A tax is a charge or levy of money made by a governmental entity (state, local, or federal) against a taxpayer—usually a U.S. citizen or a person living or working in the United States. There are many kinds of taxes, including income tax, capital-gains tax, property tax, franchise tax, gift tax, ad valorem tax, sales tax, use tax, inheritance tax, and estate tax.

In Alabama, as in all states, taxpayers are subject to a variety of taxes imposed by state and local governments, as well as the federal government. Alabama imposes a state income tax, with rates ranging from 2% to 5% depending on the amount of income and filing status. The state also levies a capital gains tax as part of the income tax, treating capital gains as regular income. Property taxes in Alabama are among the lowest in the United States, and they are administered by local county governments. Alabama does not have a state-level inheritance tax or estate tax; however, residents are still subject to federal estate taxes if their estate exceeds the federal exemption amount. The state imposes a sales tax, which varies by locality, and a use tax on the storage, use, or consumption of tangible personal property in the state. Additionally, Alabama charges an ad valorem tax on certain property, such as motor vehicles. Gift taxes are not imposed at the state level in Alabama but are subject to federal gift tax rules. Franchise taxes, which are taxes on businesses for the privilege of being incorporated or doing business in the state, are also collected in Alabama.