The Alabama Department of Revenue posted a notice on August 25, 2026, (ADOR Notice) which explains that an employer generally must withhold Alabama income tax from wages paid to a nonresident employee to the extent the wages are attributable to services physically performed in Alabama, and that if a nonresident employee performs no services in Alabama during the year, Alabama income tax withholding is not required solely because the employer is located in Alabama.
The Department references Alabama’s relatively new statutory exemption providing a 30-day safe harbor which exempts Alabama earnings from taxation for certain out-of-state workers performing services in Alabama for 30 or fewer days in a calendar year.
The Department also states in the notice that it will not follow the Alabama Tax Tribunal’s Final Order in Bollinger v. Department of Revenue, Docket No. INC. 22-390-LP (March 8, 2023), involving a nonresident remote worker “to the extent that ruling is inconsistent” with this notice.
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