Alabama Payroll Instructions

Alabama has state income tax withholding, using four tables to calculate standard deductions for different types of taxpayers. Alabama is one of a few states that use a step table to calculate deductions as well as tax withholding. They are unique in using yet another step table to change the deduction for each exemption. The calculated deduction amounts changed for 2023. Alabama formulas have changed 6 times in the past 33 years.

HINT: We provides free updates for Alabama and federal payroll tax tables in our payroll software. Click here to download the latest withholding tables for Alabama.

Alabama State Withholding Instructions

To enter withholding information for an employee in your Goldenseal company file, follow these steps:

  1. Choose Employees from the Accounts menu.
  2. Locate the employee's record.
  3. Click the Payroll Setup button.
  4. Enter the employee's marital status into the Marital Status field.
  5. Enter the number of federal dependents into the Federal Exemptions field.
  6. Enter the number of Alabama dependents into the State Exemptions field.
  7. Enter one of the 15 Alabama tax packages. Choose O, S, M, MS or H depending on the employee's marital status. Choose Old W4 if they use a pre-2020 old style W4 form. Choose New W4 Line2- if they did not check the box for Step 2 on the new style W4, and choose New W4 Line2+ if they checked it. Yes, this is very complicated! Luckily you only do it once.
  8. Click OK.

Alabama State Unemployment Tax Instructions

Alabama state unemployment tax is paid on the first $8,000 of each employees annual wages (no change from last year). In 2023 the rate for new businesses is 2.70%, followed by a variable rate of 0.65% – 6.8% that depends on payroll volume and unemployment claims by employees.

To enter your Alabama state SUTA tax rate into Goldenseal construction payroll software, follow these steps:

  1. Choose Payroll Setup from the Costs menu, and choose Tax Items.
  2. You'll see a list of Tax Items. Open the Alabama SUTA item. HINT: If you don't see SUTA in the list, you'll need to import Alabama payroll info first.
  3. Enter the percentage rate that you pay into the percentage field to the right of Calculation method.
  4. If the cutoff amount has changed, enter it into the dollar field to the right of the First Adjustment field.

Alabama Marital Status

Use the following to determine the value for the Marital Status popup menu in each Employee account:

  • S Single- single employee with one personal exemption (S table)
  • M Married- married employee with two personal exemptions (M table)
  • MS Dual Income- married employee with one personal exemption (MS table)
  • H Head of House- employee claims Head of Family status
  • O Other- no or manual withholding

An additional deduction of Annual Federal tax withheld is already factored into the Alabama state withholding calculation.

State Tax Contacts

Website

Official State Lawn Ornament

Pink plastic flamingo wearing football helmet.