What is the cost of living in Alabama?

1 min readLast updated May 23, 2023by Charlie Barton

When considering a move to a new state, understanding the cost of living is vital for effective budgeting and financial planning. If Alabama is on your radar, let's delve into the current statistics related to the cost of living in the state.

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 average cost of living in Alabama in 2023 is around $39,657 per year for a typical single individual.

Housing costs 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 within the state.

Typical Home Prices in Alabama (Zillow Data):

  1. Birmingham – $234,928

  2. Mobile - $174, 623

  3. Montgomery – $176,140

  4. Huntsville - $282,092

  5. Tuscaloosa - $202,629

  6. Dothan - $162,316

If you’re renting in Alabama, it will set you back between $664 and $1,250 per month. So for a two-bedroom apartment, you can expect to pay on average, $826 a month.

Utility costs in Alabama

Utility costs in Alabama also play a significant role in the overall cost of living. According to Forbes, Alabamians pay just over $452,50 a month in utilities—just above the national average.

Average Monthly Utility Costs in Alabama:

  1. Phone bill: $114

  2. Energy bill: $147.75

  3. Natural gas: $81

  4. Streaming: $44.75

  5. Internet: $35

  6. Monthly water bill: $30

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.

Groceries and food costs in Alabama

When it comes to groceries and food costs, Alabama generally aligns with prices found elsewhere in the United States.

According to Zippia, those in Birmingham pay nearly $400 on average each month.

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.

Transportation costs in Alabama

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

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.

Healthcare costs in Alabama

Understanding healthcare costs is crucial when considering the overall 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.

Annual Healthcare Expenditure in Connecticut Estimated by MIT:

  1. One adult, no children: $2,998

  2. Two adults (one working), no children: $6,663

  3. Two adults (two working), no children: $6,663

  4. One adult, one child: $9,059

  5. One adult, two children: $9,069

  6. Two adults (one working), one child: $9,069

  7. Two adults (two working), one child: $9,069

  8. Two adults (one working), two children: $8,994

  9. Two adults (two working), two children: $8,994

Childcare costs 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 different the state.

Taxes in Alabama

Alabama state income tax rates ranges 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.

Taxes in Alabama compared to neighboring states:

  1. Alabama income tax: 5%

  2. Mississippi income tax: 3% - 5%

  3. Florida income tax: No state income tax

  4. Georgia income tax: 1% - 5.75%

  5. Tennessee income tax: No state income tax

The bottom line

The amount of money needed to live comfortably in Alabama 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.

However, 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.

Before making any significant financial decisions, it's advisable to consult with a financial advisor to ensure a smooth transition and proper financial planning.

Whether you’re retirement planning or considering relocating to chase a new career, Unbiased can assist you with your move's financial ins and outs. Find the right advisor for your needs today.


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.