Connect with us

Hi, what are you looking for?


PARCA: Alabama second-lowest in state, local tax collection per capita

Meanwhile, the state had among the highest sales tax in the U.S.


A recent analysis of state and local tax data by the Public Affairs Research Council of Alabama showed that in 2020, the second-lowest state and local tax collection per capita were Alabama, all while the state had among the highest sales tax in the U.S.

The analysis, which used the most recent revenue and expenditure data published by the U.S. Census Bureau’s Annual Survey of State and Local Finance, showed that only Tennessee ranked lower than Alabama in taxes paid to state and local government per capita.

“Alabama state and local taxes collections are low due to two factors: lower rates and a smaller resource base to tax,” the analysis reads. “Alabama’s Per Capita Gross Domestic Product, the total value of all goods and services produced, ranks in the bottom five of states, meaning we have a lower resource base to tax. However, these other states make a greater tax effort and, thus, generate more money to provide services.”

The three principal sources of state and local tax revenue in Alabama are sales and gross receipts, income, and property tax, according to the analysis, with nearly half, or 49 percent, of taxes per capita used to fund state and local governments coming from sales tax.

As a percentage of personal income, 8.3 percent of Alabamians’ total personal income is collected as state and local tax revenue, according to the analysis, with the state GDP per capita at $45,155.

The boarding states of Mississippi, Florida, and Georgia all have revenue advantages of over a billion dollars.

“This gap between Alabama and other states will not be so obvious when newly elected lawmakers convene in March to craft budgets for FY 2024,” the analysis reads. “A strong inflationary economy, high employment levels, and a flood of federal relief have supplemented state spending and stimulated record levels of state and local tax collections in the most recent year.”

Advertisement. Scroll to continue reading.

In November, PARCA released another analysis showing that tax collection for the state of Alabama grew in the 2022 fiscal year. That analysis showed an income tax collection growth up 27 percent from the previous fiscal year, and an online sales tax collection jump up more than 20 percent.

John is a reporter at the Alabama Political Reporter. You can contact him at [email protected] or via Twitter.

More from the Alabama Political Reporter


PARCA executive director Ryan Hankins said the state is finally positioned to be able to afford expansion.


The state’s population increased to a level higher than any time in more than a decade.


But the rate still remains below pre-pandemic levels.


The changes include phasing out the business privilege tax and the exemption of $6,000 of retirement income for senior citizens.


Even with the increased revenue from tax collections over the previous fiscal year, inflation will still cost the state government. 


Rehm emphasized his opposition to increased taxation and his support for parental rights in education.


While test scores are improving, the study highlights that there is still "a long way to go."

Featured Opinion

Alabama’s tax system, overall, is among the most regressive tax systems in the nation.