Alabama considers income from
Defined Benefit Retirement Plans to be excludable from tax, but you have to manually
indicate that the plan qualifies to be excluded.
First, please see this list of defined benefit retirement plans - https://revenue.alabama.gov/individual-corporate/taxes-administered-by-individual-corporate-income-t....
If your plan does not appear on this list, contact your plan administrator to
confirm that they are a qualified "defined benefits retirement plan"
under the laws of Alabama.
If you get a positive answer, then enter the Alabama state interview and
proceed to the screen entitled "About Your Retirement Distributions".
The table will have one entry for each 1099-R that you have entered into the
federal return.
For each pension, click on Edit in order to indicate whether the plan
is taxable in Alabama or not.
When you click on the first pension, you will be presented with a new screen
that is similar to the screenshot that is attached. The screen is asking if
your pension is any one of these types. Note the "Payments from a Defined
Benefit Retirement Plan", which was the point of the discussion above.
If your pension plan is any of these types, then answer "yes"
at the bottom of the page. You will be returned to the previous screen with the
Alabama income set to zero for this item, i.e., not taxable.
