Each year, PARCA uses data from the U.S. Census Bureau’s Annual Survey of State and Local Finances
to compare Alabama’s tax collections to all 50 states. The most recent data comes from the
2023 Fiscal Year.
Key findings from this year’s report, How Alabama Taxes Compare, 2025:
- In FY 2023, adjusted for population, Alabama collected less in state and local taxes than all but
two other states, Tennessee and Mississippi, both of which cut taxes significantly in recent years. - Alabama’s per capita property tax collections are the lowest in the nation. That can help owners
of homes, farms, and timberland but comes at the cost of a revenue deficit, leaving state and
local governments with less to spend providing government services like education, health, and
public safety. - Alabama’s state and local sales tax rates are among the highest in the U.S., compensating for low
property taxes. - Alabama’s income tax, while technically graduated, does not provide the balancing effect on the
regressivity of the entire tax system that graduated income taxes in other states do. Low-income
workers begin paying taxes at a lower threshold than in any other state, and brackets top out at a
low threshold as well. At the other end of the spectrum, Alabama is the only state that allows a full
deduction for federal income taxes paid, a tax break that benefits high-income earners.
Read the full report below or click the link here.