Fees. Taxes. Exemptions.

Working on this blog was hard. It took me awhile to come up with a plan for this blog post but I feel like I attacked it the best way I could. There are way more differences between Alabama and California when it comes to taxes, fees, and other crazy things we have to pay for but here are 3 different things I found that were worth mentioning. I'll mention car registration fees, tax withholdings from work checks, and tax exempt items.

1. Car Registration Fees:

Living in Alabama, I discovered the "Last Name" system. It doesn't matter what month out of the year you bought your vehicle, your last name depends on what month you have to pay for your car tag and license plate. Since my last name starts with a "B", my family and I always had to pay in the month of February. I remember one guy at the DMV say we are unlucky because we have the shortest month out of the year. It's true. Everyone who's last name starts with a B is doomed to have to pay their fees within 28-29 days or else it's late. California, you pay your fees during the month of the vehicle purchase. That, to me, was weird when I discovered that.

Alabama fees, I believed were expensive and living in Birmingham became more expensive. A total of maybe $45 for the little sticker you put on the license plate and a little extra for the plate. I was thinking this was a lot of money but once I moved to California, oh how I was mistaken. Here are some "extra" fees Californians have to pay for on top of the usual fees Alabamians would pay.

A. Californa Highway Patrol (CHP) fee of $23. Like, what is this!?

B. Transportation Improvmenet Fee (between $25-$175)

C. Alternative Fuel / Technology Smog Fee ($25)

D. An additional license plate for the front of the car

E. Permit Fees (for those who need a permit)

F. Vehicle License Fee is .65% of value of vehicle

See what I mean!? Alabama has a set price based on model and make of vehicle, year of vehicle, and where you live in Alabama. California has way more additional costs and it's based on the value of the vehicle.

2. Tax Withholdings

California and Alabama are also different in this category. I will be using an example of someone who files a W-2 form.

Alabama employees sees their check stub and notices their job takes out money for Federal, State and Local taxes, Social Security and Medicare. Employers pay for Social Security, Medicare, and Coporate Income Tax. I didn't see anything else employees or employers would have to pay for.

For California, it's different.

A. Employers have to pay for Unemployment Insurance (UI) Tax (3.4%) and Employment Training Tax (ETT) for the first year of business.

B. Employees pay for State Disability Insurance (SDI). I actually see this on my pay stub which is actually new for me. They take out (1.2% of my income).

C. Employees also pay for California Personal Income Tax (PIT).

Similarities would include Social Security (6.2% of income) and Medicare (1.45% of income). Both Alabama and California employees pay for this.

3. Tax Exemption

I haven't really thought about this topic until one day I was looking at the groceries receipt and discovered there wasn't a spot on the receipt for taxes. That shocked me! I've always had to pay taxes on food wherever I go. One exception was when my family and I would go to the beach in Florida. We know Florida doesn't tax food but they make up for it in taxing the property.

Alabama's State Sales Tax is 4% and the average Local Tax is 3.9%. I know depending on where I go to buy things like food, I could be paying anywhere between 8-10% tax. So something that cost only a $1 at the Dollar Tree store would actually cost $1.10.

For tax exempts in Alabama, groceries are defiently not one of them. The list I found consist of medical services, prescription drugs, motor vehicles, janitorial services, transportation services, and custom software. That's it. That's all I could find. Everything else is taxed.

For California, State Sales Tax is 6% and average Local Tax is 2.4%. Tax exempt items include:

A. Groceries, prescription drugs, medical devices, medical services

B. Machinery, raw materials, utilities, fuel

C. Optional maintenance contracts, janitorial services, transportational services

D. Almost all software and digital products such as canned software and custom software

As you can see here, California has way more items that are tax exempt. This is actually really cool. So, in a way, both California and Alabama have good and not so good fees and taxes. It's interesting to compare and contrast between the two to see how both of these states function. California requires more tax withholdings but the state has way more tax exempt items. Alabama's fees are much less with car registrations but there isn't that much tax exempt items.

Disclaimer: I don't know all the facts about these topics I chose. I'm not completely knowledgeable in this topic I chose. I took what I found in different websites and came up with this list accordingly. Please let me know if I read my facts wrong and I need to change something. Please let me know how I did with this blog. It means a lot to me you are reading it. Thank you.