I thought Alabama did not tax military retirement pension

When you go through the Alabama interview, if you have entered a 1099-R of any sort, your will see a screen entitled "About Your Retirement Distributions" (see first screenshot below).

Click the Edit button to the right of the distribution you want to alter.

This should give you a new screen called "Alabama Special Handling of This Distribution" *(see second screenshot).

At the bottom of this screen, if your distribution qualifies to be non-taxable in Alabama (which military pensions do), you can answer the question "Is your distribution from one of the pension plan systems that is not taxed by Alabama?" with a "yes".

Then you are returned to the screen with the table of distributions, only this time, you will see that the Alabama income will exclude your military retirement.

Please ignore the red arrow on the second screenshot, it was for another user, but the screen is the same as what you will see.