What Alabama actually takes from a 401(k) withdrawal, a pension, and Social Security — in dollars, against the state’s own brackets and exclusions rather than a yes-or-no list.
Long-term index-fund growth after expense-ratio drag — and what your state takes from the gains at withdrawal.
When your RMDs start under SECURE 2.0, how much this year's is, and what missing it costs.
2026 limits, employer match, the 60-63 super catch-up, and whether the Roth catch-up mandate applies to you.
A required minimum distribution is ordinary income, taxed at your top bracket and often pushing you into the next one. Here is the federal tax on RMDs from $20,000 to $75,000 at different income levels, why the default 10% withholding usually leaves a bill, how to avoid an underpayment penalty, and the three side effects that make the real rate higher than the bracket.
The required minimum distribution on every common balance at every age from 73 to 95, worked from the IRS table, plus what happens to the account over twenty years of withdrawals at 0%, 5% and 7% returns. The short version: the share you must take rises every year, and at good returns the dollar amount keeps rising with it.
What moving actually saves, on your own income mix rather than a headline rate — and how to establish domicile so the state you left cannot follow you.
Which account to draw first, priced. The three cliffs a withdrawal can cross without warning, the conversion window almost nobody uses, and why the order is the last big decision you can still change.
Alabama guide
On the ordinary retirement profile — $34,000 of Social Security and $61,000 of plan distributions — Alabama takes $2,785 a year in state income tax.
That is the number people compare, and it is the smallest of three. Property tax adds about $1,072 on the state's $282,139 median home, and insurance another $3,140. The three together come to $6,997, placing Alabama 22nd of 50.
A note before you start. This is general education, not tax advice. Every Alabama figure comes from this site's own fifty-state income-tax dataset and its retirement tax engine, computed for a single filer aged 70 unless stated otherwise; property tax, median home price and insurance figures come from the site's core state dataset. Rates are for tax year 2025. Property tax is assessed locally in most states, so the effective rate here is a statewide figure rather than your county's.
On Social Security. Fully exempt with no income threshold and no age condition. 'Federal Social Security benefits' appears on the Alabama Form 40 instructions' list of Examples of Income You DO not Report, alongside Federal Railroad Retirement benefits, which receive identical treatment. Because the item is on the do-not-report list rather than handled as a subtraction, the benefit never enters Alabama gross income at all — there is no worksheet, no threshold comparison and nothing for a filer to compute.
On 401(k) and IRA distributions. Fully taxable, and this is the sharpest divide in Alabama's treatment of retirement income. Distributions from IRAs, SEPs, Keogh plans, 401(k)(2) plans, 403(b) plans and profit-sharing plans are reported on Schedule RS and taxed at ordinary rates. Alabama's exemption is keyed to plan type, not to age or income: a defined benefit plan is exempt in full while a defined contribution plan is fully taxed, which means the private-sector retiree living on a 401(k) is taxed and the one living on a traditional employer pension is not. There is no age trigger, no dollar exclusion and no income limit to soften it. the $6,000 exclusion for taxpayers 65 and older that many guides still describe could not be confirmed as operative for tax year 2025 and is not modelled here. Alabama Act 2022-297 created an exemption of up to $6,000 of distributions from defined contribution plans for taxpayers aged 65 or over, effective for tax years beginning after December 31, 2022.
Read the full Alabama guide →18 min read · Updated 2026-09-03