The Homestead Exemption in Alabama

A homestead is a single-family owner-occupied dwelling and its land, up to 160 acres, that the owner occupies as a primary residence on the first day of the tax year. For an owner under 65 and not disabled (type H-1), the regular exemption is $4,000 of assessed value for state taxes and $2,000 of assessed value for county taxes, with no income limit. Counties, municipalities or other taxing authorities may grant a homestead exemption of up to $4,000 of assessed value. Owner-occupied homes are also assessed at the lowest residential rate (Class III, 10% of appraised value).

Apply at your local county office (tax assessor or revenue commissioner). The first claim is made in person or by mail on an affidavit form from the tax assessing official, and the county may also accept it electronically. After qualifying, owners do not have to reapply each year but must verify eligibility each year on the county's form.

The county tax assessor may accept homestead exemption applications from January 1 to September 30 of each tax year, and the exemption takes effect the following October 1. Eligibility depends on owning and occupying the home as a primary residence on the first day of the tax year.

Act 2024-344 (HB73) caps the annual increase in taxable assessed value of Class II and Class III real property, which includes owner-occupied residential property, at 7%. The base year was October 1, 2024, for tax collections beginning October 1, 2025, and the limits continue through the fiscal year beginning October 1, 2027. No application is needed. The cap is removed and the property reassessed at full value in cases such as a change in ownership (transfers between spouses or family members for no or nominal consideration, or on the owner's death, do not count), a change in classification, property never before assessed, a significant addition or improvement, or location in a tax increment district.