Alabama payroll taxes
Every tax withheld from a Alabama paycheck or paid by the employer in 2026, with rates and wage limits.
Last verified November 2, 2026. Sources: oui.doleta.gov, taxfoundation.org, oregon.gov.
| Tax | Employee pays | Employer pays | Wage limit |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $184,500 |
| Medicare | 1.45%* | 1.45% | No limit |
| FUTA | — | 0.6% | $7,000 |
| Alabama SUTA | — | 2.7% (new) | $8,000 |
| Alabama income tax | 2%–5% | — | — |
*Plus 0.9% Additional Medicare Tax withheld on wages over $200,000. FUTA rate shown is net of the state credit.
State unemployment insurance
Alabama charges new employers 2.7% on the first $8,000 each employee earns in a year. After a few years, the rate is based on the employer's layoff history and ranges from 0.2% to 5.4%. Wage base fixed by statute. Patriot shows 0.59%-6.19% including the shared-cost assessment; the DOL and Equifax ranges are used here.
Employment Security Assessment (0.06%) is included in the assigned rate
Register and file with the Alabama unemployment tax agency.
Income tax withholding
Alabama has a graduated income tax with 3 brackets, from 2% up to 5% on taxable income over $3,000 for single filers. Occupational license taxes in some cities/counties (e.g. Birmingham 1%, Bessemer 1%, Gadsden 2%, Macon County 1%) withheld from wages
Frequently asked questions
- What payroll taxes do employers pay in Alabama?
- Social Security, Medicare, federal unemployment (FUTA) and Alabama unemployment insurance (SUTA).
- What is the Alabama SUTA wage base for 2026?
- $8,000 per employee.
- Does Alabama require state income tax withholding?
- Yes. Employers withhold Alabama income tax based on the employee's state withholding certificate or federal W-4.