Alabama Property Tax

Calculating Property Taxes in Alabama

Local governments in Alabama determine your property tax bill based on the assessed value of your property and the total millage rate applied by counties, municipalities, and school districts.

Property tax calculation: Alabama property taxes are calculated by multiplying your property’s assessed value (10% of the appraised market value for residential real estate) by the combined local millage rate (expressed per $1,000 of assessed value).

(Appraised Value × 0.10) ÷ 1,000 × Total Mill Rate = Property Tax Owed

New and recent laws: There have been no major statewide changes to property tax calculations in Alabama in recent years.

National comparison: Alabama’s average effective property tax rate is 0.41%, making it the second lowest in the United States, which positions Alabama as a relatively tax-friendly state for landlords compared to the national average of 0.90%.

County/Municipality-Specific Rates

Alabama’s average effective property tax rate is just 0.41%, but what you owe depends on your property’s location. Millage rates vary by county, city, and school district, which can significantly impact your final tax bill.

Jefferson County: As Alabama’s most populous county and home to Birmingham, Jefferson County has one of the highest effective tax rates in the state at approximately 0.71%.

Madison County: Located in northern Alabama, Madison County carries an effective rate of around 0.52%.

Mobile County: Positioned along the Gulf Coast, Mobile County has an average effective tax rate of approximately 0.47%.

Baldwin County: Directly east of Mobile, Baldwin County is one of the fastest-growing regions in Alabama. Its effective tax rate sits at a relatively low 0.36%, making it one of the most tax-friendly counties in the state for landlords.

Tuscaloosa County: Home to the University of Alabama, Tuscaloosa County has an effective property tax rate of around 0.44%.

Reassessments and Increases

Reassessment frequency: Most Alabama counties reappraise properties every four years, though some may reassess more frequently if local regulations or significant development warrant a market review.

Renovations and improvements: Major updates to a rental property, such as additions, structural remodels, or new buildings, can trigger a reassessment before the standard cycle. These alterations may result in a higher appraised value and, consequently, a larger property tax bill. 

Reassessment impact: Even without renovations, your taxes may rise if the local market increases, a transfer of ownership occurs, or tax levies change. Keeping up with assessment notices is crucial for managing costs effectively.

Reducing Taxes and Exemptions

Alabama offers several exemptions that may reduce your property tax bill, especially if you live in a rental property, are a senior, disabled, or a veteran. Even if you don’t qualify today, your eligibility may change if you move into the property, retire to it, or transfer ownership.

Appeals: You can appeal your property’s assessed value within 30 days of receiving your valuation notice. Supporting documents like appraisals or comps can help lower your tax liability, even without exemptions.

Homestead: Landlords who own and occupy a rental property as their primary residence may qualify for a homestead exemption on up to 160 acres, which reduces both state and local taxes.

Senior citizens: If you’re 65 or older and earn $12,000 or less, you may be eligible for a full exemption on property taxes for your residence and adjacent land (Ala Code Sec. 40-9-21).

Disabled persons: Individuals who are completely disabled and have an annual taxable income of $12,000 or less may also qualify for a full exemption on their home and up to 160 acres of land.

Veterans: Veterans who acquired their home through the National Service Life Insurance program (38 USC Sec. 701) may be eligible for a full exemption, as can their unremarried surviving spouse.

Nonprofit, religious, and educational use: Properties used exclusively for charitable, religious, educational, or scientific purposes may be fully exempt under state law.

Property Tax Deductions

Tax deductions: Alabama landlords can deduct property taxes as a rental business expense when filing federal income taxes. You may also deduct other qualifying expenses, such as mortgage interest, insurance, maintenance, repairs, utilities, and depreciation. These fall under standard rental property accounting practices and can help lower your taxable rental income.

Forms: Most landlords will use Schedule E (Form 1040) to report rental income and expenses. If you’re providing substantial services to tenants, such as daily cleaning, meals, or short-term hospitality, you may need to file using Schedule C instead.

How Often You Pay Taxes

Payment frequency: In Alabama, property taxes are billed annually, rather than in installments, unlike in some other states. The property tax year runs from October 1 through September 30 of the following year.

Due dates: Property taxes are due on October 1 and must be paid by December 31 to avoid delinquency. The state does not split payments into multiple installments, so the full amount is due by year’s end.

Late payments: Taxes not paid by December 31 are considered delinquent, and interest, penalties, and the risk of a tax lien begin to apply starting January 1.

How to pay: Payments are submitted through your county Revenue Commissioner’s or Tax Assessor’s Office. Most counties accept payments made online, by mail, or in person. If your mortgage includes escrow, your lender may handle the payment directly.

What do property taxes pay for in Alabama?

Property taxes in Alabama fund essential local services that directly impact your tenants, property value, and community infrastructure. While the overall tax burden is relatively low compared to other states, the revenue generated supports the systems and services that keep neighborhoods functional and attractive to renters.

Here’s how the government typically allocates your property tax dollars:

Education: A significant portion of property tax revenue supports Alabama’s public school systems, including teacher salaries, transportation, school maintenance, and classroom resources.

Public safety: Property taxes help fund police departments, fire protection, and emergency medical services (EMS), which contribute to community safety and can influence tenant satisfaction and property desirability.

Infrastructure: Local governments use property tax revenue to maintain roads, bridges, drainage systems, and public utilities, helping ensure reliable access and curb appeal around your rental.

Government services: Taxes also support a variety of general services, including courts, libraries, parks, sanitation, and public health initiatives, all of which help keep the community livable and your investment stable.

Resources and Contacts

• Alabama Department of Revenue
• Alabama Property Tax Resources
• Alabama Legal Help | Landlord and Tenant Self-Help Legal Information
• Jefferson County, Alabama Tax Assessor
• Madison County, Alabama Tax Assessor
• Mobile County Revenue Commission
• Baldwin County Revenue Commission
• Tuscaloosa County, Alabama Tax Assessor