Alabama Form 40 Income Tax Instruction Booklet

Form 40 Income Tax Instruction Booklet
40 Booklet TY 2023_12-21-23_F.pdf
Form

40

revenue.alabama.gov

Booklet

 Long Return  Residents and Part-Year Residents  Forms and Instructions

2023

myalabamataxes.alabama.gov

Index
A

Filing Status … 6

First-Time and Second Chance Home Buyer Savings
Account ... 16
Forms, How To Get … 33

Address Change … 17
Addresses of Taxpayer Service
Centers … 3
Adoption Expenses … 16
Alabama Election Campaign Fund … 11
Alimony or Separate Maintenance
Amount paid … 16
Amount received … 12
Amended Return … 18
Amount You Owe … 11
Annuities … 14
Armed Forces, Members of … 5

B
Business Income or (Loss)
(Federal Schedule C and C-EZ) … 12
Business Use of Home … 21

C
Casualty and Theft Losses … 20
Consumer Use Tax … 10
Contributions to Charity … 19
Corresponding With Alabama
Department of Revenue … 12 and 17

G
Gains … 13 and 23
General Information … 17

H
Head of Family … 6

I
Income (Examples) —
You Must Report … 7
You Do Not Report … 7
Income Tax Withheld (Alabama) … 8 and 11
Income Tax Deduction (Federal) … 8 and 31
Interest Income … 8 and 21
Interest — Late Payment of Tax … 17
Interest — Penalty on Early
Withdrawal of Savings … 16
Individual Retirement
Arrangement (IRA) … 13, 14 and 15
Itemized Deductions … 8, 18-21

K
Keogh Plan — Deduction for … 14 and 15

D

L

Death of Taxpayer … 18
Dependents … 8 and 10
Direct Deposit … 17
Dividend Income … 8 and 21
Domicile … 4
Donation of Refunds … 12 and 22

E
Educational Expenses … 21
Educational IRA … 13
Employee Business Expenses … 20
Estates and Trusts … 24
Estimated Tax … 11 and 18
Extension of Time to File … 18

M
Married Persons — Filing Joint or
Separate Return … 6
Medical and Dental Expenses … 18 and 19
Military Personnel —
Residents of Alabama … 5
Nonresidents of Alabama … 5
Moving Expenses … 16
Miscellaneous Itemized Deductions … 20 and 21
Mutual Funds … 23

N

Farm Income and Expenses … 15
Federal Tax Deduction … 8 and 31
Figuring Your Income Tax … 10, 25-30
Filing Requirements —
When To File … 5
Which Form To File … 5
Who Must File … 5

Part-year residents … 5
Partnerships … 23
Payments —
Check/Money Order … 11
Credit Card… 11
ACH Debit (E-Check) … 12
Penalty —
Criminal Liability … 17
Late Filing … 17
Late Payment of Tax … 17
Other Penalties … 17
Pensions … 14 and 15
Personal Exemption … 6 and 8
Preparer, Tax Return … 12

R
Records — How Long To Keep … 17
Refund Status… 4
Refund, When Should I Receive? … 4
Rents and Royalties … 23
Requesting a Copy of Your
Tax Return … 18
Rollover Distributions … 14
Roth IRA … 13
Rounding Off to Whole Dollars … 7

S

Long Term Care … 21
Losses … 12, 13, and 23

F

P

Salaries … 7
Schedules A, B, CR, DC, D, and E
Instructions… 18-24
SEP … 13, 14, and 15
Setoff Debt Collection … 4 and 18
Sign Your Return … 12
Single Person … 6
Social Security Number … 6
Standard Deduction … 8 and 9
Steps For Preparing Your Return … 6
Students and Dependents … 5

T

Name and Address … 6
Nonresidents of Alabama —
Which Form To File … 5
Who Must File … 5

Tax Assistance for Taxpayers … 3
Tax Tables … 25-30

W

O

Wages … 7
Where To File Form 40 … 12

Other Income … 8 and 12

What’s New For 2023
Identity Quiz – If you happen to receive a notice to complete an ID Confirmation
Quiz, it is not because you are suspected of ID theft. The purpose of the quiz is to protect your identity as the filer and prevent loss of taxpayer dollars to thieves.
Credits – Certain tax credits are now required to be pre-approved through My Alabama Taxes (MAT) at www.myalabamataxes.alabama.gov. Please see the credit instructions in this booklet and Schedule OC instructions for more information.
Schedule RS – Complete Schedule RS to report fully or partially taxable pensions,
annuities, IRA distributions (include SEP, Keogh, 401(k)(2), 403(b) distributions), other
distributions and retirement distributions exempt from Alabama Income.
Retirement Exemption - Act 2022-294 Effective Jan 1, 2023, exempts the first
$6,000 of taxable retirement income for those 65 years of age or older. See Schedule
RS Instructions for more information.

Volunteer Emergency Responders Tax Credit - Act 2022-298 Effective Jan 1,
2023, provides an income tax credit for volunteer firefighters and paramedics providing proof of 30 hours or more of qualifying training during the tax year. See Schedule
OC for more information.
Innovate Alabama Tax Credit - Act 2023-33 Effective Jan 1, 2023, authorizes a
tax credit to taxpayers making a cash contribution to economic development organizations (EDO) approved by Innovate Alabama. See Schedule OC for more information.
Adoption Credit - Act 2022-299 effective Jan 1, 2023, increases the adoption
credit to $2,000 provided both the qualifying children and parents are residents of Alabama.
Negative numbers - Please enter all negative numbers with negative signs (-).
Do not use parenthesis ( ).

Page 2

★

★ Huntsville

Shoals

★

Gadsden

Tuscaloosa

★

Jefferson/
★
Shelby
Auburn/Opelika

★
★

Montgomery

Dothan

★

Mobile

★

Physical Addresses of Taxpayer Service Centers
Alabama income tax assistance may be obtained by calling or visiting any of the Alabama Department of Revenue Taxpayer Service Centers listed below. Additional forms
and instructions may also be obtained from these centers.
 Montgomery Taxpayer Service Center
 Huntsville Taxpayer Service Center
 Auburn/Opelika Taxpayer Service Center
2545 Taylor Road
4920 Corporate Drive, Suite H
1800 Samford Trace Court, Suite 100
Montgomery, AL 36117
Huntsville, AL 35805
Auburn, AL 36830
Phone – (334) 242-2677
Phone – (256) 837-2319
Phone – (334) 887-9549
 Shoals Taxpayer Service Center
 Jefferson/Shelby Taxpayer Service Center
 Dothan Taxpayer Service Center
201 South Court Street, Suite 200
2020 Valleydale Road, Suite 208
121 Adris Place
Florence, AL 35630
Hoover, AL 35244
Dothan, AL 36303
Phone – (256) 383-4631
Phone – (205) 733-2740
Phone – (334) 793-5803
 Tuscaloosa Taxpayer Service Center
 Mobile Taxpayer Service Center
 Gadsden Taxpayer Service Center
1434 22nd Avenue
851 E. I-65 Service Road South, Bel Air Tower, Suite 100
701 Forrest Avenue
Tuscaloosa, AL 35401
Mobile, AL 36606
Gadsden, AL 35901
Phone – (205) 759-2571
Phone – (251) 344-4737
Phone – (256) 547-0554
Page 3

Other Reasons
For Refund Delays

Refund Status
To check the status of your current year refund, go to our Website at www.revenue.alabama.gov,
then click on “Where’s My Refund,” or call our 24-hour toll-free Refund Hotline at 1-855-894-7391.

How To Use This
Instruction Booklet
The instructions for Form 40 are divided into five
main sections.
 Section 1 contains information on who must
file, how to choose the correct form, and when to
file a return.
 Section 2 contains useful steps to help you
prepare your return.
 Section 3 contains specific instructions for
most of the lines on your return.
 Section 4 contains general information
about such items as amending your tax return, how
long to keep records, and filing a return for a deceased person.
 Section 5 contains instructions for completing Schedule A for those taxpayers itemizing their
deductions. Also included are instructions for
Schedules B, CR, DC, D, and E.
If you follow the steps in Section 2 and the specific instructions in Section 3, you should be able to
fill in your return quickly and accurately.

When Should I Expect
My Refund?
Wait At Least 90 Days
For Your Refund
If you do not receive your refund within 90 days of
mailing your return, go to www.revenue.alabama.gov,
then click on “Where’s My Refund,” or complete Form
IT:489. Form IT:489 may be obtained from the Department’s website under the Forms link or from any of our
Alabama Taxpayer Service Centers listed on page 3 of
this booklet. If you call about your refund, have a copy of
your return with you or the Department may be unable to
assist you.
Each year the Alabama Department of Revenue receives over 1.8 million income tax returns. Of this number, over 1 million taxpayers receive refunds. The
Department makes every effort to process your refund
as quickly as possible, and there are several things you,
the taxpayer, can do to help us accomplish this.
The date you file your return and how you file determines when you can expect your refund. For example,
electronically filed returns are received and processed
significantly faster than returns that are mailed to the Department of Revenue. Also, if you mail in an error-free return in January or February, you can expect to receive
your refund sooner than if you wait until March or April to
file. Returns filed this close to the deadline may require
90 days to process.

Common Mistakes
Which Delay Refunds
Incorrect Name. Your refund will be issued in the
name(s) appearing on your return. If your name is illegible or misspelled, your refund may be issued in the
wrong name.
Incorrect Address. Last year the U.S. Postal Service was unable to deliver thousands of refunds due to
incorrect addresses, or because the taxpayer moved and
failed to leave a forwarding address.
Incorrect Social Security Number. Last year approximately 80,000 returns were received with missing or
incorrect social security numbers. Your social security
number is very important; it is used for identification of
your file. Please compare the number on your return with
the number on your social security card.
Show in the blocks provided the social security numbers in the same order as the first names. For example,
the social security number of the first name listed should
be entered in the box headed “Your social security number.” The social security number of the second name
should be entered in the box headed “Spouse’s social
security number.” If separate returns are filed, the person
filing the return should enter his or her social security
number in the box headed “Your social security number,” and enter the spouse’s social security number on
line 3. It is very important that the social security numbers be listed in this order so your refund will be issued
in the correct name.
Legibility. On many returns, the name, address, or
social security number is not readable. If this happens,
the wrong information may be recorded, and your refund
check may be delayed. Make sure that the information
you enter on the return is readable.
Missing Withholding Statement (W-2). Make certain the “State Copy” of all forms W-2 wage and tax
statements are included, W-2s are frequently missing.
The Department will consider the return incomplete if all
required information is not included.
Incorrect Computation. Many returns must be corrected each year by the Department due to simple math
errors. Before mailing your return, double check the addition and subtraction to make sure the math is correct.
This is a good idea even if someone else prepares your
return.
Misdirected Mailing. Each year thousands of returns are mailed to the Internal Revenue Service instead
of the Alabama Department of Revenue.
Filing More Than One Return. File only one Form
40, 40A, 40EZ, 40NR or electronic return for each tax
year. If it is necessary to amend your original return, you
must file a completed return with the “Amended Return”
box checked. The amended return will be processed
after your original return has been processed.
Filing Copies. A copy of a return is not acceptable
unless it has the taxpayer(s) original signature(s).
Missing Signatures. Thousands of unsigned returns are received each year by the Department. Before
we can process them, these returns must be returned to
the taxpayers for signatures. If a joint return is filed, both
spouses must sign the return.
Page 4

You Have Not Paid All Taxes Due From a Previous Year. If you owe tax for a prior year, your refund will
be applied to pay that deficiency. Any amount remaining
will be refunded to you. This will generally delay your refund 12 weeks or more.
Setoff Debt Collection. If the Alabama Department
of Human Resources, the Alabama Department of
Labor, the Administrative Office of Courts, the Alabama
Medicaid Agency, Alabama League of Municipalities, or
Association of County Commissions of Alabama has notified the Alabama Department of Revenue that your account is delinquent on a debt repayment, any public
assistance program (including the Child Support Act of
1979, Chapter 10, Title 38), any Medicaid assistance
program, or Local Government Entity your refund will be
applied to that debt. Note: See Setoff Debt Collection on
page 18 for further information.
Federal Refund Offset Program. Your 2023 federal
or state refund will be taken to satisfy any outstanding liabilities owed to the State of Alabama or to the Internal
Revenue Service.

SECTION

1

Filing
Information

First, be certain you need to file a tax return. Your
marital status, filing status, and gross income determine
whether you have to file a tax return. Gross income usually means money, goods, and property you received on
which you must pay tax. It does not include nontaxable
benefits. See page 7 of the instructions to find out which
types of income you should include.

Other Filing Requirements
Refunds. Even if your gross income was less than
the amounts shown, you must file a return to get a refund
if Alabama income tax was withheld from any amounts
paid to you.
Domicile. Individuals who are domiciled in (or residents of) Alabama are subject to tax on their entire income whether earned within or without Alabama. This is
true regardless of their physical presence within Alabama at any time during the taxable year. Domicile is
where one lives, has a permanent home, and has the intention of returning when absent. Domicile may be by
birth, choice, or operation of law. Each person has one
and only one domicile which, once established, continues until a new one is established coupled with the abandonment of the old. Burden of proof regarding change
of domicile is on the taxpayer even though he/she owns
no property, earns no income, and has no place of
abode in Alabama.
If an Alabama resident accepts employment in a foreign country for a definite or indefinite period of time with
the intent of returning to the United States, the individual
remains an Alabama resident and all income, wherever
earned, is subject to Alabama income tax. This is true
even if the taxpayer leaves no property in Alabama.
If a citizen of a foreign country comes to Alabama to
work (no matter how long he stays), buys a home, secures an Alabama driver’s license, does not intend to
apply for U.S. Citizenship, and intends to ultimately re-

turn to the country of origin, the individual will be considered to have established domicile in Alabama. In
other words, a foreign citizen domiciled in Alabama is liable for Alabama income tax on income earned from all
sources.
Military Personnel (Residents). Military personnel,
whose legal residence is Alabama, are subject to Alabama income tax on all income regardless of the source
or where earned unless specifically exempt by Alabama
law.
Military personnel (Army, Navy, Marine, Air Force,
Merchant Marine, and Coast Guard) who were residents
of Alabama upon entering military service remain residents of Alabama for income tax purposes, regardless of
the period of absence or actual place of residence, until
proof as to change of home of record has been made.
The burden of proof is on the taxpayer though he owns
no property, earns no income, or has no place of abode
in Alabama. Under the provisions of the Soldiers’ and
Sailors’ Civil Relief Act, military personnel are not
deemed to have lost their permanent residence in any
state solely because they are absent in compliance with
military orders. In addition, persons are not deemed to
have acquired permanent residence in another state
when they are required to be absent from their home
state by virtue of military orders. If the husband and wife
are both in military service, each could be a resident of
a different state under the Soldiers’ and Sailors’ Civil Relief Act. A spouse not in military service has the same
domicile as the military spouse unless proven otherwise.
Military Personnel (Nonresidents). Nonresident
military personnel merely having a duty station within
Alabama (whose legal residence is not Alabama) are not
required to file an Alabama income tax return unless they
have earned income from Alabama sources other than
military pay. If they have earned income in Alabama
other than military pay, they are required to file Alabama
Form 40NR. A married nonresident military person with
income earned in Alabama may file either a separate return claiming himself or herself only, or a joint return
claiming the total allowable personal exemption. The
“Military Spouses Residency Relief Act” (Public Law 11197) states that the income for services performed by the
spouse of a service member shall not be deemed to be
income for services performed or from sources within a
tax jurisdiction of the United States if the spouse is not
a resident of the jurisdiction in which the income is
earned because the spouse is in the jurisdiction solely to
be with the service member serving in compliance with

military orders.
Dependent’s and Student’s Income. Dependents
who are residents of Alabama must file a return if they
meet the requirements under You Must File A Return
If… on this page. A student’s income is fully taxable to
the same extent as other individuals who are required to
file a return. The dependent or student can claim a personal exemption of $1,500, and his or her parents may
claim a dependent exemption if they provided more than
50% of his or her total support. See Dependent Exemption on page 8.

When To File

come which cannot exceed $1,500,
 You are not claiming income or loss from Schedules C, D, E, or F, and
 You are not claiming credit for taxes paid to another state.

You MUST Use Form 40 If:
 You were a full or part-year resident of Alabama
and do not meet ALL of the requirements to file Form
40A, and
 You are itemizing deductions.

Part-Year Residents

You should file as soon as you can after January 1,
2024, but no later than the due date of the federal return. If you file late, you will have to pay penalties and interest. (See Penalties and Interest on page 17.)
If you know you cannot file your return by the due
date, you do not need to file for an extension. You will
automatically be granted an extension until October 15,
2024. If you anticipate that you will owe additional tax on
your return, you should submit your payment with a payment voucher (Form 40V) with the box “Automatic Extension Payment” checked by the due date of the federal
return.
Except in cases where taxpayers are abroad, no extension will be granted for more than 6 months.
An extension means only that you will not be assessed a penalty for filing your return after the due date.
Interest on the additional tax due from the due date of the
return and any penalties will be assessed if applicable to
your return.
Original returns must be filed within two years of the
date the taxes are paid to be eligible for a refund. Criminal Liability could result from a continued failure to file
returns. (Refer to “Criminal Liability” on Page 17.)

Which Form To File
You MAY Use Form 40A If You Meet
ALL The Following Conditions:
 You were a resident of Alabama for the entire
year,
 You do not itemize deductions,
 You do not claim any adjustments to income,
such as an IRA deduction, alimony paid, Federal income
tax paid for a prior year, etc.,
 You do not have income from sources other than
salaries and wages except for interest and dividend in-

Part-year residents of Alabama should only report income earned while a resident of Alabama. Itemized deductions must be prorated to reflect only those expenses
incurred while a resident of Alabama. Federal Tax Liability must be prorated by applying a percentage of Alabama adjusted gross income to Federal adjusted gross
income in order to calculate the amount deductible on
line 12 of Form 40. Part-year residents are allowed to
deduct the full standard deduction, personal, and dependent exemptions.

You MUST Use Form 40NR If:
 You are not a resident of Alabama and you received taxable income from Alabama sources or for performing services within Alabama and your gross income
from Alabama source exceeds the allowable prorated
personal exemption, or filing Married Filing Joint under
the “Military Spouses Residency Relief Act.” Nonresidents must prorate the personal exemption. If your Alabama gross income exceeds the prorated amount, a
return must be filed.

You MUST Use Both Form 40 and
Form 40NR If:
 You had sufficient income to require the filing of
a part-year return and also had income from Alabama
sources while a nonresident during the same tax year. In
this case, both the total personal exemption and the dependent exemption must be claimed on the part-year
resident return. No exemption can be claimed on the
nonresident return. The part year resident return should
include only income and deductions during the period of
residency, and the nonresident return should include
only income and deductions during the period of nonresidency.

You Must File A Return If…
You were a:
Full Year
Resident

Part Year
Resident

Nonresident

and your marital status at the end of 2023 was:
Single (including divorced and legally separated)
Married and living with your spouse at the end
of 2023 (or on the date your spouse died)
Single (including divorced and legally separated)
Married and living with your spouse at the end
of 2023 (or on the date your spouse died)
Single (including divorced and legally separated)
Married and living with your spouse at the end
of 2023 (or on the date your spouse died)

and your filing status is:
Single
Head of family
Married, joint return
Married, separate return
Single
Head of family
Married, joint return
Married, separate return
Single or head of family
Married, joint return
Married, separate return
Page 5

and your gross income was at least:
$ 4,500
$ 8,200
$11,500
$ 5,750
$ 4,500 (while an Alabama resident)
$ 8,200 (while an Alabama resident)
$11,500 (while an Alabama resident)
$ 5,750 (while an Alabama resident)
Over the allowable prorated exemption:

SECTION

2

Steps for Preparing
Your Return

By following these four useful steps, and reading the
specific instructions, you should be able to prepare your
return quickly and accurately.

Step 1
Collect all your necessary records.
Income Records. These include any Forms W-2,
W-2G, and 1099 that you have. If you do not receive a
Form W-2 by February 1, or if the one you receive is incorrect, please contact your employer as soon as possible. Only your employer can give you a Form W-2, and
only he or she can correct it.
If you have someone prepare your return for you,
make sure that person has all your income and expense
records so he or she can fill in your return correctly. Remember, if someone else prepares your return incorrectly — you are still responsible.

Step 2
Obtain any forms or
schedules you may need.
The fastest way to obtain forms is to download
them from our website www.revenue.alabama.gov.
Also see page 33 for more information.

Step 3
Sign and date your return.
Form 40, 40A, or 40NR is not considered a return
unless you sign it. Please sign the return in black
ink only. Your spouse must also sign if it is a joint return.
Original signatures are required or the return will not be
accepted.

Step 4
Attach all necessary
forms and schedules.
Attach the state copy of all Forms W-2, W-2G, and
1099 to the front of your return. Attach schedules and
forms in sequential order, starting with Form 40.
If you need more space on forms or schedules, attach separate sheets and use the same format as printed
forms, but show your totals on the printed forms. Please
use sheets that are the same size as the forms and
schedules. Be sure to put your name and social security
number on these separate sheets and attach them at the
end of the return.
Before mailing your return, check to make sure you
have retained an exact copy for your records. If you owe
tax, be sure to include your payment and Form 40V with
your return.

SECTION

3

Specific
Instructions

Name and Address
Please type or print your name, address, and social
security number in the appropriate blocks.
If you live in an apartment, please include your apartment number in the address. If the post office delivers
mail to your P.O. box number rather than to your street
address, write the P.O. box number instead of your
street address.

Social Security Number
Each year thousands of taxpayers file returns using
an incorrect social security number. Usually this number
belongs to another taxpayer. It is very important that you
file your return using the correct social security number.
Failure to use your correct social security number(s) in
the space(s) provided WILL DELAY the processing of
your refund. Listed below are a few of the common reasons why a social security number is reported
incorrectly:
 failed to enter number on return,
 memorized wrong number,
 copied number wrong,
 gave an incorrect number to the tax preparer, or
 gave your employer an incorrect number.
IMPORTANT: Check your W-2 forms. Your employer
may be reporting an incorrect number for you.
If you are married and filing a joint return, write both
social security numbers in the blocks provided.
If you are married and filing separate Alabama returns, write your spouse’s social security number on line
3.
If your spouse is a nonresident alien, has no income,
does not have a social security number, and you file a
separate return, check the "NRA" box and leave the
block for your spouse's social security number blank. If
you and your spouse file a joint return, your spouse must
have a social security number.
If you or your spouse do not have a social security
number, please get Form SS-5 from a Social Security
Administration (SSA) office. File it with your local SSA
office early enough to get your number before April 15.
IMPORTANT: Please notify the Social Security Administration (SSA) immediately in the event you have
changed your name because of marriage, divorce, etc.,
so the name on your tax return is the same as the name
the SSA has on record. This helps prevent delays in processing your return.

Filing Status and Personal
Exemption Lines 1 through 4
You should check only the box that describes your filing status. The personal exemption will be determined by
your filing status on the last day of the tax year.

Single
Consider yourself single if on December 31, 2023,
you were unmarried or separated from your spouse either by divorce or separate maintenance decree.
If you check box 1, enter $1,500 on line 13.
Page 6

Married – Joint or Separate Returns?
Joint Returns. Most married couples pay less tax if
they file a joint return. If you file a joint return, you must
report all income, exemptions, deductions, and credits for you and your spouse. Both of you must sign
the return even if only one of you had income. Common
law marriages entered into before January 1, 2017, are
recognized by the State of Alabama for income tax
purposes.
CAUTION: You cannot file a joint return if you are a resident of Alabama and your spouse is a resident of another state. You should file as “married filing separate.”
You and your spouse can file a joint return if you
were living together on December 31, 2023, even if you
did not live together for the entire year. Both of you are
responsible for any tax due on a joint return, so if one of
you does not pay the other may have to.
NOTE: If you file a joint return, you may not, after the
due date of the return, choose to file separate returns
for that year.
If your spouse died in 2023, you can file a joint return
for 2023. You can also file a joint return if your spouse
died in 2024 before filing a 2023 return. For details on how
to file a joint return, see Death of Taxpayer on page 18.
If you check box 2, enter $3,000 on line 13.
Separate Returns. You can file separate returns if
both you and your spouse had income, or if only one of
you had income.
If you file a separate return, report only your own income, exemptions, deductions, and credits. You are responsible only for the tax due on your return.
NOTE: Alabama is not a community property state.
If you file a separate return, write your spouse’s social security number on line 3. If your spouse is not required to file, attach a statement explaining why.
If you check box 3, enter $1,500 on line 13.

Head of Family
An individual shall be considered “Head of Family”
if, and only if, such individual is not married at the close
of their tax year, is not a surviving spouse and their qualifying dependent is not a foster child.
You may check the box on line 4 ONLY IF on December 31, 2023, you were unmarried or legally separated and meet either test 1 or 2 below.
Test 1. You paid more than half the cost of keeping
up a home for the entire year provided that the home
was the main home of your parent whom you can claim
as a dependent. Your parent did not have to live with
you in your home,
OR
Test 2. You paid more than half the cost of keeping
up a home in which you lived and in which one of the following also lived for more than 6 months of the year
(temporary absences, such as for vacation or school, are
counted as time lived in the home):
a. Your unmarried child, grandchild, great-grandchild, etc., adopted child, or stepchild. This child does
not have to be your dependent.
b. Your married child, grandchild, great-grandchild,
etc., adopted child, or stepchild. This child must be your
dependent. But if your married child’s other parent claims
him or her as a dependent under the Federal rules for

“Children of Divorced or Separated Parents,” this child
does not have to be your dependent.
c. Any relative whom you can claim as a dependent.
(See definition of dependent on page 8.)
If the person for whom you kept up a home was born
or died during the year, you may still file as “Head of
Family” if the home was that person’s main home for the
part of the year he or she was alive.

Special Rules
A nonresident taxpayer who receives income from
Alabama sources or for performing services within Alabama and who also had income while a resident of Alabama during the same tax year must file both the
Alabama Nonresident Form 40NR and the Alabama
Part-year resident Form 40. If you are required to file
both returns, the total personal exemption and the
dependent exemption must be claimed on the partyear return (Form 40). No personal exemption or dependent exemption can then be claimed on the
nonresident return (Form 40NR).

Income
All income is subject to Alabama income tax unless
specifically exempted by state law. The term “income”
includes, but is not limited to, salaries, wages, commissions, income from business or professions, alimony,
rents, royalties, interest, dividends, and profits from sales
of real estate, stocks, or bonds. Military pay is taxable
income except for compensation received for active
service in a designated combat zone.

Examples of Income
You MUST Report
The following kinds of income should be reported on
Forms 40, 40A, or 40NR and related forms and
schedules:
 Wages including salaries, fringe benefits,
bonuses, commissions, fees, and tips.
 Dividends (Schedule B).
 Interest on: bank deposits, bonds, notes, federal
income tax refunds, mortgages on which you receive
payments, accounts with savings and loan associations,
mutual savings banks, credit unions, etc. (Schedule B).
 Original Issue Discount (Schedule B).
 Distributions from an Individual Retirement
Arrangement (IRA) including SEPs and DECs, if you excluded these amounts in a prior year.
 Bartering income (fair market value of goods or
services you received in return for your services).
 Business expense reimbursements you received
that are more than you spent for the expenses.
 Amounts received in place of wages from accident and health plans (including sick pay and disability
pensions) if your employer paid for the policy.
 Alimony or separate maintenance payments received from and deductible by your spouse or former
spouse.
 Life insurance proceeds from a policy you cashed
if the proceeds are more than the premium you paid.
 Profits from businesses and professions (Federal
Schedule C or C-EZ).
 Your share of profits from partnerships and S
Corporations (Schedule E).
 Profits from farming (Federal Schedule F).
 Pensions and annuities other than those listed in
“Examples of Income You DO NOT Report.”
 Lump-sum distributions, endowments.
 Gains from the sale or exchange (including
barter) of real estate, securities, coins, gold, silver, gems,

or other property (Schedule D).
 Gains from the sale of your personal residence
as reported on your Federal return.
 Rents and Royalties (Schedule E).
 Your share of estate or trust income (Schedule
E).
 Prizes and awards (contests, lotteries, and gambling winnings).
 Income from sources outside the United States.
 Director’s fees.
 Fees received as an executor or administrator of
an estate.
 Embezzled or other illegal income.
 Refunds of federal income tax if deducted in a
prior year and resulted in a tax benefit.
 Payments received as a member of a military
service are taxable except for combat pay and certain
allowances.
 Property transferred in conjunction with performance of services.
 Jury duty pay.
 Nonqualified Withdrawal from Alabama College
Counts 529 Fund.

Examples of Income
You DO NOT Report
Do not include these amounts when deciding if you
must file a return.
 United States Retirement System benefits.
 State of Alabama Teachers’ Retirement System
benefits.
 State of Alabama Employees’ Retirement System
benefits.
 State of Alabama Judicial Retirement System
benefits.
 Military retirement pay.
 Tennessee Valley Authority Pension System
benefits.
 United States Government Retirement Fund
benefits.
 Payments from a “Defined Benefit Retirement
Plan” in accordance with IRC 414(j). Contact your retirement plan administrator to determine if your plan
qualifies.
 Federal Railroad Retirement benefits.
 Federal Social Security benefits.
 State income tax refunds.
 Unemployment compensation.
 Welfare benefits.
 Disability retirement payments (and other benefits) paid by the Veteran’s Administration.
 Workman’s compensation benefits, insurance
damages, etc., for injury or sickness.
 Child support.
 Gifts, money, or other property you inherit or that
was willed to you.
 Dividends on veteran’s life insurance.
 Life insurance proceeds received because of a
person’s death.
 Interest on obligations of the State of Alabama or
any county, city, or municipality of Alabama.
 Interest on obligations of the United States or any
of its possessions.
 Amounts you received from insurance because
you lost the use of your home due to fire or other casualty to the extent the amounts were more than the cost
of your normal expenses while living in your home. (You
must report as income reimbursements for normal living
expenses.)
 Military allowances paid to active duty military,
Page 7

National Guard, and active reserves for quarters, subsistence, uniforms, and travel.
 Subsistence allowance received by law enforcement and corrections officers of the State of Alabama.
 All retirement compensation received by an eligible fire fighter or a designated beneficiary from any Alabama firefighting agency.
 All retirement compensation received by an eligible peace officer or a designated beneficiary from any
Alabama police retirement system.
 Death benefits received by a designated beneficiary of a peace officer or fireman killed in the line of
duty.
 Income earned while serving as a foreign missionary after first serving 24 months as a missionary in
a foreign country.
 Compensation received from the United States
for active service as a member of the Armed Forces in
a combat zone designated by the President of the United
States.
 An amount up to $50,000 for Tax Years 2020 and
forward and $25,000 for Tax Years 2019 and prior received as severance, unemployment compensation or
termination pay, or as income from a supplemental income plan, or both, by an employee who, as a result of
administrative downsizing, is terminated, laid-off, fired,
or displaced from his or her employment, shall be exempt from state income tax. If the exempt severance
pay is included in your state wages, contact your
employer for a corrected W-2.
 Beginning January 1, 1998, all benefits received
from Alabama Prepaid Affordable College Tuition Contracts (PACT).
 Qualified Withdrawal from Alabama College
Counts 529 fund.
 Income received from the Department of Defense
as a result of a member of the military killed in action in
a designated combat zone.
 Any income earned by the spouse in the year of
death of a member of the Military who has been killed in
action in a designated combat zone.
 Beginning January 1, 2016, all income, interest,
dividends, gains or benefits of any kind received from an
ABLE (Achieving Better Life Experience) savings
account.
 Effective with tax year 2020, insurance benefits
received by a certified firefighter as a result of a cancer
diagnosis to any extent the amounts are included in the
federal adjusted gross income of the taxpayer and are
not exempt under any other law. For more information
please see Act 2019-361.

Rounding Off to Whole Dollars
Round off cents to the nearest whole dollar on your
return and schedules. You can drop amounts under 50
cents. Increase amounts from 50 to 99 cents to the next
dollar. For example: $1.39 becomes $1.00, and $2.69
becomes $3.00.

Line 5
Wages, Salaries, Tips, Etc.
Report all W-2 information on Schedule W-2. See
Schedule W-2 instructions for more information. On column B – “Income,” enter the amount from Schedule W2, Line 18, Column I plus Column J.
NOTE: If you are a resident of Alabama and you earn
wages in more than one state, include the total “State
Wages” from all states.

NOTE: State of Alabama employees will find that the
amount taxable for state purposes is, in most cases,
more than the amount taxable for federal purposes. This
is due to the fact that amounts deducted from their
wages as “Contributions to the Alabama State Retirement System” qualify for deferral on the Federal return,
but do not qualify for deferral on the Alabama return.
Part-year Residents. If you were a resident of Alabama for only a part of the year, enter only the income
earned during the period of residence in Alabama.
Statutory Employees. If you were a statutory employee, the “Statutory Employee” box of your W-2 form
should be checked. Statutory employees include full time
life insurance salespeople, certain agent or commission
drivers, traveling salespeople, and certain homeworkers.
Please see the Schedule W-2 instructions for information on how to report your “Statutory Employee”
wages.

Alabama Income Tax Withheld
Alabama tax withheld information must be reported on Schedule W-2. (See Schedule W-2 instructions for more information.) The amount withheld is
shown on the state copy of your Form W-2. This copy
should be marked “To Be Filed With Your Alabama Income Tax Return.”
NOTE: Do not change or alter the amount of tax withheld or wages reported on your Form W-2. If any amount
is incorrect or illegible, you should contact your employer
and request a corrected statement.
Do not include the following as Alabama income tax:
Federal income tax,
FICA tax (Social Security and Medicare),
Local, city, or occupational tax, or
Taxes paid to another state.
In Column A – “Alabama tax withheld,” enter the total
amount from Schedule W-2, Line 18, Column G.






Line 6
Interest and Dividend Income
Enter your TOTAL taxable income from interest and
dividends. If the total taxable and nontaxable interest and
dividends you received in 2023 is $1,500 or more, you
must complete and attach Schedule B. Part-year residents enter only the amount of interest and dividend income earned during the period of residency.
The payer should send you a Form 1099-INT, Form
1099-OID, or 1099-DIV, if applicable, showing interest
or dividends you must report.
To see what interest and dividends are taxable, read
the instructions for Schedule B in this booklet.

Line 7
Other Income
All taxable income you received that is not reported
on lines 5 and 6 should be entered on line 7. This includes rents, royalties, gains from sale of property, items
not included in “State wages” box on W-2 forms, etc.
See Examples of Income You DO NOT Report and
Examples of Income You MUST Report on page 7 of
these instructions for further details on income which
should be included on this line.
If you have income from other sources, you must
complete page 2, Part I, and attach the appropriate
schedule(s).

Line 9
Adjustments to Income
If you made payments to a traditional Individual Retirement Arrangement (IRA) or to a Keogh plan, you may
be entitled to claim these payments as an adjustment to
income.
Also deductible as an adjustment to income are
penalties you incurred for the early withdrawal of interest
before maturity.
You can deduct payments of alimony or separate
maintenance made under a court decree to the same
extent allowed for federal income tax purposes.
Certain legal and medical expenses paid or incurred
in the adoption of a minor are deductible as an adjustment to income.
Certain active duty Armed Forces members may
deduct certain moving expenses. The new job location
must be within the State of Alabama.
Self-employed persons may deduct health insurance
premiums to the same extent as allowed for federal
purposes.
For more information on the above exclusions,
please see the instructions for Part II on page 15.
The total adjustments to income from page 2, Part
II, line 16 should be entered on page 1, line 9.

Line 10

worksheet on page 31 to determine your federal income
tax deduction. If claiming a deduction on line 12, you
must attach page 1, 2 and Schedule 1 of your Federal
Return, if applicable.
PLEASE NOTE: The Federal line references were
correct at the time these forms and instructions were
printed. However, there may have been changes to Federal forms after our print deadline and the line numbers
referenced for our forms may have changed. If you have
questions as to the correct line number on the Federal
return, please feel free to call one of our taxpayer service centers listed on page 3.
Joint Federal and Separate Alabama Returns, or
Part Year Residents. If a married couple elects to file a
joint federal return and separate Alabama returns, the
federal income tax liability must be determined by a ratio
of each spouse’s federal adjusted gross income to total
joint federal adjusted gross income, or if filing as a part
year resident, the ratio of Alabama adjusted gross income to federal adjusted gross income. This calculation
is required regardless of the method used in claiming
other deductions.

Line 13
Personal Exemption
Enter the personal exemption from line 1, 2, 3, or 4.

Adjusted Gross Income
If the amount on line 10 is less than zero, you may
have a net operating loss that you can carry to another
tax year. If you carry the loss back to earlier years, you
should check the amended return box on your Form 40
and attach Form NOL-85 and/or Form NOL-85A.

Note: Part year residents are allowed the full exemption
amount. A dependent or student may take the personal
exemption even if claimed as a dependent by someone
else.

Line 14

Line 11

Dependent Exemption

Itemized or Standard Deduction

A “dependent” as defined under Alabama law is an
individual other than the taxpayer and his or her
spouse who received over 50% of his or her support
from the taxpayer during the tax year and is also related
to the taxpayer in one of the following relationships:

You have the option to either itemize your deductions or you may claim the optional Standard Deduction.
You should compute your deduction both ways to determine the option that gives you the larger deduction. If
you elect to claim the Standard Deduction on your return and it later becomes necessary to change to itemized deductions, you may do so by filing an amended
return.
If married and filing separate returns, both spouses
must claim the same deduction unless the spouses have
lived apart for the entire year, in which case each spouse
may claim either deduction. However, neither spouse
may claim a deduction for expenses paid by the other.
See the instructions for Schedule A for items that may
be claimed as an itemized deduction.
Part-year residents of Alabama may claim only the
itemized deductions actually paid during the period of
Alabama residency.
Itemized Deductions. If you elect to itemize your
deductions, you should check box a on line 11 and complete and attach Schedule A.
Standard Deduction. If you elect to claim the Standard Deduction, you must check box b on line 11 and
use the Standard Deduction chart on page 9 to determine your allowable deduction. A dependent or student
may take the standard deduction even if claimed as a
dependent by someone else.

Line 12
Federal Income Tax Deduction
Use your 2023 federal income tax return and the
Page 8

Son
Daughter
Stepson
Stepdaughter
Legally adopted child
Parent
Grandparent
Grandchild
Brother
Sister
Stepbrother
Stepsister
Stepmother

Stepfather
Mother-in-law
Father-in-law
Brother-in-law
Sister-in-law
Son-in-law
Daughter-in-law
If related by blood:
Uncle
Aunt
Nephew
Niece

NOTE: You cannot claim a foster child, friend, cousin,
yourself, or your spouse as a dependent under Alabama
law.
Birth or Death of Dependent. You can take an exemption for a dependent who was born or who died during 2023 if he or she met the qualifications for a
dependent while alive.
Support. You must have provided over 50% of the
dependent’s support in 2023. If you file a joint return, the
support can be from you or your spouse. You cannot
claim credit on an Alabama return for a dependent if you
provided less than 50% of the support under Alabama
law as you can under federal law in certain conditions.
In figuring total support, you must include money the

Standard Deduction
Married Filing Joint
____________________________
AL Adjusted Gross
Standard
Income (AL Line 10) Deduction
$8,500
$ 0 – $25,999
$8,325
$26,000 – $26,499
$8,150
$25,500 – $26,999
$7,975
$27,000 – $27,499
$7,800
$27,500 – $27,999
$7,625
$28,000 – $28,499
$7,450
$28,500 – $28,999
$7,275
$29,000 – $29,499
$7,100
$29,500 – $29,999
$6,925
$30,000 – $30,499
$6,750
$30,500 – $30,999
$6,575
$31,000 – $31,499
$6,400
$31,500 – $31,999
$6,225
$32,000 – $32,499
$6,050
$32,500 – $32,999
$5,875
$33,000 – $33,499
$5,700
$33,500 – $33,999
$5,525
$34,000 – $34,499
$5,350
$34,500 – $34,999
$5,175
$35,000 – $35,499
$5,000
$35,500 and above

Married Filing Separate
____________________________
AL Adjusted Gross Standard
Income (AL Line 10) Deduction
$4,250
$ 0 – $12,999
$4,162
$13,000 – $13,249
$4,074
$13,250 – $13,499
$3,986
$13,500 – $13,749
$3,898
$13,750 – $13,999
$3,810
$14,000 – $14,249
$3,722
$14,250 – $14,499
$3,634
$14,500 – $14,749
$3,546
$14,750 – $14,999
$3,458
$15,000 – $15,249
$3,370
$15,250 – $15,499
$3,282
$15,500 – $15,749
$3,194
$15,750 – $15,999
$3,106
$16,000 – $16,249
$3,018
$16,250 – $16,499
$2,930
$16,500 – $16,749
$2,842
$16,750 – $16,999
$2,754
$17,000 – $17,249
$2,666
$17,250 – $17,499
$2,578
$17,500 – $17,749
$2,500
$17,750 and above

Head of Family
____________________________
AL Adjusted Gross Standard
Income (AL Line 10) Deduction
$5,200
$ 0 – $25,999
$5,065
$26,000 – $26,499
$4,930
$26,500 – $26,999
$4,795
$27,000 – $27,499
$4,660
$27,500 – $27,999
$4,525
$28,000 – $28,499
$4,390
$28,500 – $28,999
$4,255
$29,000 – $29,499
$4,120
$29,500 – $29,999
$3,985
$30,000 – $30,499
$3,850
$30,500 – $30,999
$3,715
$31,000 – $31,499
$3,580
$31,500 – $31,999
$3,445
$32,000 – $32,499
$3,310
$32,500 – $32,999
$3,175
$33,000 – $33,499
$3,040
$33,500 – $33,999
$2,905
$34,000 – $34,499
$2,770
$34,500 – $34,999
$2,635
$35,000 – $35,499
$2,500
$35,500 and above

Single
____________________________
AL Adjusted Gross
Standard
Income (AL Line 10) Deduction
$3,000
$ 0 – $25,999
$2,975
$26,000 – $26,499
$2,950
$26,500 – $26,999
$2,925
$27,000 – $27,499
$2,900
$27,500 – $27,999
$2,875
$28,000 – $28,499
$2,850
$28,500 – $28,999
$2,825
$29,000 – $29,499
$2,800
$29,500 – $29,999
$2,775
$30,000 – $30,499
$2,750
$30,500 – $30,999
$2,725
$31,000 – $31,499
$2,700
$31,500 – $31,999
$2,675
$32,000 – $32,499
$2,650
$32,500 – $32,999
$2,625
$33,000 – $33,499
$2,600
$33,500 – $33,999
$2,575
$34,000 – $34,499
$2,550
$34,500 – $34,999
$2,525
$35,000 – $35,499
$2,500
$35,500 and above

Alabama Use Tax Worksheet

Column A

Column B

Column C

Report 2023 purchases for use in Alabama from out-of-state sellers
on which tax was not collected by the seller.

Total Purchase Price

Tax Rate

Tax Due –
(Multiply Col. A by Col. B)

1. All purchases EXCEPT automotive vehicles and farm machinery . . . . . . . . . . . . . .
2. ATVs, off-road motorcycles, riding lawnmowers, self-propelled construction
equipment and other automotive vehicles that are not titled or registered by
the county licensing official . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.04

3. Farm machinery or equipment and replacement parts thereof . . . . . . . . . . . . . . . . . .

.015

.02

4. TOTAL TAX DUE (Total of Column C). Carry this amount to Schedule ATP, Part I, line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 9

dependent used for his or her own support even if this
money was not taxable (for example: gifts, savings, welfare benefits). If your child was a student, do not include
amounts he or she received as scholarships.
Support includes items such as food, a place to live,
clothes, medical and dental care, recreation, and education. In figuring support, use the actual cost of these
items. However, the cost of a place to live is figured at its
fair rental value.
In figuring support, do not include items such as income taxes, social security taxes, premiums for life insurance, or funeral expenses.
If you qualify to claim your child and/or other individuals as your dependent, you must complete on page 2
Part III. The amount entered on page 2, Part III, line 2,
should be entered on page 1, line 14.
Use the following chart to determine the per-dependent exemption amount.
Amount on
Page 1, Line 10
0 - 50,000
50,001 - 100,000
Over 100,000

Dependent
Exemption
1,000
500
300

Line 17
Figuring Your Tax
You must figure your tax from the Tax Tables unless you are claiming a carryover or carryback Net Operating Loss from another year.
Indicate the method you are using by checking the
appropriate box. If you are claiming a Net Operating
Loss from another year, you must complete and attach
Form NOL-85A.

Line 18
Net Tax Due Alabama
If you are using tax credits to reduce your tax liability, Schedule OC must be completed in order to compute your net tax due. You must check the box to
indicate you are using Schedule OC to compute your net
tax due. If you do not have any tax credits, enter the
amount from line 17.

Credits - Schedule OC
Schedule OC must be completed for a credit claim
and Individual taxpayers must register to set up an account in My Alabama Taxes (MAT) at
www.myalabamataxes.alabama.gov for approval before
claiming certain credits on their tax return. Once logged
into MAT, a taxpayer will need to locate the “Individual
Income Tax” account type, then select “Submit a Credit
Claim” from the “Tax Incentives” section on the right margin of the page and follow a short series of steps to reserve their credit. For individuals who do not have a MAT
account or are unable to set up a MAT account, go to
the MAT homepage, select “Submit an Individual Credit
Claim” from the “Individuals” section on the main page
and follow a short series of steps to reserve your credit.
If the credit claimed on an individual income tax return is
from a Schedule K-1 issued by a pass through entity, the
credit claim will be submitted by the entity and no action
is required by the individual. Supporting documentation
for certain credits is required to be uploaded in MAT.
Taxpayers needing assistance with reserving a tax credit
may call (334) 353-9770 or (334) 353-0602.
While all tax credits are reported on Schedule OC,
some require a separate schedule to be completed be-

fore entering the results on Schedule OC and some require a MAT account to reserve their credit approval before submission on Schedule OC.
Please visit the Department’s website for more information on the Schedule OC and Schedule OC instructions for each of the following tax credits: Credit for
Taxes Paid to Other States, Alabama Enterprise Zone
Credit, Basic Skills Education Credit, Rural Physician
Credit, Coal Credit, Full Employment Act of 2011 Credit,
Veterans Employment Act – Employers Credit, Veterans
Employment Act- Business Start Up Expense Credit,
Credit For Taxes Paid to a Foreign Country, Qualified Irrigation System/Reservoir System tax Credit, Alabama
Accountability Tax Credit- School Transfer Credit, Alabama Accountability Act Credit – Scholarship Granting
Organization (SGO) credit, Alabama Adoption Credit,
2013 Alabama Historic Rehabilitation Tax Credit , Career Technical Dual Enrollment Credit, Investment Credit
– Alabama Jobs Act, Alabama Renewal Act – Port
Credit, Alabama Renewal Act – Growing Alabama
Credit, Apprenticeship Tax Credit, 2017 Alabama Historic Tax Rehabilitation Credit, Railroad Modernization
Act of 2019 Credit, Storm Shelter Credit, Volunteer
Emergency Responders Tax Credit, Innovate Alabama
Tax Credit, and the Income Tax Capital Credit. For more
information on credits see Schedule OC.
Credit for Taxes Paid to Another State. You must
complete Schedule CR and you must attach a copy of
other state’s return or W-2G’s if the taxing state does not
allow a return to be filed for gambling winnings.
The credit is provided to prevent the double taxation
of income and is only available to legal residents of Alabama filing Form 40 who have income from sources outside of Alabama that is being taxed by Alabama and
another state (or territory of the United States) in the
same tax year. Residents of Alabama for only a part of
the tax year can claim this credit only if the returns filed
with Alabama and the other state cover the same
periods.
If the state for which you are claiming a credit allows
for credits instead of personal exemptions, call (334)
242-1170 for further information in converting this credit
for Alabama purposes.
No credit is allowable when the income from sources
outside of Alabama is totally offset by a corresponding
deduction. However, income from sources outside of
Alabama that is reported on the return and not totally offset by a corresponding deduction may result in a credit.
In such cases the credit is limited to the lesser of the tax
actually due to the other state or territory or the amount
that would be due on the same income computed at the
income tax rate in Alabama. An example of this situation
is shown in the booklet in the instructions for Schedule
CR on page 22. The Schedule CR calculation should not
be used by a taxpayer who paid income tax to a foreign
country. Taxpayers who paid taxes to a foreign country
should use Section B, Part I of Schedule OC. Please see
rule 810-3-21-.03 for calculation of credit when tax was
paid to a foreign country.
For further information for Schedule CR see page
22.

Line 19
Additional Taxes
Please complete Schedule ATP to report consumer
use tax and Catastrophe savings tax, enter amount from
Schedule ATP, Part I, Line 3.
Consumer Use Tax: Review the purchases you
made during 2023. If you purchased items for use in Alabama from out-of-state sellers who did not charge sales
Page 10

or use tax, you owe consumers use tax on the items. If
you made no purchases from out-of-state sellers, enter
0 (zero) on Schedule ATP, Part I, line 1 and check the
box.
Use tax is the counterpart of the sales tax. State use
tax is imposed at the same rate and on the same type of
transactions as sales tax and is due from the consumer
when the sales tax is not collected. When you purchase
merchandise from a retail store or other business establishment in Alabama, the seller is required to collect
sales tax on the purchase. When you purchase merchandise from a business located outside of Alabama
the seller might collect use tax on the purchase. However, not all out-of-state businesses are registered and
required to collect Alabama tax. As the consumer, you
are responsible for ensuring that sales or use tax is paid
on your purchases. When you purchase merchandise
for storage, use or consumption in Alabama and the retail seller does not collect tax on the purchase, you must
report and pay consumer use tax on the purchase price.
Usually, these purchases are made from catalogs, over
the internet, or by telephone and include items such as:
 Clothing
 Books
 Computers
 Computer Software
 Furniture
 Magazine Subscriptions
 Sporting Goods
 Jewelry
 Electronic Equipment
 CDs, DVDs, Audio & Video Cassettes
 Photographic Equipment
 Musical Equipment
 Automotive Accessories and Parts
 ATVs
 Lawn and Garden Equipment

Applicable State Use Tax Rates
The general use tax rate of 4% applies to all purchases of merchandise, except where a different rate of
tax is expressly provided.
The automotive use tax rate of 2% applies to purchases of automotive vehicles. Where any used vehicle
is traded-in on the purchase of a new or used vehicle, the
tax is due on the trade difference, that is, the price of the
new or used vehicle purchased less the credit for the
used vehicle taken in trade. The county licensing official
will collect the tax due on purchases of automotive vehicles that are required to be titled or registered including purchases of automobiles, trucks, trailers, mobile
homes, and motor boats. Do not include purchases of
vehicles that are titled or registered in the calculation on
the worksheet on page 9. You must report and pay the
use tax due on other purchases of automotive vehicles including ATVs, off-road motorcycles, riding
lawnmowers, self-propelled construction equipment,
and other self-propelled instruments of conveyance.
The agriculture use tax rate of 1.5% applies to purchases of machinery or equipment used in connection
with the production of agricultural products, livestock, or
poultry on farms and the replacement parts for such machinery or equipment. Where any used farm machinery
or equipment is traded-in on the purchase of new or used
farm machinery or equipment, the tax is due on the trade
difference, that is, the price of the new or used machinery or equipment less the credit for the used machinery
or equipment taken in trade.
Local Use Tax: City and County use tax may also be
due and should be reported and paid to the appropriate
local tax authority. For information about reporting local

use tax please see the department’s web page at
www.revenue.alabama.gov.
You can use either the Alabama Use Tax Table on
page 11 or the worksheet on page 9 if you only have Internet or catalog purchases that do not include automotive vehicles, farm machinery, or farm machinery
replacement parts; otherwise use the worksheet on page
9 to compute Alabama Use Tax. For more information
regarding consumers use tax call (334) 242-1490.
Catastrophe Savings Tax: Withdrawals that exceed
the qualified catastrophe expenses during the taxable
year, must be included in income. This amount is taxed
at an additional 2.5% under Section 40-18-312 (d)(1) unless: (1) the taxpayer no longer owns a legal residence
that qualifies pursuant to Chapter 7, or (2) the distribution is made on or after the date on which the taxpayer
attains the age of seventy (70) years old and is a self-insured individual who chooses not to obtain insurance on
his or her legal residence. Enter the additional tax on
Schedule ATP, Part I, line 2.

Line 20
Alabama Election Campaign Fund
If you wish to make a voluntary contribution to Alabama’s Democratic Party or Republican Party indicate
the amount and party by checking the proper box(es) on
lines 20a or 20b.
Each individual may contribute $1 to either party. If
a joint return is filed, each spouse may contribute $1 to
either party. If you make a voluntary contribution to this
fund it WILL INCREASE your tax by the amount of the
contribution.

The total amount entered on line 20a or 20b cannot
exceed $2 for a married couple filing a joint return or $1
for all other filers.

Line 22
Alabama Income Tax Withheld
Enter the total Alabama income tax withheld as
shown on line 5A.

Line 23
2023 Estimated Tax Payments/
Automatic Extension Payment
Enter on this line any payments you made on your
estimated Alabama income tax (Form 40ES) for 2023 or
automatic extension (Form 40V).
CAUTION — DO NOT INCLUDE:
 The amount shown on line 29 of your 2022 Form
40. This is the balance you owed for the tax year 2022,
and cannot be claimed as paid on your 2023 estimated
tax even though you paid it in 2023.
 Any overpayment from 2022 that was refunded
to you.
If you and your spouse paid joint estimated tax but
are now filing separate Alabama income tax returns, either of you may claim all of the amount paid, or you can
each claim a part of it. Please be sure to show both social security numbers on the separate returns. If you and
your spouse paid separate estimated tax but are now filing a joint income tax return, add the amounts you each
paid.

Alabama Use Tax Table
for General Internet and Catalog Purchases
Purchases Subject to Use Tax
At least
But less than
Use Tax Due
0 ........
50 . . . . . . . .
1
50 . . . . . . . .
100 . . . . . . . .
3
100 . . . . . . . .
150 . . . . . . . .
5
150 . . . . . . . .
200 . . . . . . . .
7
200 . . . . . . . .
250 . . . . . . . .
9
250 . . . . . . . .
300 . . . . . . . . 11
300 . . . . . . . .
350 . . . . . . . . 13
350 . . . . . . . .
400 . . . . . . . . 15
400 . . . . . . . .
450 . . . . . . . . 17
450 . . . . . . . .
500 . . . . . . . . 19
500 . . . . . . . .
550 . . . . . . . . 21
550 . . . . . . . .
600 . . . . . . . . 23
600 . . . . . . . .
650 . . . . . . . . 25
650 . . . . . . . .
700 . . . . . . . . 27
700 . . . . . . . .
750 . . . . . . . . 29
750 . . . . . . . .
800 . . . . . . . . 31
800 . . . . . . . .
850 . . . . . . . . 33
850 . . . . . . . .
900 . . . . . . . . 35
900 . . . . . . . .
950 . . . . . . . . 37
950 . . . . . . . . 1,000 . . . . . . . . 39
1,000 . . . . . . . . 1,050 . . . . . . . . 41
1,050 . . . . . . . . 1,100 . . . . . . . . 43
1,100 . . . . . . . . 1,150 . . . . . . . . 45
1,150 . . . . . . . . 1,200 . . . . . . . . 47
1,200 . . . . . . . . 1,250 . . . . . . . . 49

Purchases Subject to Use Tax
At least
But less than
Use Tax Due
1,250 . . . . . . . . 1,300 . . . . . . . . 51
1,300 . . . . . . . . 1,350 . . . . . . . . 53
1,350 . . . . . . . . 1,400 . . . . . . . . 55
1,400 . . . . . . . . 1,450 . . . . . . . . 57
1,450 . . . . . . . . 1,500 . . . . . . . . 59
1,500 . . . . . . . . 1,550 . . . . . . . . 61
1,550 . . . . . . . . 1,600 . . . . . . . . 63
1,600 . . . . . . . . 1,650 . . . . . . . . 65
1,650 . . . . . . . . 1,700 . . . . . . . . 67
1,700 . . . . . . . . 1,750 . . . . . . . . 69
1,750 . . . . . . . . 1,800 . . . . . . . . 71
1,800 . . . . . . . . 1,850 . . . . . . . . 73
1,850 . . . . . . . . 1,900 . . . . . . . . 75
1,900 . . . . . . . . 1,950 . . . . . . . . 77
1,950 . . . . . . . . 2,000 . . . . . . . . 79
2,000 . . . . . . . . 2,050 . . . . . . . . 81
2,050 . . . . . . . . 2,100 . . . . . . . . 83
2,100 . . . . . . . . 2,150 . . . . . . . . 85
2,150 . . . . . . . . 2,200 . . . . . . . . 87
2,200 . . . . . . . . 2,250 . . . . . . . . 89
2,250 . . . . . . . . 2,300 . . . . . . . . 91
2,300 . . . . . . . . 2,350 . . . . . . . . 93
2,350 . . . . . . . . 2,400 . . . . . . . . 95
2,400 . . . . . . . . 2,450 . . . . . . . . 97
2,450 . . . . . . . . 2,500 . . . . . . . . 99

If purchases are over $2,499 use the Alabama Use Tax Worksheet on page 9

These instructions also apply if your spouse died during the year.
Name Change. If you changed your name because
of marriage, divorce, etc., and you made estimated tax
payments using your former name, attach a statement to
Form 40 explaining all the payments you and your
spouse made in 2023 and the name(s) and social security number(s) under which you made the payments.
Caution: It is very important that the social security numbers be the same on your current return, your last year’s
return, and all of your estimate vouchers. The Department will be unable to allow you proper credit for your
payments unless the numbers are the same. If the Department is unable to verify the amount claimed, you
may be requested to submit copies of all your canceled
checks substantiating