2026 tax year · Alabama
Local income tax in Alabama
Opelika is the most expensive of the Alabama levies we hold, $1,200 on $80,000, on top of federal and state tax.
A city occupational tax on wages, for work done inside the city.
It reaches wages only. Work for yourself and it does not touch your profit. But a separate business license tax does.
What the Alabama levies cost on $80,000
| Jurisdiction | How it is worked out | On $80,000 |
|---|---|---|
| Birmingham | 1% | $800 |
| Auburn | 1% | $800 |
| Opelika | 1.5% | $1,200 |
Does it reach self-employment profit?
No. Alabama's local charge applies to wages only, so a sole proprietor's Schedule C profit escapes it. That is unusual and worth confirming with your own jurisdiction before relying on it.
What catches people out in Alabama
Alabama’s occupational tax is a tax on wages, and only on wages. It applies where the person doing the work is an employee of the person paying for it. If you work for yourself, it does not reach your profit. And that is an unusual answer, which is why it is worth stating plainly.
That does not mean self-employed people in these cities owe nothing. They are reached instead by a separate municipal business license tax, charged on turnover rather than profit, at rates that vary by the type of business. It is a different tax with different rules and is not included in the figures on this page.
New occupational taxes have been frozen without approval from the state legislature since 2020, so the list of cities charging one is stable. Cities that already have one can still change their rate.
These figures were checked in July 2026 against Alabama city and state revenue sources, and we rate our confidence in them as medium. Local rates change by council vote and local referendum far more often than state rates do, so confirm yours with the city or county itself before relying on a number here.
Related
- Local income tax in every state
- 1099 taxes in Alabama
- Paycheck in Alabama
- Quarterly payments in Alabama
- S-corp election in Alabama
General information about how these taxes work, not tax advice. Local rates change by ordinance and referendum, confirm with your jurisdiction or a tax professional before acting on anything here.