Some types of retirement income are taxed in Alabama. Income from retirement accounts like an IRA or a 401(k) will be taxed as regular income, at Alabama’s state income tax rates. Tax rates range from 2% to 5%. More information can be found here https://revenue.alabama.gov/incometax/xempt.cfm
However, income from pensions is not taxed in Alabama. If you receive money from a public pension like the Teachers Retirement System or from a private company pension, that income will not be taxed by the state. There are five states that do not tax any teacher pensions and those include: Alabama, Hawaii, Illinois, Mississippi, and Pennsylvania.
The only states that do tax some or all of the income from an out-of-state teacher's pension are Kansas, Louisiana, Massachusetts, Michigan and New York.
NOTE: There is federal tax on pension benefits you receive. But in Alabama, pensions are tax exempt. That includes state pensions from various groups including state employees and teachers.
