Alabama
Overall Rating for Taxes on Retirees: Tax-friendly
State Sales Tax: 4% state levy. Localities can add as much as 7% to that, and the average combined rate is 9.15%, according to the Tax Foundation. Alabama is one of the few states that does not exempt food from sales tax.
State Income Tax Range: Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others); High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others). Alabama also allows residents to deduct all of their federal income tax from state taxable income.
State Taxes on Social Security: Benefits are not taxed.
Property Taxes: The median property tax on Alabama’s median home value of $128,500 is $550.
