Last updated: October 2026 · By Byron Bennett, The Williams Group at Keller Williams Realty
QUICK SUMMARY
The short answer: Alabama property taxes are paid a year in arrears. The tax year runs October 1 to September 30, and the bill that comes due each October 1 (and turns delinquent after December 31) pays for the tax year that just ended. So at closing, the seller typically pays any unpaid bill for past tax years and credits the buyer for the days the seller owned the home in the current tax year, because the buyer will receive that bill next fall. Standard Alabama purchase contracts prorate ad valorem taxes as of the closing date, and the closing attorney or title company does the math. As of October 2026, the 2025–26 bill is due now and the 2026–27 tax year has just begun.
KEY TAKEAWAYS
1. Alabama’s property tax year is October 1 through September 30, and taxes are collected about a year later, in arrears. 2. Bills are due October 1 and delinquent after December 31. Unpaid taxes are a lien on the home that comes ahead of every other lien, so they get paid at closing. 3. The seller usually credits the buyer for the seller’s share of the current tax year, based on an estimate from the most recent bill. 4. Estimates can miss when the home changes tax class, loses an exemption, or was new construction on October 1. Ask about it before you close. 5. Homestead exemptions do not transfer. Buyers file their own with the county assessor, using their recorded deed.
Property tax proration is one of the line items on an Alabama closing statement that confuses buyers and sellers most, and it confuses them most in the fall, when a new bill is landing in the middle of a sale. This guide from The Williams Group at Keller Williams Realty walks through the calendar, the math and the handful of situations where the estimate at closing can be off. It applies statewide, from Tuscaloosa County to Jefferson and Shelby counties.
How does Alabama’s property tax calendar work?
Alabama sets everything off October 1. Under Ala. Code § 40-1-3, the state, county and city each hold a lien on taxable property “from and after October 1 of each year,” and that lien is superior to all other liens until the taxes are paid. County revenue offices describe the tax year as beginning October 1 and ending September 30, with taxes collected a year in arrears. In practice, that means:
| Date | What happens | Example for the 2025–26 tax year |
|---|---|---|
| October 1 | New tax year begins; ownership, use and exemptions are set as of this date | October 1, 2025 |
| Following October 1 | That year’s bill is due | October 1, 2026 |
| November 15 | Mortgage company escrow payments due (Tuscaloosa County) | November 15, 2026 |
| December 31 | Last day to pay without penalty | December 31, 2026 |
| January 1 | Taxes are delinquent; penalties and interest begin | January 1, 2027 |
| Spring | Delinquent parcels move toward the county tax sale (late April online in Tuscaloosa County) | Spring 2027 |
Dates from the Alabama Department of Revenue and the Tuscaloosa County Tax Collector. Jefferson and Shelby counties follow the same October 1 / December 31 schedule.
Two consequences matter at closing. First, the bill paid this fall covers a period that is already over, so it belongs almost entirely to whoever owned the home last year. Second, nobody has a bill yet for the tax year that started October 1, so that year’s share has to be estimated.
How is the proration calculated at closing?
Most Alabama REALTOR purchase contracts say ad valorem taxes, along with HOA dues and similar charges, are “prorated between Seller and Buyer as of the date of closing.” Your closing attorney or title company typically takes the most recent annual bill as the estimate, divides it by 365 and multiplies by the number of days the seller owned the home in the current tax year. Here are two worked examples, assuming an annual bill of $2,400 and that the buyer owns the home on closing day.
Example 1: closing on November 16, 2026. The 2025–26 bill (due now) covers a year the seller owned completely. If it is unpaid, it is paid from the seller’s proceeds at closing. For the 2026–27 tax year, the seller owned the home October 1 through November 15, which is 46 days. The seller credits the buyer about $302 (46 ÷ 365 × $2,400), and the buyer pays the full 2026–27 bill in the fall of 2027.
Example 2: closing on August 14, 2026. The 2025–26 bill has not been issued yet. The seller owned the home October 1, 2025 through August 13, 2026, which is 317 days, so the seller credits the buyer about $2,084. The buyer then pays that whole bill when it comes due in October. This is why a summer buyer can be surprised by a nearly full-year tax bill a few weeks after moving in, even though the money for it was credited at closing.
Contracts, lenders and closing offices can differ on details such as whether closing day belongs to the buyer or the seller, so treat these as illustrations. Your closing statement will show the actual credit. For how this fits with the rest of the bill, see our breakdown of Alabama buyer closing costs and, for sellers, the cost to sell a house in Alabama.
Buying or selling this fall and want the tax line checked before closing? Call or text 205-292-2108 (West Alabama) or 205-292-7142 (Greater Birmingham).
When can the closing estimate be wrong?
The proration is only as good as the bill it is based on. These are the situations where it most often misses:
1. The home changes tax class. Alabama assesses an owner-occupied home (Class III) at 10% of appraised value and most other property, including rentals, (Class II) at 20%. If you buy a former rental to live in, the most recent bill was likely figured at the higher rate. If the seller claimed an owner-occupied rate they did not qualify for, your next bill can come in higher than the estimate. Standard Birmingham-area contracts include a seller statement about whether the property is Class III and a reimbursement promise if that statement is wrong.
2. An exemption disappears. The seller’s homestead and any age 65+ or disability exemption stay with the seller. A bill that reflected a large senior exemption can understate what the buyer will owe by a wide margin.
3. New construction. Status is set as of October 1. If a house was unfinished on that date, the last bill may reflect mostly land, and county offices note that changes after October 1 can take up to two years to show up on a statement. Prorating a lot-only bill shortchanges the buyer. Our new construction guide covers what else to check.
4. Reappraisal. Every Alabama county reviews about a quarter of its parcels each year, so a home’s appraised value can move between bills.
If one of these applies, ask your closing attorney before closing whether to adjust the estimate or sign a re-proration agreement that settles up when the actual bill arrives. Our guides to closing attorneys and title companies in Alabama and how Alabama property taxes are calculated explain the roles and the math in more detail.
When does a buyer’s homestead exemption start?
Homestead is based on who owns and lives in the home on October 1, the first day of the tax year. The Tuscaloosa County Assessor describes it as an exemption that “must be timely claimed or lost,” and Jefferson County says exemptions must be claimed by December 31 for the next tax year. After closing, take a copy of your recorded deed to the county assessor (Tuscaloosa County: 714 Greensboro Ave., Room 108, 205-464-8240; Jefferson County: 205-325-5300) and ask which tax year your exemption will first apply to. Our Alabama homestead exemption guide covers the amounts and the 65+ options, and our Tuscaloosa and Northport tax rate breakdown shows how millage varies by location.
What should buyers with a mortgage escrow account know?
Most lenders collect property taxes monthly in escrow and pay the county directly. In Tuscaloosa County, mortgage company escrow payments are due November 15, and the tax collector notes that it does not mail notices to mortgage companies. The Alabama Department of Revenue is also clear that owners are responsible for taxes “whether you receive a statement or not.” In your first fall as an owner, check the county’s online records in December to confirm the bill was paid. If you closed in late summer, the first bill may also arrive in the previous owner’s name, so do not assume it went to the right place.
Who pays if the seller’s taxes are delinquent?
Because the tax lien comes ahead of every other lien, the title search will turn up unpaid taxes and they are normally paid from the seller’s proceeds at closing. That protection is one reason owner’s title insurance matters; our Alabama title insurance guide explains what it covers. If you are buying acreage, also read our guide to Alabama current use valuation: a three-year rollback tax can follow the land after a sale.
Local TWG perspective
Fall closings are when this question comes up most for The Williams Group, in Tuscaloosa and Northport and across the Birmingham suburbs alike. Sellers who just paid their October bill are surprised to see a tax credit to the buyer on the settlement statement, and buyers who closed in August are surprised by a full bill in October. Neither is a mistake; it is how Alabama’s arrears calendar works. On every closing we review three things early: whether the home is currently taxed as owner-occupied, whether the seller has a senior or disability exemption that will drop off, and whether the home was finished on the last October 1. Catching those before closing is far easier than chasing a seller afterward.
Frequently asked questions
Are Alabama property taxes paid in advance or in arrears?
In arrears. The tax year runs October 1 through September 30, and the bill for that year is due the following October 1 and delinquent after December 31.
Who pays property taxes in the year a house sells in Alabama?
Both parties, by proration. The seller pays for the days they owned the home in the tax year, usually as a credit to the buyer at closing, and the buyer pays the actual bill when it comes due. Any unpaid bill for earlier years is paid by the seller at closing.
Why did I get a full property tax bill right after buying my house?
If you closed between roughly spring and September, the bill due that October covers a tax year mostly owned by the seller. The seller’s share should have been credited to you at closing; check your closing statement for the tax proration line.
Does the seller’s homestead exemption transfer to the buyer?
No. Exemptions belong to the owner, not the house. Buyers who will live in the home should file their own homestead claim with the county assessor after closing, bringing a copy of the recorded deed.
When are property taxes due in Alabama?
October 1. They become delinquent after December 31, and penalties and interest start January 1.
This article is general information, not tax or legal advice. Your purchase contract and closing attorney control how taxes are prorated on your transaction.
If you are buying or selling in West Alabama or Greater Birmingham, The Williams Group can review the tax line with you and your closing attorney before the closing date, so nothing on the settlement statement is a surprise.
Sources
Alabama Department of Revenue: When are my property taxes due?
Alabama Department of Revenue: What is the timetable for property taxes?
Ala. Code § 40-1-3, Lien for taxes (Justia)
Cullman County Revenue Commissioner: Real property information (tax year and arrears)
Tuscaloosa County Tax Collector: Important dates
Tuscaloosa County Tax Assessor: Assessor department (homestead)
Jefferson County Tax Assessor: Frequently asked questions
Closing this fall? Let’s check the tax math first.
Whether you are buying or selling, we will walk you through the property tax proration before you sign.
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