Alabama payroll tax and registration guide

Why is this important?

To maintain compliance with state payroll tax regulations, you must provide the following information before you can use OnPay to run payroll:

• State Employer Identification Number and state/local tax IDs
• Tax rates - State tax offices set these rates based on the type, age, and size of your business
• TPA and power of attorney - Most tax offices require this before we can submit quarterly wage reports and deposits on your behalf

This information must be provided and maintained by you in order for OnPay to accurately file and deposit tax payments for your company. OnPay is not responsible for any penalties or interest that incur due to missing or incorrect company tax information.

Each state has its own requirements, so if you pay employees in more than one state, you’ll find separate tax guides for each state.

See what information you need to provide OnPay, and what taxes and filings OnPay handles for Alabama Employers.

• Information OnPay needs from you

  Use this checklist to make sure you’ve covered everything required to set up your account as an Alabama employer, so OnPay can accurately file and pay taxes on your behalf:
  
  

  All Alabama employers	What is this?
  Make sure your business is registered with the Alabama Department of Revenue	Allows your business to file and pay withholding taxes in Alabama More info >
  Make sure your business is registered with the Alabama Department of Labor	Allows your business to pay required unemployment insurance in Alabama More info >
  Provide OnPay with your Alabama State Withholding ID and deposit schedule	The employer identification number issued by the Alabama Department of Revenue (Ex: R000123456) More info >
  Provide OnPay with your E-File Sign-On ID, E-File Access Code	Allows OnPay to file and pay taxes on your behalf in Alabama.  More info >
  Provide OnPay with your Alabama Unemployment Account Number	A 10-digit number unique to your account with the Alabama Department of Labor. More info >
  Provide OnPay with your Alabama Unemployment (SUI) Rate and Alabama Employment Security Assessment Rate (ESA) Rate	A tax rate you receive annually from the Alabama Department of Labor. More info >
  Birmingham employers	What is this?
  Provide OnPay with your Birmingham Occupational Tax Account Number	A 6-digit number unique to your Birmingham Occupational Tax account. More info >

• Taxes and filings OnPay handles for Alabama Employers

  Withholding Tax

  Form A-6	Employer’s Monthly Return of Income Tax Withheld	- Monthly
  Form A-1	Employer’s Quarterly Return of Income Tax Withheld	- Quarterly
  Forms A-3 & W-2	Annual Reconciliation of Alabama Income Tax Withheld filed with state W-2s	- Annual

  Unemployment Insurance

  Forms UC-CR-4 & UC-10-R	Alabama Quarterly Contribution and Wage Report	- Quarterly
  New Hire Report	Alabama New Hire Reporting Form	- As required

Where you can find the tax account numbers needed

Existing Alabama Employer:

If you are an existing employer who has previously run payroll in Alabama, you likely already have the IDs and online accounts needed for OnPay to process your tax filings. 

New Alabama Employer:

If you are a new employer in Alabama, you will need to register your business with the Alabama Department of Revenue and the Alabama Department of Labor. This must be completed for OnPay to be able to file and pay your Alabama taxes.

Withholding Tax Account Number and E-File Sign-On ID/Access Password:

Existing Alabama Employer: 

• You can find your Withholding Tax Account Number and your E-File Sign-On ID and Access Code on the notification letter you received from the Alabama Department of Revenue.
• If you have misplaced this letter, please get in touch with the Alabama Department of Revenue at (334) 242-1300 for withholding tax assistance.

New Alabama Employer: Register with the Alabama Department of Revenue 

• Visit the Business Tax Online Registration System and follow the instructions for registering your business. Note: You'll need to have already registered with the Alabama Secretary of State. For more information on registering with the Secretary of State, call 334-242-5324.
• 3-5 days after completing your business tax online registration, you'll receive a letter in the mail with the following information:
  • Alabama Withholding Tax Account Number
  • E-File Sign-On ID
  • E-File Access Code
  • TPA Password

Unemployment Account Number, Unemployment Tax Rate, and Alabama Employment Security Assessment Rate (ESA) Rate

Updated January 1, 2025

Existing Alabama Employer: 

• You can find your Unemployment Account Number on the Tax Rate Notice (Form UC-216F) or Quarterly Contribution and Wage Report (Form UC-CR4).
• Your unemployment tax rate can be found in Box 6 of the Tax Rate Notice. New employers generally have a rate of 2.7% for SUTA with a wage base of $8,000.
• Your Employment Security Assessment (ESA) rate can be found in box 7 of the Tax Rate Notice.

New Alabama Employer: Register with the Alabama Department of Labor

• Go to labor.alabama.gov, and follow the instructions to register your business.
• You will need to register with this department if you have employees that work in Alabama. If your business is located out of the state, but some of your employee's primary work location is in Alabama, you will need to register with this agency.
• Note: Employers are not required to register with the Alabama Department of Labor until you have paid $1,500.00 in wages during a calendar quarter, or had at least one employee working 20 or more different weeks during a calendar year.

Birmingham occupational tax

If your business has worksites in Birmingham, you'll need to enter your Birmingham Occupational Tax ID in OnPay, and grant us TPA access. We'll show you how→

Alabama Municipal Occupational Tax

All city and county rates are those given to The Alabama League of Municipalities by survey and should be verified with the appropriate entity for updates.

Paying employees in other states?

If you operate in multiple states or just have employees working from home across a state line, it's important to file the correct state forms for those workers. See what forms we file in the states where you pay employees.

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