Cost of Business
The following is an overview of the main tax costs and other related costs for doing business in Alabama. For more information about other costs, please contact the PowerSouth Economic Development division at (334) 269-2793.
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Corporate Income Tax
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Business Privilege Tax
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Property Tax
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Personal Property Tax
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Sales & Use Tax
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Unemployment
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Workers Comp
Corporate Income Tax
- Rate: 6.5%*
- Based on net taxable income of business done in Alabama
- All of a company's federal income taxes apportioned to Alabama are deducted
Business Privilege Tax
- Rates: Varies from $.25 to $1.75 for each $1,000 of net worth in Alabama
- Based on ability to pay
Property Tax
- State Rate: 6.5%
- Local property tax rates vary
- No property taxes for inventory. Some exemptions apply for raw materials inventory.
Real and Personal Property Tax
- Based on 20% of fair market value
- Includes land, buildings, machinery, equipment, furniture, and other items
Sales and Use Tax
- State Rate: 4.00%
- Local sales & use taxes vary
Unemployment Insurance
- New Employer Tax Rate: 2.70%
- Taxable Wage Base: $8,000
- Unemployment Insurance Tax Rate: Ranges from 0.20% to 6.80%
Workers Compensation Insurance
- Minimum Weekly Workers Compensation: $136
- Maximum Weekly Workers Compensation: $493
Source for this page: State Fact Finder, Commerce Clearinghouse (CCH)
