2026 tax year · cross-border wages
Crossing a state line into or out of Alabama
Alabama taxes its residents on income earned anywhere, and taxes non-residents on work done inside it. Which return you file depends on which direction you commute.
Alabama borders 4 states. They fall into 2 different situations, and which one applies decides whether you file one return or two.
Where you file a nonresident return and claim a credit
Alabama has no agreement with Georgia and Mississippi. Work in one of these and you file a nonresident return there, report the same income again to Alabama, and claim a credit for what you already paid. The credit is capped at your Alabama liability, so you are not taxed twice, the combined bill lands at roughly the higher of the two rates. On $70,000, Georgia costs the most at $3,633 and Mississippi the least at $3,460, $173 between them.
| Work state | Its tax | Alabama after credit | Total | Rate that governs |
|---|---|---|---|---|
| Georgia | $3,633 | $0 | $3,633 | Georgia |
| Mississippi | $2,800 | $660 | $3,460 | Alabama |
Where the work state takes nothing
Florida and Tennessee levy no personal income tax, so there is no return to file there and no credit to claim. But Alabama still taxes the wages as a resident. The catch is withholding: an employer in Florida or Tennessee has no state income tax to withhold, so nothing is taken out for Alabama either. The liability is real and nothing is being set aside against it, which usually means Alabama estimated payments.
What Alabama itself takes across a salary range
A single filer, taking the standard deduction. This is the figure every arrangement above is measured against, the tax Alabama charges a resident, whether the work happened inside the state or over a line:
| Wages | Alabama tax | Effective rate |
|---|---|---|
| $45,000 | $2,210 | 4.91% |
| $70,000 | $3,460 | 4.94% |
| $120,000 | $5,960 | 4.97% |
Coming the other way: living in a no-income-tax state, working in Alabama
Florida and Tennessee border Alabama and levy no personal income tax of their own. A resident of Florida or Tennessee who works in Alabama has the simplest arrangement on this page and the least room to improve it: Alabama taxes the wages earned inside it, $3,460 on $70,000, there is no home-state return, and so there is nothing to claim a credit against. Living across a border that charges nothing does not reduce the Alabama bill by a cent.
Reciprocity cannot help either, even where Alabama has agreements: reciprocity shifts the income to the home state's return, and a state with no income tax has no return to shift it to.
What Alabama charges as your home state
Alabama taxes income on 3 graduated brackets for 2026, from 2% up to 5%. Because wages stacks on top of any other income, a second source can push part of it into the next bracket.
Alabama also has local income tax that the estimate above does not model, some cities: Birmingham 1%, etc.. Add it separately for where you live and work.
State income tax on wages only, 2026 rates. Not tax advice, what this does and doesn't cover.