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Payroll and Benefits Guide United States – Alabama

Last updated: Mar 21, 2025

Currency
United States Dollar (USD)
Employer Taxes
11.60% - 23.15%
Payroll Frequency
Monthly/Semi-monthly
Employee Costs
8.55%
Capital
Montgomery
Date Format
mm/dd/yyyy
Fiscal Year
1 January - 31 December
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Contribution

Employer Payroll Contributions
0.2% – 5.4% State Unemployment Insurance (SUI), applied on the first 8,000 USD of each employee’s wages.Rates vary based on their experience rating, which reflects their history of layoffs and unemployment claims.
2.7% State Unemployment Insurance – New Employer, applied on the first 8,000 USD of each employee’s wages.
6.20% Federal Insurance Contributions Act (FICA) - Social Security, applied on salary up to 176,100 USD per year.
1.45% Federal Insurance Contributions Act (FICA)  – Medicare.

An additional 0.9% should be withheld from employees earning above 200,000 USD per year.

0.60% – 6.00% Federal Unemployment Tax Act (FUTA), applied on salary up to 7,000 USD per year.Employers who pay their state unemployment tax in full and on time are eligible for a 5.4% tax credit, reducing the FUTA rate to 0.6%.
11.60%- 23.15%
Total Employment Cost

 

Employee Payroll Contributions
6.20% Federal Insurance Contributions Act (FICA) - Social Security, applied on salary up to 176,100 USD per year.
1.45% Federal Insurance Contributions Act (FICA)  – Medicare.An additional 0.9% should be withheld from employees earning above 200,000 USD per year.
7.65%-8.55%                                                                                               
Total Employee Cost
State Employee Income Tax Annual
State Tax – Single
2.00% Up to 500 USD
4.00% 500 – 3,000 USD
5.00% Above 3,000 USD
State Tax – Married – Joint Filing
2.00% Up to 1,000 USD
4.00% 1,000 – 6,000 USD
5.00% Above 6,000 USD
Standard Deduction and Personal Exemption
Single
4,500 USD
Married – Joint Filing
11,500 USD
Personal Exemption
Single
1,500 USD
Married – Joint Filing & Head of Household
3,000 USD
Federal Employee Income Tax Annual
Federal Tax – Singles
10.00% Up to 11,925 USD
12.00% 11,925 – 48,475 USD
22.00% 448,475 – 103,350 USD
24.00% 103,350 – 197,300 USD
32.00% 197,300 – 250,525 USD
35.00% 250,525 – 626,350 USD
37.00% Above 626,350 USD
Federal Tax – Married – Joint Filing
0.00% Up to 23,850 USD
12.00% 23,850 – 96,950 USD
22.00% 96,950 – 206,700 USD
24.00% 206,700 – 394,600 USD
32.00% 394,600 – 501,050 USD
35.00% 501,050 – 751,600 USD
37.00% Above 751,600 USD
Federal Tax – Heads of Household
10.00% Up to 17,000 USD
12.00% 17,000 – 64,850 USD
22.00% 64,850 – 103,350 USD
24.00% 103,350 – 197,300 USD
32.00% 197,300 – 250,500 USD
35.00% 250,500 – 626,350 USD
37.00% Above 626,350 USD
Standard Deduction and Personal Exemption
15,000 USD Single
30,000 USD Married Filing Jointly
22,500 USD Head of Household

Minimum Wage

General

Alabama does not have a minimum wage;  therefore, the Federal minimum wage is applied at 7.25 USD per hour.

There are also other minimum wage requirements:

  • Youth minimum wage: 4.25 USD per hour
  • Minimum cash wage: 2.13 USD per hour
  • Maximum tip credit: 5.12 USD per hour

Payroll

Payroll Cycle

Employees are generally paid monthly or semi-monthly.

13th Salary

There are no provisions in the law regarding 13th salaries.

Working Hours

General

In Alabama, the workweek is a maximum of 40 hours per week or 8 hours per day.

Overtime

Alabama adheres to the Fair Labor Standards Act (FLSA), and work in excess of 40 hours per week is considered overtime and paid at the rate of 150% of the regular pay.

If employees are scheduled to work on weekends or rest days, no additional payment is required.

However, should an employer request an employee to work in exceptional circumstances on these days, then overtime is paid at the rate of 150% of the regular pay.

Leave

 Annual Leave (vacation)

Alabama does not have any state laws that govern paid time off. However, it is common for employers to decide whether to offer paid or unpaid vacation leave.

This must comply with employment law and must be stipulated in the collective bargaining agreements.

Public Holidays

Public holidays are not mandatory as paid days off, however, it is very common to allow workers to take federal holidays as paid days off.

Some companies may also agree to allow workers to take state holidays off.

Usually when an agreed public holiday falls on a weekend, a day off in lieu is given on the Friday before or the Monday after the holiday.

Date Day Holiday Notes
1 January 2026 Thursday New Year’s Day Standard holiday
19 January 2026 Monday Martin Luther King Jr.’s Birthday Standard holiday
16 February 2026 Monday Presidents’ Day (Washington’s Birthday) Standard holiday
30 March 2026 Monday Seward’s Day Standard holiday
25 May 2026 Monday Memorial Day Standard holiday
19 June 2026 Friday Juneteenth Day (Juneteenth National Independence Day) Standard holiday
3 July 2026 Friday Independence Day
7 September 2026 Monday Labor Day Standard holiday
18 October 2026 Sunday Alaska Day Standard holiday
19 October 2026 Monday Alaska Day (Observed)
11 November 2026 Wednesday Veterans Day Standard holiday
26 November 2026 Thursday Thanksgiving Day Standard holiday
25 December 2026 Friday Christmas Day Standard holiday

Sick Days

Alabama does not have any state statute governing the amount and payment of absences.

However, it is common for employers to offer paid or unpaid coverage to their employees, which must comply with employment law and stipulated in the collective bargaining agreements.

It is common for an employer to follow the Family and Medical Leave Act (FMLA), which provides certain employees with up to 12 weeks of unpaid,

job-protected leave per year for certain family and medical reasons (maternity leave, serious illnesses, or if the employee needs to care for a spouse or child).

In addition, Alabama employers must provide one hour of paid sick leave for every 30 hours worked, up to an annual maximum of 40 hours of paid sick leave.

Employees are eligible for FMLA if they’ve worked for their employer for at least one year, completed a minimum of 1,250 hours over the past year, and worked at a location where the company employs 50 or more employees within 75 miles.

FMLA eligible employees are entitled for:

  • 12 working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth.
  • Leave for the adoption or foster care of a child and care for the newly placed child within one year of placement.
  • Care for the employee’s spouse, child, or parent who has a severe health condition.
  • Leave in the event of a serious health condition that makes the employee unable to perform the essential functions of their job.
  • Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty.”

Or

  • 26 working weeks of leave during a single one-year period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).

Maternity Leave

Maternity leave may fall under FMLA (see Sick Leave).

Paternity Leave

Paternity leave may fall under FMLA (see Sick Leave).

Parental Leave

Parental leave may fall under FMLA (see Sick Leave).

Other Leave

  • Voting Leave: Employees who are registered to vote must be allowed to take necessary time off from work as unpaid leave to vote in any municipal, county, state, or federal primary or general election. Employees must provide reasonable notice to their employers to take time off to vote.
  • Jury Duty: Full-time employees are entitled to job-protected, paid time off from work to perform jury duty. Employees must provide a copy of the jury summons to the employer as evidence of requirement.
  • In addition to the federal law, USERRA, Alabama law provides military members with paid leave for days they are called to serve in the field, coast defense, other training, or service ordered under federal regulations governing the U.S. Reserves. The employer must pay a maximum of 168 hours per calendar year to an employee engaged in active state service.

Termination

Termination Process

Except in mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal notice period to terminate an individual employment relationship, and employment is stipulated “at will.

” This means that either the employer or the employee may end the employment relationship without giving either notice or reason, provided it is not illegal, notable discrimination on the grounds of a category protected by law, etc., and as per the Federal Worker Adjustment and Retraining Notification Act (WARN).

The employment contracts of executives and other highly skilled individuals often incorporate a “just cause termination” clause which mandates that the employer may only terminate the employee for “cause” and lists the permissible grounds.

In such cases, the parties negotiate the foundations for a “just cause” termination.

Salary payment interval / date Final payment on termination Bank account/payment‐method requirement
There is no state law in Alabama specifying how often wages must be paid (weekly, bi-weekly, monthly) or the exact payday for all employees. Employers set pay periods under their own policy/contract. Alabama does not have a statute specifying a fixed deadline for final wages upon termination. Federal law (Fair Labor Standards Act, FLSA) requires payment by the employer’s next regular payday for the last pay period. Alabama law does not mandate that wages must only be paid via bank account. Payment in lawful currency/money is required and method is governed by employer practice/policy.

Notice Period

In Alabama, most employees are employed “at-will,” and either party can terminate the employment relationship without notice.

Payout of unused vacation time is not required by law. However, employers will generally pay an employee for unused vacation days, provided the employee gives some advance notice of resignation.

While there is no notice period, general practice is two weeks.

In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN Act) must be followed, and employers must give 60 days’ notice to impacted employees.

Severance Pay

Except as otherwise provided in an employment contract or collective bargaining agreement, employers are not required to pay severance. Many employers choose to offer severance pay based on the length of employment.

Probation Period

There are no provisions in the law regarding probation or trial periods. However, it is common practice for employers to set a performance evaluation after an initially stated period of employment of 90 days.

Minimal Statutory Termination Costs 

Some states require PTO balances to be paid out during termination, also any bonuses or commissions that were promised in the employment contract

Immigration

Foreign nationals without permanent resident status or a work visa are not permitted to work in the United States.

An employer seeking to hire a foreign national may file a petition with the United States Department of Homeland Security/ United States Citizenship and Immigration Services (“USCIS”) for an employment visa on behalf of the prospective employee.

If the petition is approved, the prospective employee must obtain a “visa stamp” from a United States embassy or consulate (Canadian citizens are exempt from this requirement).

To get a temporary U.S. work visa, an employer must file a petition with U.S. Citizenship and Immigration Services (USCIS). An approved petition must be part of the visa request; the types of visas include:

  • H-1B – for applicants with a college degree hired to do specialized work. The visa is valid for three years and can be extended for an additional three years. The visa is connected to the employer that filed the petition. If there is a change of employer, the new employer must repeat the process. There are 65,000 H-1B visas available each year.
  • H-1B1 – for applicants with a college degree from Chile and Singapore. The US government grants up to 1,400 visas to Chilean citizens and 5,400 from Singapore each year.
  • H-2A – for temporary or seasonal agriculture work. It is limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
  • H-2B – for temporary non-agricultural work. These visas are limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
  • L – for intercompany transfers (people transferred from a foreign company to a US branch of the company.) The applicant must have been employed at the company for a year before the transfer and work in a managerial level position or higher with specialized knowledge.
  • 0 – for people with extraordinary ability in science, arts, education, business, or athletics.

The standard procedure is to obtain a short-term work visa and then apply for an immigrant visa after the employee has started working in the United States.

For those seeking employment-based immigrant visas:

  • E-1 – Highest priority employment for those with extraordinary ability in science, arts, education, business, and athletics.
  • E-2 – for those with advanced degrees or exceptional ability.
  • E-3 – for skilled workers and professionals, as well as unskilled workers.
  • E-4 – Members of certain immigrant groups.
  • E-5 – Immigrant investors in US companies (substantial investment)

Alternatively, an employer may sponsor a potential employee’s application for permanent resident status, referred to as a “green card,” if the employee can establish that the potential employee is a multinational executive/manager transferee, has unique skills, or has been offered a job in the United States.

The employer must have been unable to recruit a U.S. worker who meets the position’s minimum requirements.

All employers are obligated to verify that all individuals they employ are authorized to work in the United States.

VAT

General

Alabama has a State sales tax of 4%. Additionally, local municipalities can impose additional sales taxes ranging from 0.10% to 7.5%.

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Version History

February 16, 2022
Employer and employee tax contributions have changed.
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Payroll and Benefits Guide in United States – Alabama

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Payroll and Benefits Guide
in United States – Alabama

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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Public Holidays Calendar

United States – Alabama
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Date Day Holiday Notes
1 January 2026 Thursday New Year’s Day Standard holiday
19 January 2026 Monday Martin Luther King Jr.’s Birthday Standard holiday
16 February 2026 Monday Presidents’ Day (Washington’s Birthday) Standard holiday
30 March 2026 Monday Seward’s Day Standard holiday
25 May 2026 Monday Memorial Day Standard holiday
19 June 2026 Friday Juneteenth Day (Juneteenth National Independence Day) Standard holiday
3 July 2026 Friday Independence Day
7 September 2026 Monday Labor Day Standard holiday
18 October 2026 Sunday Alaska Day Standard holiday
19 October 2026 Monday Alaska Day (Observed)
11 November 2026 Wednesday Veterans Day Standard holiday
26 November 2026 Thursday Thanksgiving Day Standard holiday
25 December 2026 Friday Christmas Day Standard holiday