Alabama Bonus Tax Calculator 2026

Five percent, if your employer chooses it

The Department of Revenue's booklet Withholding Tax Tables and Instructions for Employers and Withholding Agents (revised January 2026) handles bonuses in a single sentence: employers "may withhold state income tax from bonuses and supplemental wage payments at the rate of 5%." On the standard example — a $5,000 bonus for someone paid $3,000 every two weeks — that is $250.00 for Alabama and a net check of $3,267.50. A $20,000 year-end bonus would carry $1,000.00 of Alabama tax.

Because the wording is "may," an employer can instead treat the bonus as part of a regular payroll and run Alabama's formula. The booklet says that formula must be used when an employee's salary exceeds the printed tables.

Form A-4 still matters for your regular pay

Alabama does not accept the federal W-4. Employees file Form A-4 and claim "0", "S", "M", "H" or "MS" exemption status; an employee who never files one is withheld at zero exemptions. Those choices change regular paychecks but not a flat-rate bonus, which ignores exemptions entirely.

City and county taxes are separate

Several Alabama localities levy occupational license taxes on wages. They are not part of state withholding and are not in the 5%. If your employer withholds one, enter its rate in the local field above so the net check matches your stub.