Alabama

Alabama determines gross income under its own Chapter 40-18 base (not federal AGI or the IRC)

“The term "gross income" means all wealth flowing to the taxpayer from whatever source derived other than as a return of his capital and other than those items exempted by Section 40-18-14(3), Code of Ala. 1975.”

Note: Alabama does not key to federal AGI or the IRC; capital gains fold into its own Chapter 40-18 'gross income ... from dealings in property' and are taxed as ordinary income.

No Alabama estate/inheritance filing for deaths after Dec 31, 2004

“estates where the decedent's date of death is after December 31, 2004, are not required to file with Alabama.”

Note: Mid-sentence verbatim fragment from the DOR page. Page cites Title 40 Chapter 15.

Alabama graduated income tax: 2%/4%/5% (top 5% above $6,000 single / $12,000 MFJ)

“There is hereby levied upon the taxable income of every resident individual an income tax at the following rates: 2% on the first $500; 4% on the next $2,500; and 5% on any excess income. Every nonresident individual shall be subject to tax at the same rates on Alabama income.”

Note: Alabama imposes a flat 5% individual income tax rate on net capital gains under Ala. Code §40-18-5. Confidence medium: URL resolves to the chapter table of contents, not the specific section. Alabama uses its own bracket base (not federal taxable income). Deductible: federal income taxes paid (Ala. Code §40-18-15(7)) this deduction is unlimited and large for high earners, so the effective Alabama rate is materially lower than 5% nominal. MFJ standard deduction $8,500; CLIFF to $2,000 above $35,000 FAGI (own schedule). Alabama is one of four states with an unlimited federal-tax deduction (ND dropped it; MO and OR remain).

Alabama deducts the entire capital loss in the year incurred (no cap, no carryforward, no carryback)

“Under current Alabama law, the entire gain is taxable, and the entire loss is deductible in the year in which it occurs. §§40-18-6,(7) and (8).”

Note: Alabama does NOT year-lock losses to capital gains: the whole loss is deductible against income generally in the year incurred, with no federal-style $3,000 cap. The flip side is that nothing carries: an unusable loss (income already zero) dies at year-end. machine 0 = zero carryforward years.

Alabama deducts the entire capital loss in the year incurred (no cap, no carryforward, no carryback)

“Under current Alabama law, the entire gain is taxable, and the entire loss is deductible in the year in which it occurs. §§40-18-6,(7) and (8).”

Note: Alabama does NOT year-lock losses to capital gains: the whole loss is deductible against income generally in the year incurred, with no federal-style $3,000 cap. The flip side is that nothing carries: an unusable loss (income already zero) dies at year-end. machine 0 = zero carryforward years.

AL exempts AL-issued bonds; out-of-state muni bond interest is taxable per Ala. Code §40-18-14

“Interest on obligations of the state of Alabama or any county, city, or municipality of Alabama.”

Note: Ala. Code §40-18-14 exempts interest on Alabama state and local bonds. Interest on other states' bonds receives no Alabama exemption and is taxable Alabama income.

AL exempts AL-issued bonds; out-of-state muni bond interest is taxable per Ala. Code §40-18-14

“Interest on obligations of the state of Alabama or any county, city, or municipality of Alabama.”

Note: Ala. Code §40-18-14 exempts interest on Alabama state and local bonds. Interest on other states' bonds receives no Alabama exemption and is taxable Alabama income.

Alabama partially conforms to IRC §1400Z-2 QOZ gain deferral and exclusion

“The provisions of Section 1400Z-2 of the Internal Revenue Code of 1986, as amended, shall apply for Alabama income tax purposes with respect to any investment in a qualified opportunity fund that is designated by the Alabama Department of Economic and Community Affairs.”

Note: ADECA approval gate was never operationalized; no Alabama-approved QOZs were ever designated, so the partial conformity is effectively a nullity in practice.

Alabama does not conform to IRC §1202 QSBS gain exclusion

“Verbatim text not yet extracted; see note.”

Note: Structural inference on a negative claim: Alabama adopts federal income tax law on a piecemeal basis, and no provision of Title 40 Chapter 18 incorporates or references IRC §1202, so QSBS gains are fully taxable at the Alabama level. The Code of Alabama is served only through the ALISON table-of-contents portal (no fetchable section-level text), so no verbatim statutory text can be quoted; confidence stays low pending a quotable primary source.

Alabama Form 40 Schedule B lists FNMA and FHLMC under 'Examples of TAXABLE Interest'

“Interest on the following obligations is also taxable: (C.3) Federal National Mortgage Association (FNMA or Fannie Mae) bonds; (C.4) Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) bonds.”

Note: Alabama Form 40 Schedule B lists FNMA/FHLMC as examples of taxable interest; qualified dividends are not addressed separately in the citation but Alabama provides no IRC §1(h)(11) preference, so they are ordinary income.

Alabama Form 40 Schedule B lists FNMA and FHLMC under 'Examples of TAXABLE Interest'

“Interest on the following obligations is also taxable: (C.3) Federal National Mortgage Association (FNMA or Fannie Mae) bonds; (C.4) Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) bonds.”

Note: Alabama Form 40 Schedule B lists FNMA/FHLMC as examples of taxable interest; qualified dividends are not addressed separately in the citation but Alabama provides no IRC §1(h)(11) preference, so they are ordinary income.

U.S. Treasury interest exempt from Alabama income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations

“Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax.”

Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption.

FHLB and FFCB bond interest exempt from Alabama income tax: federal enabling statutes mandate state tax exemption

“Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority.”

Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states.

Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation

“The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124).”

Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check.

Alabama graduated income tax: 2%/4%/5% (top 5% above $6,000 single / $12,000 MFJ)

“There is hereby levied upon the taxable income of every resident individual an income tax at the following rates: 2% on the first $500; 4% on the next $2,500; and 5% on any excess income. Every nonresident individual shall be subject to tax at the same rates on Alabama income.”

Note: Alabama imposes a flat 5% individual income tax rate on net capital gains under Ala. Code §40-18-5. Confidence medium: URL resolves to the chapter table of contents, not the specific section. Alabama uses its own bracket base (not federal taxable income). Deductible: federal income taxes paid (Ala. Code §40-18-15(7)) this deduction is unlimited and large for high earners, so the effective Alabama rate is materially lower than 5% nominal. MFJ standard deduction $8,500; CLIFF to $2,000 above $35,000 FAGI (own schedule). Alabama is one of four states with an unlimited federal-tax deduction (ND dropped it; MO and OR remain).

Alabama income tax: MFJ bracket thresholds double Single/MFS thresholds at each boundary (marriage neutral)

“For single, head of family, and married filing separate returns: 2% First $500 of taxable income 4% Next $2,500 of taxable income 5% All taxable income over $3,000 For married persons filing a joint return: 2% First $1,000 of taxable income 4% Next $5,000 of taxable income 5% All taxable income over $6,000”

Note: Single/HOH/MFS: 2% on first $500; 4% on next $2,500; 5% on all taxable income over $3,000. MFJ: 2% on first $1,000; 4% on next $5,000; 5% on all taxable income over $6,000. MFJ bracket thresholds are exactly 2x Single/MFS thresholds: $500/$1,000 and $3,000/$6,000. Same marginal rates (2%/4%/5%) apply at each doubled boundary. Marriage neutral on the graduated schedule.

Alabama deducts the entire capital loss in the year incurred (no cap, no carryforward, no carryback)

“Under current Alabama law, the entire gain is taxable, and the entire loss is deductible in the year in which it occurs. §§40-18-6,(7) and (8).”

Note: Alabama does NOT year-lock losses to capital gains: the whole loss is deductible against income generally in the year incurred, with no federal-style $3,000 cap. The flip side is that nothing carries: an unusable loss (income already zero) dies at year-end. machine 0 = zero carryforward years.