What is the cost of living in Alabama?

1 min readLast updated March 6, 2024by Charlie Barton

Find out everything you need to know about Alabama’s cost of living, from tax rates to healthcare costs. 


  • The Alabama cost of living is approximately $39,657 per adult per year.

  • State income tax rates range from 2% to 5%.

  • The estimated average value in Alabama is around $206,044.

  • Various factors influence the actual cost of living per person.

The average cost of living in Alabama 

Alabama's average cost of living varies depending on location and individual circumstances. However, according to the Bureau of Economic Analysis, the Alabama cost of living in 2023 is around $39,657 per year for a typical single individual.  

How much will I pay in taxes in Alabama?

Alabama state income tax rates range from 2% to 5%. The state income tax rate for the highest bracket is currently 5%. Additionally, Alabama has a sales tax rate of 4%, which is relatively low compared to other states. Check out the complete guide to taxes in Alabama here.

Here's a comparison of income tax rates among some neighboring states:

StateIncome Tax Rate
Alabama 5%
Mississippi 5%
Florida No state income tax
Georgia 1% - 5.75%
Tennessee No state income tax

How much does housing cost in Alabama?

Housing costs in Alabama are generally affordable compared to the national median of $436,800. 

Zillow, the real-estate company, Home Value Index, as of March 2023, estimates the average value in Alabama is around $206,044. However, it's important to note that housing prices can vary significantly across different regions.

If you’re renting in Alabama, you can budget for between $664 and $1,250 per month. You can expect to pay an average of $826 a month for a two-bedroom apartment.

To provide a snapshot of housing costs, here are some examples of the typical home prices across the state based on Zillow’s data: 

How can I manage the cost of living in Alabama?

If you’re concerned about the cost of living and how to make your money go further, it’s important to know and understand your finances.

Speaking to a regulated financial advisor is an excellent way to gain control over your finances. Let Unbiased match you with an advisor you can trust.

CityTypical Home Price
Birmingham $234,928
Mobile $174,623
Montgomery $176,140
Huntsville $282,092
Tuscaloosa $202,629
Dothan $162,316

What is the average cost of utilities in Alabama?

Utility costs also play a significant role in the overall Alabama cost of living. 

According to Forbes, Alabamians pay just over $452,50 a month in utilities — just above the national average. However, you should be mindful of some regional variations. Factors such as climate and location impact these costs. For example, areas experiencing colder winters might have higher heating expenses, while regions with long, humid summers may require more air conditioning.

Take a look at the utility cost breakdown for energy, water, internet, natural gas, phone bill, and streaming in the table below:

UtilityAverage cost in Alabama
Energy bill $147.75
Monthly water bill $30
Internet $35
Natural gas $81
Phone bill $114
Streaming $44.75

What are the average grocery and food costs in Alabama?

When it comes to groceries and food costs, Alabama generally aligns with prices found elsewhere in the United States. Thanks to groceries being taxed at the same rate as other purchases, any raise in the State of Alabama's cost of living is seldom high.

According to Zippia, those in Birmingham pay nearly $400 on average each month, which is slightly less than the national average. 

According to 2021 data from the Bureau of Labor Statistics, the average spending on food at home is $5,259 annually, or about $438 per month for US households.

What are the average transportation costs in Alabama?

Transportation costs, including gas prices and vehicle maintenance, can impact the overall cost of living in Alabama.

You need to factor transportation into your considerations, as the state is 50,744 square miles (131,426 square kilometers) in size. The urban areas offer affordable, reliable public transport, but a personal vehicle or easy access to a vehicle is essential outside the cities.

Alabama's Gas prices are typically lower than the national average, providing potential savings for residents. However, these prices fluctuate over time. 

It is also worth noting that prices can vary across different regions within the state.

How much does healthcare cost in Alabama?

Understanding healthcare costs is crucial when considering the overall Alabama cost of living. 

Alabama is known for its excellent healthcare system, but the costs are slightly higher than the national average. However, there can be regional contrasts within the state. Your costs can also be influenced by the specific type of insurance you have. Check out the average cost of health insurance in the US here.

MIT estimates:

ScenarioAnnual healthcare expenditure
One adult, no children $2,998
One adult, one child $9,059
One adult, two children $9,069
Two adults (one working), no children $6,663
Two adults (one working), one child $9,069
Two adults (one working), two children $8,994
Two adults (two working), no children $6,663
Two adults (two working), one child $9,069
Two adults (two working), two children $8,994

Check out the average cost of health insurance in the US here.

What is the average childcare cost in Alabama?

Childcare costs in Alabama are relatively affordable compared to the national average. Families in Alabama currently pay around $7,400 per year for childcare for one child. This figure doubles for two children. 

However, it's important to note that this figure can vary across the state.

How much does it cost to live in Alabama?

The amount of money needed to comfortably cover the cost of living in Alabama in 2023 can vary depending on location, lifestyle, family size, and personal preferences. However, to provide a general idea, let's consider the state's median income as a benchmark.

According to recent data, the median household income in Alabama is around $55,000 per year. 

It's important to note that the definition of "living comfortably" can differ from person to person. Some individuals may have higher expenses due to various factors such as housing preferences, healthcare needs, education costs, or saving goals. 

Get expert financial advice and learn more about the cost of living and how to manage it with an SEC-regulated advisor. Let Unbiased match you with the best financial advisor for your needs. 


Charlie Barton

Charlie Barton is a writer at Unbiased. He has been writing about personal finance and investing since 2017, with extensive knowledge of platforms and products. Charlie has a first-class degree from the London School of Economics.