Effective September 1, 2015, individuals performing services in Alabama as an employee may no longer claim exemption from Alabama state income tax withholding. Act 2015-504 has repealed the provision in the Alabama Code, which allowed a taxpayer to claim a total exemption from withholding tax. As a result, Form A4-E will no longer be available for use by employees. Any employees that had previously submitted a Form A4-E to their employers must submit a new Form A-4, Employee’s Withholding Exemption Certificate.Please note that Alabama does not recognize the Federal Form W-4, Employee’s Withholding Allowance Certificate, as an acceptable substitute for the Alabama Form A-4.
If an employee fails to provide his/her employer with a Form A-4, employers should subject any wage payments made to the impacted employee utilizing the tax withholding rate applicable assuming a “single and zero” withholding allowance.
Employers should review the withholding allowance certificates submitted by their Alabama employees prior to September 1, 2015 to ensure that there are currently no employees that have claimed exemption from Alabama state income tax withholding.
Please note that Act 2015-504 does not impact the ability of military spouses to submit Form A4-MS, Nonresident Military Spouse Withholding Tax Exemption Certificate. Form A4-MS may continue to be accepted by employers for those employees who are claiming exemption from Alabama’s income tax withholding requirements based on the provisions of the Military Spouses Residency Relief Act.
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