According to the Alabama website, all income is to be reported on your Alabama return and is subject to Alabama tax unless it is specifically exempt by state law.
Examples of income you must report include wages, dividends, interest, business income, alimony, life insurance and pensions.
Income that is not reported to Alabama includes retirement benefits, social security benefits, child support, gifts and combat pay.
For a complete list of income that needs to be reported and income that is excluded, please refer to the Alabama instructions.