Ad Valorem - Residential property is taxed at a rate of 31 mills x 10% of assessed value. There is a homestead exemption for the totally disabled persons or person over 65 years of age with $7,500 or less income if they live on the property. Other exemptions are based on individual situations. Income from Specified Alabama Retirement Systems, the United States Civil Service Retirement System, Military Retirement Systems, and benefits received under a "defined benefit plan" as decided under Section 414(j) of the Internal Revenue Code, are exempt from Alabama Income Tax.