Is Social Security Taxable?
From Tax Guide.
Tax Guide · Arab, Alabama
Senior Tax Breaks in Alabama: Taxes at Age 65 and Older
Turning 65 can change your taxes. See how Alabama treats Social Security and retirement income, and which federal senior tax rules may apply to you.
The short answer
What tax breaks do seniors get in Alabama?
Alabama does not tax Social Security benefits, exempts many traditional pensions, and gives people 65 and older a partial exclusion for other retirement income.
For many retirees, Alabama treats income differently from the federal return, and the details matter. Social Security benefits are not taxed by Alabama, and neither are military retirement pay or unemployment compensation. Many traditional (defined benefit) pensions are exempt as well.
For other retirement income, people age 65 and older receive a partial exclusion. Withdrawals from an IRA or a 401(k) can otherwise be taxable in Alabama. Our guide on retirement income and Alabama taxes goes into more detail.
Alabama also lets taxpayers deduct federal income tax paid, so a change on the federal return can change the Alabama return. This article is general information, and the rules change, so we confirm the current ones for your return.
Federal rules
What federal tax rules change at age 65?
At 65 the federal return offers a few age-based features, including an additional standard deduction, and some retirement account rules also start to apply.
The IRS gives taxpayers who are 65 or older an added amount on top of the standard deduction. The dollar figure is set each year, so we do not list it here. If you choose between taking the standard deduction and itemizing, our guide on the standard deduction versus itemizing can help you think it through.
Social Security benefits may be partly taxable on the federal return, depending on your other income. See whether Social Security is taxable for the basics.
Owners of traditional retirement accounts are generally required to begin taking withdrawals at an age the government sets, and those required withdrawals count as income. Missing one can lead to a penalty, so it is worth knowing when your first one is due.
- Additional standard deduction for age 65 and older.
- Social Security that may be partly taxable.
- Required withdrawals from traditional IRAs and 401(k) plans.
- Medicare premiums and other medical costs, which may be deductible if you itemize.
Income sources
How is each type of retirement income taxed?
Different kinds of retirement income are taxed differently, so it helps to see them next to each other.
The table is a general guide. Your own mix of income decides how it fits together.
| Type of income | Alabama (general) | Federal (general) |
|---|---|---|
| Social Security benefits | Not taxed | May be partly taxable |
| Traditional (defined benefit) pension | Often exempt | Generally taxable |
| IRA or 401(k) withdrawals | Can be taxable; partial exclusion at 65+ | Generally taxable |
| Military retirement pay | Not taxed | Generally taxable |
| Interest and dividends | Generally taxable | Generally taxable |
General information only. Exceptions apply, and we check how the rules fit your situation.
Other savings
Do I have to file a tax return after I retire?
Retiring does not automatically end the need to file, because your requirement depends on your income and the type of income you receive, not on your age alone.
A retiree who has Social Security only may not need to file, while another with a pension, retirement account withdrawals, interest or part-time work might. Filing can also be worthwhile if tax was withheld and you want to claim it back.
Without a paycheck, no one is automatically withholding for you. If you receive a pension or take retirement account withdrawals, you can often ask the payer to withhold tax, or you may need to make estimated payments during the year. Our article on adjusting your withholding explains the basics.
Planning ahead also helps with how and when you take retirement money. See retirement savings and your taxes.
Property and scams
What else should seniors watch for at tax time?
Beyond income tax, seniors often deal with property tax questions and with scammers who pose as the IRS.
Some counties offer property tax exemptions for homeowners of a certain age. Those are handled by your county tax office rather than on your income tax return, so ask them what applies where you live.
The IRS generally makes first contact by mail, not by phone call, text or email. Anyone who demands immediate payment by gift card, wire transfer or cryptocurrency is not the IRS. If you receive a suspicious call or letter, do not give out your Social Security number or bank information. Hang up, keep a copy of anything in writing, and call our office.
Do not send documents through our website. Bring them in or call.
- Keep records of medical costs, property taxes and charitable gifts if you itemize.
- Bring Forms SSA-1099 and 1099-R with your other papers.
- Tell your preparer about any change in marital status or a spouse's death.
How we can help
How Melton Tax Services can help
Our office prepares federal and Alabama income tax returns for retirees and older adults.
Bring your benefit statements, pension and retirement account forms, and last year's return, and we will go through them with you. See our income tax preparation service or contact our office.
You can also call 256-586-4635. We serve Arab and the surrounding area.
Answers
Questions about taxes for seniors 65+
Does Alabama tax Social Security?
No. Alabama does not tax Social Security benefits. The federal return may tax part of them, depending on your other income.
Is my pension taxable in Alabama?
Many traditional (defined benefit) pensions are exempt in Alabama. Other retirement income is treated differently, so bring your forms and we check how each one applies.
Are IRA and 401(k) withdrawals taxed in Alabama?
They can be. People 65 and older receive a partial exclusion for certain retirement income, but it does not cover everything, and we check what applies.
Do I still need to file if my only income is Social Security?
Often not, but it depends on your other income and situation. Bring your statement and we can tell you.
Can I deduct my medical expenses?
Medical costs may be deductible if you itemize and they are high enough, under rules the IRS sets. For many people the standard deduction ends up being the better choice.
Will a change in my federal return change my Alabama return?
It can. Alabama lets you deduct federal income tax paid, so a change on the federal side often changes the Alabama side too.
Read next
Related reading
Is Retirement Income Taxed in Alabama?
From Tax Guide.
Standard Deduction or Itemizing: Which Is Right?
From Tax Guide.
Retirement Savings and Taxes: IRA, 401(k), Roth
From Tax Guide.
Income Tax Services
A service Melton Tax Services provides.
Melton Tax Services
Questions about your taxes or your business?
Our team in Arab is just a phone call away, and we are glad to talk it through with you.