AL
Static Conformity — Needs Legislation
5%
Top state income tax rate
low
SALT deduction impact
OBBBA in Alabama: What You Need to Know
Alabama uses static conformity and has not enacted legislation to conform to OBBBA provisions. State income tax applies to tips and overtime normally.
OBBBA Provision Impact for Alabama Residents
| OBBBA Provision | Federal Impact | AL State Impact |
|---|---|---|
| Tip Income Exemption ($25k) | ✅ Exempt from federal income tax | ⚠️ Still taxed at 5% until state acts |
| Overtime Exemption | ✅ All OT exempt from federal tax | ⚠️ Still taxed at state level |
| SALT Cap ($40k married) | ✅ Deduct up to $40k on federal return | 🟢 Low benefit — low state/property taxes |
| Child Tax Credit ($2,500) | ✅ Federal CTC expanded | No direct state effect |
| Senior Deduction ($4,000) | ✅ Additional $4k deduction | ⚠️ Likely not adopted |
| Trump Accounts | ✅ $1,000 federal seed + tax-free growth | Federal program — state tax treatment varies |
Calculate Your Alabama Tax Savings
Enter your income, tips, overtime, and family details to see your federal OBBBA savings.
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