2026 tax year · Alabama
Marketplace seller taxes in Alabama
Etsy, eBay, Shopify and the rest report your gross and withhold nothing. The gap between that and what you are taxed on is your costs, in Alabama that gap is worth $7,182 in tax.
Take a driver who grossed $45,000 over 18,000 business miles. After mileage at 74.3 cents and the rest of the stack, worked through on the marketplace seller page $26,775 comes off and $18,225 is left as taxable profit. That profit is what Alabama and the IRS charge against.
What that leaves you owing in Alabama
Alabama uses graduated 2026 income tax brackets topping out at 5%, across 3 brackets, on top of federal income tax and self-employment tax.
| Self-employment tax | $2,575 |
| Federal income tax | $67 |
| Alabama income tax | $807 |
| Total tax | $3,449 |
| Effective rate on gross | 7.7% |
Earning more in Alabama
A single filer taking the standard deduction, this work as the only income, the calculator above handles the other filing statuses. Miles rise with earnings, so the deduction rises too, and the effective rate on gross climbs more slowly than it would for someone whose income grew without expenses attached:
| Volume | Gross | Mileage off | Taxable profit | Alabama tax | Total tax | Rate on gross |
|---|---|---|---|---|---|---|
| Part-time | $15,000 | $0 | $15,000 | $657 | $2,776 | 18.5% |
| Steady side income | $45,000 | $0 | $45,000 | $2,051 | $10,631 | 23.6% |
| Full-time | $72,000 | $0 | $72,000 | $3,306 | $18,109 | 25.2% |
Alabama specifics that change the number
Alabama also has local income tax that the estimate above does not model, some cities: Birmingham 1%, etc.. Add it separately for where you live and work.
Selling into and out of Alabama
Income tax follows you: Alabama taxes your profit wherever the buyer was. Sales tax does not. Marketplace facilitator laws make the platform collect and remit sales tax on your behalf in most states, which is why a seller can have customers in all fifty and still file only one income tax return. Selling off-platform is where that stops being true.
On $18,225 of profit, what the states around Alabama would charge:
| State | Its tax | vs Alabama |
|---|---|---|
| Florida | No income tax | −$871 |
| Tennessee | No income tax | −$871 |
| Mississippi | $729 | −$142 |
| Georgia | $946 | +$75 |
- Florida has no income tax at all, so the same work done there costs $871 less in state tax than it does in Alabama.
- Tennessee has no income tax at all, so the same work done there costs $871 less in state tax than it does in Alabama.
- Mississippi would take $142 less, $729 against Alabama's $871.
- Georgia would take $75 more, $946 against Alabama's $871.
Marketplace seller tax questions in Alabama
How much should an Alabama seller set aside?
About 7.7% of gross on the $45,000 example, $3,449 across self-employment tax, federal income tax and $807 to Alabama. In practice that means moving about $77 of every $1,000 payout into a separate account the day it lands, and sending roughly $862 to the IRS each quarter, no platform withholds any of this for you. Set aside from each payout rather than finding it in April.
Does the $45,000 on my 1099-NEC match what Alabama taxes?
No. Alabama taxes profit, not gross. After $26,775 of deductions the taxable figure is $18,225, so the Alabama bill is $807 rather than what gross alone would suggest. The form reports what the platform paid out, it knows nothing about your costs, and no one subtracts them for you. On this example 60% of the gross never becomes taxable income, but only for the seller who kept the records to prove it.