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Taxes
Alabama Payroll Taxes 2026: Complete Overview for Employers
Alabama graduated 2%–5% income tax, SUI on the first $8,000, and all employer tax obligations explained.
Practical guides on AL payroll taxes, employer registration, SUI, minimum wage, and labor laws — written for small business owners, not accountants.
Written by payroll professionals at Pacific Data Services — trusted since 1969.
Alabama’s graduated income tax ranges from 2% to 5%, with a unique deduction for federal income taxes paid that lowers the effective rate.
At $8,000, Alabama’s SUI wage base is among the lowest nationally, keeping unemployment insurance costs manageable for employers.
Alabama law requires most employers to pay employees at least semi-monthly, with final wages due on the next regular payday.
Alabama graduated 2%–5% income tax, SUI on the first $8,000, and all employer tax obligations explained.
Get your EIN, register with Alabama, set up withholding, new hire reporting — the complete checklist.
New employer rate 2.7%, experienced range 0.20%–5.40%, wage base $8,000.
Alabama minimum wage $7.25/hr. Alabama has no state minimum wage law; the federal minimum of $7.25/hr applies statewide.
IRS classification rules, Alabama-specific considerations, misclassification penalties.
Gusto vs Paychex vs QuickBooks vs ADP — detailed comparison for Alabama small businesses.