With our payroll tax calculator, you can quickly calculate payroll deductions and withholdings – and that’s just the start! Overall, Alabama has one of the lowest tax burdens in the U.S. Sources: SmartAsset, government websites, US Census Bureau 2018 American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics, Save more with these rates that beat the National Average. What are my state payroll tax obligations? If the combination of low property taxes and low income taxes has you considering a move to the Yellowhammer State, take a look at our mortgage guide for details on rates and getting a mortgage in Alabama. Withholding Formula >(Alabama Effective 2020)<. We indexed the final number, so higher values reflect the most paycheck friendly places. The Alabama tax calculator is designed to provide a simple illlustration of the state income tax due in Alabama, to view a comprehensive tax illustration which includes federal tax, medicare, state tax, standard/itemised deductions (and more), please use the main 2021/22 tax reform calculator. All that’s left to do after calculating your employee’s net pay is cut those checks. For income growth, we calculated the annual growth in median income throughout a five year period for each county and then indexed the results. If you are unsure, contact the agency at 334-242-2067. If you’re married and filing jointly, that 2% of taxable income goes up to the first $1,000, 4% on up to $6,000 and 5% over that. However, rates could be higher depending on where in Alabama you live or work, as local governments can also collect income taxes ranging from 0% to 2%. These apply to your gross wages -- not your taxable income -- and are withheld from your paycheck. Number of cities with local income taxes. Alabama defines wages for state unemployment insurance (SUI) tax purposes as every form of compensation paid for personal services. You can't withhold more than your earnings. The same goes for putting money into a Health Savings Account or a Flexible Spending Account. We make it easy to switch — and now's the best time. Methodology To find the most paycheck friendly places for counties across the country, we considered four factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth. How likely is it that you would recommend this tool to a friend or colleague? It is not a substitute for the advice of an accountant or other tax professional. (A notable exception is contributions to a Roth 401(k), which come out after income tax is applied). The information provided by the Paycheck Calculator provides general information regarding the calculation of taxes on wages for Alabama residents only. We then created a purchasing power index for each county. Payroll Tax. More details about employment tax due dates can be found here. The tax rate ranges from 2% to 5%. The calculator above can help you with steps three and four, but it’s also a good idea to either double-check the calculator by using the payroll tax rates below, or save time and effort by using a reliable payroll service. Alabama Payroll Tax Details. Alabama requires employers to withhold state income taxes from employee paychecks in addition to employer paid unemployment taxes.You can find Alabama’s tax rates here.Employees in Alabama fill out form A4, Employee's Withholding Tax Exemption Certificate, to be used when calculating withholdings. There is a line on the W-4 that allows you to specify additional withholding. Please refer to the table below for a list of 2019 Payroll Taxes (employee portion and employer portion) that are applicable to the city of Montgomery in the state of Alabama. Your paycheck size will also differ depending on any contributions you choose to make. Alabama has the second lowest average effective property tax rate in the country, and its income tax rates range from just 2% to 5%, lower than most other states that have an income tax. We applied relevant deductions and exemptions before calculating income tax withholding. Depending on which county you live in, local income taxes may also be withheld. Ferguson's. Simply write that amount on the correct line on the W-4. Say, for example, your employer offers health benefits. All you have to do is enter each employee’s wage and W-4 information, and our calculator will process their gross pay, deductions, and net pay for both federal and state taxes. This Alabama Payroll Taxes Calculator is used to calculate the taxes for the Alabama Withholding, Unemployment and Employment Security Enhancement Taxes for both employee and employer. The process is simple. Thank you for your answer! 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