Work in Alabama, Live in Florida: How Your Pay Is Taxed

Reciprocity

Do Alabama and Florida have a tax reciprocity agreement?

No agreement applies, and none is needed. The Alabama Department of Revenue says plainly that Alabama does not have broad reciprocity agreements with neighboring states that would remove withholding based only on where an employee lives. Florida, for its part, does not impose a personal income tax, so there is nothing on the Florida side to trade away.

The practical result is one state return, not two. Alabama taxes nonresidents on wages for personal services performed within Alabama and expects them to file Form 40NR each year. Because Florida never taxes those wages, you do not face double taxation and you do not need a credit for taxes paid to another state. Alabama's Schedule CR credit exists for Alabama residents who pay tax elsewhere; it has no role for a Florida resident.

Filing

Which tax return does a Florida resident file for an Alabama job?

You file the Alabama nonresident return, Form 40NR. Florida's Department of Revenue confirms there are no personal income tax filing requirements in Florida, so your only other return is your federal Form 1040.

You must file Form 40NR when your gross income from Alabama sources exceeds the allowable prorated personal exemption. The personal exemption is $1,500 for a single filer and $3,000 for married filing jointly, and a nonresident prorates it by the share of income earned in Alabama. For most full-time commuters, Alabama wages clear that bar easily.

Your Alabama wages come from the state wage box of each Form W-2, which you carry to the Schedule W-2 that goes with Form 40NR. The booklet also tells you to report wages, tips, bonuses and commissions earned in Alabama even if you do not have a Form W-2, so side jobs and one-off gigs in Alabama count too.

• Due date: the same day as the federal return, April 15 for most filers.
• Extension: automatic to October 15, with no form to file. If you owe tax, send it with Form 40V, checking the box for an automatic extension payment, by the federal due date.
• Payment: the extension does not extend the time to pay, so send any balance by the original due date.

The math

How does Alabama figure tax on a nonresident's pay?

Form 40NR asks for your income from all sources in one column and your Alabama income in another. Your Florida-side income, such as days you worked from home, is not taxable to Alabama, but it still goes on the return because it sets the ratio on line 10. You divide Alabama adjusted total income by adjusted total income from all sources, and that percentage then shrinks your deductions:

• Standard deduction: taken from the chart in the 40NR booklet, which is keyed to your adjusted gross income from all sources, not just the Alabama part (for a single filer with income of $35,500 and above it is $2,500), then prorated by the line 10 percentage.
• Federal income tax deduction: figured on the booklet worksheet, then prorated by the same percentage.
• Personal exemption: $1,500 single or $3,000 married filing jointly, multiplied by the line 10 percentage.
• Dependent exemption: $1,000 per dependent when adjusted gross income from all sources is $50,000 or less, $500 up to $100,000 and $300 above that, prorated the same way.

Alabama then applies its graduated rates. For single filers: 2% up to $500 of taxable income, 4% on the following $2,500 and 5% on everything above $3,000. Joint filers get double-width brackets: 2% on the first $1,000, 4% on the next $5,000 and 5% above $6,000. The booklet directs you to its tax tables, so a bracket calculation is a close estimate rather than the exact figure. This is general information, not tax advice.

For 2026 through 2028, Alabama also lets taxpayers deduct the premium portion of overtime wages, up to $1,000 per taxpayer. The Department's page does not say how a nonresident prorates it, so check the 2026 Form 40NR instructions when they are released.

Payroll

What should your Alabama employer withhold?

Your employer should withhold Alabama income tax from a nonresident's wages only to the extent those wages are attributable to services physically performed in Alabama. The Department asks employers to collect a completed Form A-4, the Employee's Withholding Exemption Certificate, from anyone whose wages are subject to Alabama withholding, and to keep records of work dates and locations. No Florida tax is withheld because there is none.

Alabama also has a 30-day safe harbor for tax years beginning on or after January 1, 2026. It applies when you perform employment duties in more than one state during the calendar year and your home state has a similar exclusion or no income tax, which covers Florida. Once you reach 31 days in Alabama, all income earned in Alabama that year becomes taxable, and the employer must withhold for every day, including the first 30. Professional athletes, professional entertainers and public figures are excluded. A daily commuter passes the limit early in the year, but it matters for occasional visits to an Alabama office.

If withholding falls short, watch the estimated tax rule. Alabama requires estimated payments when your expected tax after credits and withholding is more than $500, in installments due April 15, June 15, September 15 and January 15. As a general rule you are covered if withholding plus credits reaches the smaller of 90% of the current year's tax or all of the prior year's tax, provided last year's return covered all 12 months.

Truck drivers, railroad workers, airline crews and water carrier employees are a special case. The Department notes that federal law creates separate rules for air carriers, interstate railroads, interstate motor carriers and water carriers, and that these rules generally focus on the mobile employee's state of residence. If that describes your job, ask payroll to confirm which rule it applies before assuming the standard Alabama sourcing above.

If you do not give your employer a Form A-4 (the form itself is titled Employee's Withholding Tax Exemption Certificate), the employer withholds using zero exemptions, which takes more tax from each paycheck than necessary.

Remote work

What if you work from home in Florida some days?

Days worked at your Florida home are not Alabama-source pay. The Department's guidance states that if an employee lives outside Alabama and performs all services outside Alabama, including remote work from another state, the wages are not Alabama-source wages and no Alabama withholding is required. It adds that remote work arrangements should be judged by where the employee actually performs services.

For a hybrid schedule, the employer should use a reasonable method, usually workdays, to split wages between Alabama and elsewhere, and the Alabama figure should appear in the state wage box of your W-2. Keep your own calendar of office days and home days. Because Florida taxes none of this pay, every day you can document as a Florida workday lowers your Alabama tax directly.

Example: hybrid commuter, single, $60,000 salary

Florida resident working 75% of days in an Alabama office (not a city with an occupational tax). Uses the tax year 2025 Form 40NR booklet; the federal tax figure is an assumed example. Result is approximate.

Corrections

What if Alabama tax was withheld on pay earned in Florida?

Start with your employer. The Department relies on the W-2 figures that employers report to decide how much of a nonresident's pay is Alabama-source income. If the Alabama wage figure is wrong, for example because home-office days were coded as Alabama days, the employer should issue a corrected Form W-2C to you and to the Department's Withholding Tax Section.

With the corrected W-2 in hand, file Form 40NR reporting only the Alabama portion. Any Alabama tax withheld beyond what you owe comes back as a refund. Also ask payroll to fix the allocation going forward so the problem does not repeat next year.

Moving

What if you moved between Florida and Alabama this year?

A mid-year move changes the forms. Alabama residents are taxed on their entire income wherever it is earned, while nonresidents are taxed only on Alabama-source income. Alabama handles a split year like this:

• Part-year residents file Form 40 and report only income earned while an Alabama resident. They may deduct the full standard deduction, personal exemption and dependent exemptions.
• Both Form 40 and Form 40NR are required if you had enough income to file a part-year return and also had Alabama-source income while a nonresident in the same year. The full exemptions go on the part-year return, and none can be claimed on the nonresident return.

Domicile is the test that matters. Alabama defines it as where you live, have a permanent home and intend to return when absent, and each person has only one domicile at a time. A new one requires both setting it up and abandoning the old one, and a temporary absence from Alabama does not change it by itself. If you move from Alabama to Florida but keep the same Alabama employer, update your address with payroll right away: the Department tells Alabama employers to keep withholding Alabama tax from residents working outside the state.

Alabama puts the burden of proving a change of domicile on the taxpayer, so keep the lease or closing papers, your Florida driver license date and voter registration change.

Local taxes

Do Alabama cities add an occupational tax?

Some do, and they apply to workers who live elsewhere. Two examples with published rules:

In both cities, employers withhold the fee, and wages earned outside the city are not subject to it, so remote days at home in Florida fall outside it too. This is a city charge, separate from your state return. Other Alabama cities levy their own version: Birmingham lists an occupational tax among its city taxes, and Gadsden's employer reconciliation form covers occupational license fees withheld from wages. The Department of Revenue says local occupational tax information comes from the city or county that administers the tax, so check your pay stub for a city line and ask that revenue office for the current rate.