Taxes on Business Income in Alabama

April 13, 2006

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The following are the major tax types of income-based taxes that affect small businesses. Our intent is to give you a general understanding of when the various taxes will apply to you and what they will mean to your business.

Privilege tax is imposed on Alabama businesses based on their taxable income and net worth.
Income tax on business income computed at 6.5 percent based upon corporate taxable net income is required in Alabama.
Personal income tax, based on a person's income, is 2 percent to 5 percent of taxable income in Alabama.