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Handbook
The Alabama Tax and Budget Handbook – Tax Overview
How do state taxes work? Most people would consider a tax system to be unfair if those who earned less paid a higher percentage of their income in taxes than those who earned more. But that’s exactly how regressive taxes work. As we’ve seen, Alabamians contribute to the funding of public services by paying taxes [...]
Handbook
The Alabama Tax and Budget Handbook – Income Tax
Feeling the pinch Alabama’s nearly flat income tax can’t offset our regressive sales taxes. As a result, the lowest-paid 20% of Alabama residents pay more than twice the share of their incomes in state and local taxes that the top 1% pay. It’s an upside-down tax system: It reduces the consumer spending that fuels economic [...]
Handbook
The Alabama Tax and Budget Handbook – Sales Taxes
Sales taxes: The key driver of Alabama’s upside-down tax system Should wealthy people pay at a lower tax rate than everyone else? Most Alabamians would answer with a resounding “no.” Yet that’s exactly the result that our state’s tax system produces. Families with low incomes in Alabama pay more than twice the share of income [...]
Handbook
The Alabama Tax and Budget Handbook – Property Taxes
How do Alabama’s property taxes work? The 1901 Alabama constitution established a property tax of 6.5 mills to help fund the state government. That was 30 years before our state had income or sales taxes. More than a century later, the state property tax rate has not changed. Property tax is applied to real estate, [...]
Handbook
The Alabama Tax and Budget Handbook – Business Taxes
What taxes do businesses pay in Alabama? How does Alabama tax businesses? Business taxes provide the important “fourth leg of the stool” of our tax system. Alabama’s business taxes were restructured in 1999 after courts ruled the old system unconstitutional because it taxed out-of-state companies at a higher rate. Today’s structure relies on two taxes: [...]
Handbook
The Alabama Tax and Budget Handbook – Tax Policy Solutions for the Long Haul
How could we make our tax code more fair? Alabama can move forward by changing its outdated, imbalanced approach to raising revenue. Our state’s current approach is not helping workers get ahead, and it is not adequately funding education, health care and other vital services that help make widely shared prosperity possible. Alabama should consider [...]
Handbook
The Alabama Tax and Budget Handbook – Glossary
This glossary includes keywords used in The Alabama Tax and Budget Handbook, as well as other terms commonly encountered in tax and budget debates. Terms that are italicized in the definitions are defined elsewhere in this glossary. act – a bill that has become law. adjusted gross income – total annual earnings after subtracting certain [...]
Fact Sheet
2026 Legislative Day – Vote ‘Yes’ on HB 336: Help Alabama families by ending the state grocery tax
Why Alabama needs to untax groceries The grocery tax increases hunger rates and drives many struggling families deeper into poverty. Alabama’s tax system is upside down. On average, people with low incomes pay a much higher share of their income in state and local taxes than the wealthiest households do. The grocery tax is a [...]
Blog
Arise 2026: How we’re working to build a better Alabama
Alabama Arise believes in dignity, equity and justice for all. We believe in an Alabama where everyone's voice is heard and everyone has the opportunity to reach their full potential. And we believe better public policies are the key to building a brighter future for our state. Below, we'll share some details of that vision [...]
Fact Sheet
Alabama’s tax system is upside down and needs real reform
Haga clic aquí para leer esto en español. Alabama’s tax structure is among the nation’s most unfair and unjust. The state is heavily reliant on regressive sales taxes on consumer goods that account for a larger share of spending for households with low incomes. Our state continues to tax groceries, though at a lower rate [...]