Alabama has made the following changes to their tax code for the 2023 tax year:
Standard Deduction and Dependent Exemption – There are increases to the standard deduction and changes to the threshold for the dependent exemption. See page 9 for updated standard deduction chart and page 10 for updated dependent exemption chart.
Certain tax credits are now required to be pre-approved through My Alabama Taxes (MAT) at www.myalabamataxes.alabama.gov. Please see the credit instructions in this booklet and Schedule OC instructions for more information.
Retirement Exemption - the first $6000 of taxable retirement income is exempt from your Alabama income if you are age 65 or older.
Volunteer Emergency Responders Credit - Firefighters and paramedics with 30 or more hours of qualifying training during the tax year can apply for this credit.
Innovative Alabama Tax Credit - a tax credit to taxpayers making a cash contribution to economic development organizations (EDO) approved by Innovate Alabama.
Adoption Credit - credit is increased to $2000 for qualifying and parents that are residents of Alabama.