What is the average income in Alabama?

The median household income in Alabama is approximately $59,609 (2024), ranking 45th among US states. The per capita income is about $32,990. Income varies significantly by city: Huntsville ($75,400), Birmingham ($46,600), Mobile ($43,800), and Montgomery ($48,200).

Is Alabama a cheap state to live in?

Yes. Alabama has one of the lowest costs of living in the country, with an overall index of about 87 (13% below national average). Housing is especially affordable — the median home price is around $230,000, roughly 60% of the national median. Groceries, utilities, and healthcare are also below average.

What are the taxes like in Alabama?

Alabama has a relatively low flat-ish income tax (2-5% with a top rate of 5% on income over $3,000 single / $6,000 married), low property taxes (average effective rate of 0.39%, 4th lowest in nation), and a combined state+local sales tax averaging 9.24% (one of the highest in the US). Alabama is one of few states that taxes groceries.

Living in Alabama: Income, Housing, Taxes & Cost of Living (2026)

Alabama is one of the cheapest states to live in, with a cost of living roughly 13% below the national average, median home prices well under $250,000, and property taxes among the lowest in the nation (0.39% effective rate, the lowest of any state). The economy is anchored by aerospace and defense (Huntsville’s Redstone Arsenal and NASA Marshall Space Flight Center), automotive manufacturing (Honda, Hyundai, Mercedes-Benz, Mazda-Toyota), healthcare, and military installations. Huntsville has emerged as one of the fastest-growing tech and defense cities in the Southeast, with incomes that rival much larger metros. Birmingham, Mobile, and Montgomery offer deep affordability. The state’s income tax tops out at 5% and includes a deduction for federal taxes paid — a unique benefit that reduces the effective rate for most earners.

Alabama at a Glance

Metric	Value	National Rank
Population (2024)	5.1 million	24th
Median household income	$59,609	45th
Median home price	$230,000	5th lowest
Cost of living index	87	4th lowest
State income tax	2-5%	Below average
Sales tax (state + local avg)	9.24%	4th highest
Property tax (effective rate)	0.39%	4th lowest
Unemployment rate	3.2%	Average

Income in Alabama

Median Household Income by City

City/Metro Area	Median Household Income	Cost of Living Index	Affordability Rating
Huntsville	$75,400	92	Excellent
Birmingham	$46,600	86	Good
Montgomery	$48,200	84	Good
Mobile	$43,800	85	Good
Tuscaloosa	$47,500	84	Good
Auburn-Opelika	$56,200	88	Excellent
Dothan	$48,000	82	Excellent
Decatur	$52,100	80	Excellent
Florence-Muscle Shoals	$48,500	78	Excellent
Gadsden	$42,500	76	Good

Income by Occupation (Alabama vs National)

Occupation	Alabama Average	National Average	Difference
Software developer	$88,200	$127,260	-31%
Registered nurse	$62,400	$81,220	-23%
Teacher (K-12)	$54,800	$63,650	-14%
Accountant	$68,500	$79,880	-14%
Electrician	$51,200	$60,240	-15%
Truck driver	$48,200	$49,920	-3%
Retail manager	$44,500	$47,150	-6%

While salaries are lower than national averages, the 13% lower cost of living offsets much of the gap.

Housing in Alabama

Median Home Prices by City

City/Area	Median Home Price	Price per Sq Ft	Median Rent (2BR)	Price-to-Income Ratio
Huntsville	$310,000	$155	$1,250	4.1
Birmingham	$225,000	$120	$1,050	4.8
Montgomery	$195,000	$105	$950	4.0
Mobile	$210,000	$110	$1,000	4.8
Tuscaloosa	$230,000	$130	$1,050	4.8
Auburn-Opelika	$285,000	$150	$1,200	5.1
Dothan	$185,000	$100	$900	3.9
Florence	$195,000	$105	$850	4.0
State Average	$230,000	$120	$1,000	3.9
National Average	$412,000	$210	$1,650	5.4

Monthly Mortgage Payment (Alabama vs National)

Scenario	Alabama ($230K, 20% down)	National ($412K, 20% down)	Monthly Savings
Mortgage payment (6.5%)	$1,163	$2,082	$919
Property taxes	$75	$267	$192
Home insurance	$165	$150	-$15
Total housing cost	$1,403	$2,499	$1,096

Taxes in Alabama

Income Tax Brackets (2025)

Single Filer:

Taxable Income	Tax Rate
$0 – $500	2%
$501 – $3,000	4%
Over $3,000	5%

Married Filing Jointly:

Taxable Income	Tax Rate
$0 – $1,000	2%
$1,001 – $6,000	4%
Over $6,000	5%

Total Tax Burden Comparison

Gross Income	Federal Tax	Alabama Income Tax	FICA	Property Tax ($230K home)	Effective Total Rate
$50,000	$3,962	$2,222	$3,825	$897	21.8%
$75,000	$8,115	$3,472	$5,738	$897	24.3%
$100,000	$13,615	$4,722	$7,650	$897	26.9%
$150,000	$25,915	$7,222	$10,878	$897	29.9%

Alabama Tax Advantages and Disadvantages

Advantage	Disadvantage
4th lowest property taxes in US (0.39%)	High combined sales tax (9.24% average)
Federal income tax is deductible on state return	Groceries are taxed (one of few states)
Low overall tax burden	Regressive tax structure (sales tax hits low earners harder)
No tax on Social Security benefits	Income tax kicks in at very low income levels

Cost of Living Breakdown

Category	Alabama Index	National Average	Annual Cost (Single)	National Annual
Housing	64	100	$13,680	$21,480
Groceries	94	100	$4,700	$5,000
Transportation	94	100	$9,400	$10,000
Healthcare	92	100	$4,600	$5,000
Utilities	96	100	$3,840	$4,000
Miscellaneous	92	100	$3,680	$4,000
Total	87	100	$39,900	$49,480

A single person saves roughly $9,580/year living in Alabama vs the national average.

Affordability Analysis

Income Needed to Live Comfortably

Household Type	Alabama	National Average	Savings vs National
Single person	$42,000	$52,000	$10,000
Single parent + 1 child	$58,000	$72,000	$14,000
Couple, no children	$62,000	$78,000	$16,000
Family of 4	$78,000	$98,000	$20,000

Can You Afford a Home?

Household Income	Max Affordable Home (28% rule)	Available in Alabama?
$40,000	$155,000	Yes — smaller cities, rural areas
$50,000	$195,000	Yes — most cities outside Huntsville
$60,000	$235,000	Yes — state average home price
$75,000	$295,000	Yes — most markets including Birmingham
$100,000	$390,000	Yes — even Huntsville market

Best Cities in Alabama by Financial Profile

If You Want…	Best City	Why
Highest income + growth	Huntsville	Tech/defense jobs, fastest-growing metro
Lowest cost of living	Florence-Muscle Shoals	Index of 78, very affordable homes
Best income-to-cost ratio	Huntsville	High salaries relative to moderate costs
College town culture	Auburn-Opelika or Tuscaloosa	University amenities, younger population
Biggest metro amenities	Birmingham	Largest city, most diverse economy
Gulf Coast lifestyle	Mobile	Coastal access, moderate costs

Alabama Pros and Cons

Financial Pros	Financial Cons
Very low cost of living (87 index)	Below-average incomes (45th in US)
4th lowest property taxes	High sales tax including groceries
Affordable housing (median $230K)	Limited high-paying job markets outside Huntsville
Federal tax deductible on state return	Higher home insurance (hurricane/tornado risk)
Low utility costs	Below-average healthcare access in rural areas
Growing tech sector in Huntsville	Lower educational attainment rates

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

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