Taxes in Madison
Alabama's near-flat 5% income tax applies to Madison residents the same as anywhere else in the state, layered with a real, disclosed cross-source spread on the combined sales tax rate (9%-10.5%) and a real, disclosed within-city property tax variance by ZIP code.
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Learn moreAlabama's graduated income tax -- restated as place-level context
Alabama applies a graduated state income tax: 2% up to $500 (single)/$1,000 (MFJ), 4% from there to $3,000/$6,000, and 5% above -- effectively near-flat 5% for most earners given how low that top threshold sits. Alabama is also one of only three states letting taxpayers deduct federal income taxes paid from state taxable income, a real, meaningful offset -- this applies identically to Madison residents as anywhere else in Alabama.
Madison's combined sales tax: a real, disclosed spread
One source's own component breakdown (4.0% state + 3.5% city + 0.5% county) sums to 9%, while a separate source cited a 9.6% headline (with a further 10.5% figure for certain special districts) -- not reconciled this pass. Confirm the current, address-specific rate directly before budgeting a major purchase.
Property tax: a real, disclosed within-city variance by ZIP code
Madison's median effective property tax rate runs 0.68% overall (above Alabama's cited 0.47% state median, below the ~1.02% national median), but this varies by ZIP code: 0.69% in 35758 vs. 0.51% in 35757 -- confirm the actual current rate for a target property's specific ZIP.
No state estate or inheritance tax
Alabama levies no state estate tax or inheritance tax. Confirm current guidance directly for any actual estate-planning decision, since sufficiently large estates may still owe the federal estate tax.
Key takeaways
- Alabama's graduated income tax runs near-flat 5% for most earners, softened by a real, uncapped federal-tax-deduction offset.
- Madison's combined sales tax rate showed a real, disclosed spread (9%-10.5%) across sources this pass.
- Property tax shows a real, disclosed within-city variance by ZIP code (0.51%-0.69%) -- confirm the specific rate for a target property.
- Alabama levies no state estate or inheritance tax, though the federal estate tax can still apply to sufficiently large estates.
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