Social Security, when entered on form SSA-1099, is automatically removed from Alabama income.
As for other retirement plans, 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.
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. Note that your military retirement and your teacher retirement (if from Alabama) are both explicitly listed here.
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.
