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Alabama Withholding: What you need to know

Alabama is one of many states that impose a state tax on personal income. State withholding tax is the money an employer is required to withhold from each employee’s wages to pay the state income tax of the employee. The employer is responsible for collecting and remitting the tax withheld. The Alabama withholding law requires all employers in the state to withhold the Alabama income tax from wages paid to their employees at each payroll period. The definitions of “employers,” “employees,” and “wages” under Alabama's law are the same as for federal tax purposes, and changes to the federal Internal Revenue Code are automatically adopted. An employer is any person or other entity for which an individual performs or performed a service, of any nature, as an employee of that person or entity. Withholding may be based on wage bracket withholding tables or the percentage method tables provided by the Department of Revenue (DOR) (AL Stat. Sec. 40-18-70et seq.).
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Generally, all wages earned in Alabama are subject to Alabama withholding tax. However, certain classes of employment are exempt from Alabama withholding tax. Alabama taxes must be withheld from all wages of residents and of wages of nonresidents to the extent that they perform services in the state. A resident is a person who has a permanent home in Alabama and who spends at least 7 months a year in the state.
Exempt from withholding are:
• Members of the armed forces in combat zones
• Agricultural workers
• Household or domestic employees
• Employees in foreign governments and international organizations
• Nonresident aliens
• Ministers/certain missionaries
• News carriers
• Merchant seafarers
• Full-time students holding ...

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Alabama Withholding Resources

Withholding Products

Taxation and Withholding Explained Webinar Recording
BLR Webinar: "Taxation and Withholding Explained: Compliance Tips for Multistate Employers""
Employment Taxes in Multiple States Webinar Recording
BLR Webinar: "Employment Taxes in Multiple States: Step-by-Step Calculation and Reporting Strategies""
Payroll Webinar Recording
BLR Webinar: "Payroll: How to Legally Handle Tax Levies and Garnishments""
IRS and ICE Audit Alert Webinar Recording
BLR Webinar: "IRS and ICE Audit Alert: How to Avoid and Manage Payroll and Recordkeeping Scrutiny""
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We’ve compiled a list of the 100 most commonly asked questions we have received on the federal Fair Labor Standards Act (FLSA) overtime regulations.
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This report, "Top 100 FLSA Q&As", is designed to provide you with an examination of the federal FLSA overtime regulations in Q&A format, including valuable tips for bringing your workplace into compliance in an affordable manner.

At the end of the report, you will find a list of state resources on wage and hour issues. This report includes practical advice on topics such as:
  • FLSA Coverage: How FLSA regulations apply to all employers and any specific exemptions from the overtime requirements
  • Salary Level: Qualifying for exemptions and nonexempt employees
  • Deductions from Pay: Deducting for violations, disciplinary reasons, sick leave, or personal leave


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