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Taxes
Alabama Payroll Taxes 2026: Complete Overview for Employers
Alabama graduated 2%–5% income tax, SUI on $8,000, and all employer obligations.
Practical, accurate resources for Alabama small business owners — covering payroll taxes, labor laws, and compliance. Written by the payroll professionals at Pacific Data Services.
Alabama graduated 2%–5% income tax, SUI on $8,000, and all employer obligations.
How to register with Alabama Department of Revenue and Alabama Department of Labor as a new Alabama employer.
New employer rate 2.7%, experienced range 0.20%–5.40%, wage base $8,000.
Alabama minimum wage is $7.25/hr. Alabama has no state minimum wage law; the federal minimum of $7.25/hr applies statewide.
Semi-monthly pay required. Final pay: Final wages are due on the next regular payday after separation..
FICA, Social Security, Medicare, FUTA, federal withholding — the complete breakdown.
EIN, state registration, withholding setup, new hire reporting — complete checklist.
IRS classification rules, Alabama-specific considerations, and misclassification penalties.
IRS lookback period, deposit thresholds, next-day rule, EFTPS, and penalties.
Federal and Alabama new hire reporting requirements, deadlines, and penalties.
FLSA, IRS, and Alabama recordkeeping — what to keep, how long, and why.
ALE threshold, penalties, 1094-C/1095-C filing, small business exemption.
Misclassifying workers, wrong withholding, missed deposits — mistakes that add up fast.
Gusto vs Paychex vs QuickBooks vs ADP for Alabama small businesses.
Federal OT after 40 hrs/week, Alabama overtime rules, exemptions, salary thresholds.