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.

  • 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)