
Payroll and Benefits Guide United States – Alabama
Last updated: Mar 22, 2023
Contributions
Employer
Employer Payroll Contributions
11.60% – 23.15% | Total Employment Cost |
0.20%- 6.80% * includes 0.6% stabilization Tax (Maximum taxable wages is 8,000.00 USD) | Unemployment Insurance (State) |
2.70% (Maximum taxable wages is 8,000 USD) | Unemployment- New Employer (State) |
6.20% (Maximum wage limit 160,200.00 USD) | FICA Social Security (Federal) |
1.45% | FICA Medicare (Federal) |
0.60-6.00% (Maximum taxable wages is 7,000 USD) | FUTA (Federal Unemployment Tax Act)
FUTA tax rate is 6.0% with a taxable wage base of 7,000 USD. However, if states operate their unemployment insurance programs in compliance with federal law, then the FUTA tax is reduced (credit) by 5.4% to 0.6%. |
Employee
Employee Payroll Contributions
7.65% – 8.55% | Total Employee Cost |
6.20% (Maximum taxable wages 160,200.00 USD) | FICA Social Security (Federal) |
1.45% | FICA Medicare (Federal) |
0.90% | (Additional tax on earnings over 200,000 USD) (High-income earners also pay an additional 0.9 percent in Medicare taxes) |
Employee Income Tax
State Income Tax – Single Filers | |
2.00% | Up to 500.00 USD |
4.00% | 500.00 USD – 3,000.00 USD |
5.00% | 3,000.00 USD and over |
State Income Tax – Married taxpayers filing jointly | |
2.00% | Up to 1,000.00 USD |
4.00% | 1,000.00 USD – 6,000.00 USD |
5.00% | 6,000.00 USD and over |
Standard Deduction and Personal Exemption | |
Single | 2,500.00 USD |
Couple/Married Filing Jointly | 7,500.00 USD |
Personal exemption | |
Single | 1,500.00 USD |
Couple /Married Filing Jointly | 3,000.00 USD |
Dependent | 1,000.00 USD |
Federal Employee Income Tax | |
Federal Tax – Singles | |
10.00% | Up to 11,000 USD |
12.00% | 11,001 USD to 44,725 USD |
22.00% | 44,726 USD to 95,375 USD |
24.00% | 95,376 USD to 182,100 USD |
32.00% | 182,101 USD to 231.250 USD |
35.00% | 231,251 USD to 578,125 USD |
37.00% | 578,126 USD or more |
Federal Tax – Married, filing jointly | |
10.00% | Up to 22,000 USD |
12.00% | 22,001 USD to 89,450 USD |
22.00% | 89,451 USD to 190,750 USD |
24.00% | 190,751 USD to 364,200 USD |
32.00% | 364,201 USD to 462,500 USD |
35.00% | 462,501 USD to 693,750 USD |
37.00% | 693,751 USD or more |
Federal Tax – Heads of Households | |
10.00% | Up to 15,700 USD |
12.00% | 15,701 USD to 59,850 USD |
22.00% | 59,851 USD to 95,350 USD |
24.00% | 95,351 USD to 182,100 USD |
32.00% | 182,101 USD to 231,250 USD |
35.00% | 231,251 USD to 578,100 USD |
37.00% | 578,101 USD or more |
Standard Deduction and Personal Exemption | |
13,850.00 USD | Single |
27,700.00 USD | Married Filing Jointly |
20,800.00 USD | Head of Household |
Minimum Wage
General
Alabama does not have a minimum wage and therefore, the federal minimum wage is used which is 7.25 USD per hour.
There are also other minimum wage requirements:
- Youth minimum wage: 4.25 USD per hour
- Minimum cash wage: 2.13 USD per hour
- Maximum tip credit: 5.12 USD per hour
Payroll
Payroll Cycle
Employees are generally paid monthly or semi-monthly.
13th Salary
There are no provisions in the law regarding 13th salaries.
Working Hours
General
In Alabama, the workweek is a maximum of 40 hours per week or 8 hours per day.
Overtime
Alabama adheres to the Fair Labour Standards Act (FLSA), and work in excess of 40 hours per week is considered overtime and paid at the rate of 150% of the regular pay. If employees are scheduled to work on weekends or rest days, no additional payment is required. However, should an employer request an employee to work in exceptional circumstances on these days, then overtime is paid at the rate of 150% of the regular pay.
Working Week
Monday-Friday
Leave
Termination
VISA
VAT
Stay up to date on payroll & employment law changes
Version History

See how Papaya can help you automate your global payroll or EoR whilst staying 100% compliant with local labor laws
Payroll and Benefits Guide
in United States – Alabama
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
Day | Date | Holiday | Notes |
---|---|---|---|
Sunday | Jan-1 | New Year's Day | |
Monday | Jan-16 | Martin Luther King Jr. Day | |
Monday | Feb-20 | President's Day | |
Monday | May-29 | Memorial Day | |
Monday | Jun-19 | Juneteenth Independence Day | |
Tuesday | Jul-4 | Independence Day July | |
Monday | Sep-4 | Labor Day | |
Monday | Oct-9 | Columbus Day | |
Friday | Nov-10 | Veterans Day | |
Thursday | Nov-23 | Thanksgiving Day | |
Monday | Dec-25 | Christmas Day |
Questions & Answers