Homestead exemptions

A Homestead Exemption is a tax break a property owner may be entitled to if he or she owns a single-family residence and occupies it as his or her primary residence on the first day of the tax year (October 1) for which the owner is applying. A Homestead Exemption must be requested at the Revenue Commission office, as it is not automatic. The following are the four types of
homestead exemptions:

  • H1: Homestead Exemption 1 is available to all citizens of Alabama who own and occupy single-family residences, including manufactured homes, as their primary residences and use their property for no other purposes. The amount of the exemption is $4,000 in assessed value for State taxes and $2,000 in assessed value for County taxes.
  • H2: Homestead Exemption 2 is a homestead that may be claimed by homeowners who are age 65 or older with an adjusted gross income on their most recent Alabama income tax return of $12,000 or less and a taxable income of more than $12,000 on their most recent federal tax return. Owners must renew this homestead exemption every year.
  • H3: Homestead Exemption 3 is available to all taxpayers of Alabama who own and occupy single-family residences, including manufactured homes, as their primary residences, use their property for no other purposes, AND who are age 65 and older with a combined taxable income of $12,000 or less on their most recent Federal Income Tax Return. This exemption also applies for owners who are retired due to permanent and total disability (unable to work). An H3 exemption exempts property owners from all ad valorem taxes.

    To verify permanent and total disability, taxpayers must furnish proof via official disability awards letters from the Veterans Administration or Social Security as applicable, proof of disability income from private or government trust (Medicare card), or two official Alabama Department of Revenue Physician’s Affidavits of Permanent and Total Disability, provided one of the physicians is actively treating the taxpayer for his or her disability.

  • H4: Homestead Exemption 4 is available to all taxpayers of Alabama who own and occupy single-family residences, including manufactured homes, as their primary residences, use their property for no other purposes, AND who are age 65 or over with a combined taxable income of greater than $12,000 on their most recent Federal Income Tax Return and an adjusted gross income of greater than $12,000 on their most recent Alabama State Income Tax Return. This exemption is for the State portion of the ad valorem taxes and $2,000 of the assessed value on County taxes.

    Exemptions should be applied for before December 31 of each year based upon status (owner-occupied, age 65, or totally and permanently disabled) of property and owner on October 1. Once you receive an exemption for disability or age you must claim this exemption each year. The Revenue Commission will mail a letter to you annually to make this claim; however, it is your responsibility to make sure the claim is done each year. An H2, H3, or H4 exemption must be removed if the respective claim is not made each year.

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