an income tax deduction for federal income taxes paid

Recent Developments

Enacted double-weighted sales factor apportionment rules for calculating the corporate income tax

Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, 4th Edition

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