Cost of Living in Alabama

By Jacqueline DeMarco

(Last Updated – 03/2025)

Whether Tiger or Crimson Tide, there’s no doubt that Alabamans are intensely proud of their state. With some of the best college football legacies in the nation, its delicious southern cuisines, or the fact that Mobile, Alabama was actually the site of the first celebration of Mardi Gras, it’s not surprising why Alabamans are so proud to hail from the Heart of Dixie.

Alabama’s ranks continue to grow, as its population has risen each year since 2010 and now numbers over 5,157,000 residents. One of the things that continues to draw in new residents is no doubt Alabama’s affordable cost of living.

We take an up-close look at some of the key costs of living that make up the budgets of everyday Alabamans.

What’s the Average Cost of Living in Alabama?

Average Cost of Living in Alabama: $44,529 per year

The Bureau of Economic Analysis cites that the average cost of living in Alabama is around $44,529 per year for a typical single individual.

This is good news for anyone who’s thinking of moving to Alabama, as MERIC’s 2024 Cost of Living Index actually ranked Alabama as having the 5th lowest cost of living in the United States. The only other Southeastern state to beat Alabama on that list was Mississippi.

As a whole, the Southeastern United States region is fairly affordable when compared to the nation at large. It’s hard to go wrong if you’re looking to settle down without paying an arm and a leg.

We’ve broken down the major costs of living into five key categories to help paint a picture of what annual expenses look like in Alabama.

Housing Costs in Alabama

Average Housing Costs in Alabama: $802 to $1,351 per month

The average home in Alabama costs around $226,118, according to Zillow’s January 2025 housing data. This is almost half of the national median sales price of an existing U.S. home of $355,328, according to Zillow.

•  Median monthly mortgage cost: $1,386

•  Median studio rent: $802

•  Median one-bedroom rent: $849

•  Median two-bedroom rent: $935

•  Median three-bedroom rent: $1,086

•  Median four-bedroom rent: $1,351

•  Median gross rent: $982

Home prices and rental costs vary widely depending on where you live. When calculating your monthly budget, don’t forget to factor in other costs like utilities, taxes, and maintenance in addition to your monthly mortgage payment.

Below are the typical 2024 home prices for major cities in Alabama, according to Zillow.

* data as of December 2024

Utility Costs in Alabama

Average Utility Costs in Alabama: $398 per month

Alabamians can expect to pay a total of $398 per month on their utility bills. This includes electricity, gas, cable, and water.

The exact monthly tally will depend on your property, utility usage habits, and the type of services you choose (e.g., internet only or TV and internet). We’ve broken out some common utility costs below.

Sources: U.S. Energy Information Administration, Electric Sales, Revenue, and Average Price; Statista.com, “Average monthly residential utility costs in the United States, by state”; DoxoInsights, U.S. Cable & Internet Market Size and Household Spending Report; and Rentcafe.com, What Is the Average Water Bill?

Groceries & Food

Average Grocery & Food Costs in Alabama: $319 per person, per month

Alabamians pay an average of $319 per month on grocery and nonrestaurant food costs, or about $3,833 per year, according to the BEA’s latest Personal Consumption Expenditures report.

Alabama’s grocery and food costs are fairly cheap when compared to the rest of the nation; this is fairly typical of Southeastern states in general.

However bear in mind that these expenses will vary depending on where you live within Alabama. Expect to pay more for groceries if you’re living in a larger urban city like Mobile versus a smaller city like Decatur.

Below are the Council for Community and Economic Research’s rankings of food costs across major Alabama cities as of 2024.

Recommended: Grocery Shopping on a Budget

Transportation

Average Transportation Costs in Alabama: $10,561 to $19,652 per year

If you’re planning to drive through the Land of Dixie, you’ll want to keep an eye on your transportation costs. Fuel costs in the Southeast aren’t cheap, and those bills can quickly add up (particularly if you’re driving American muscle!).

Depending on your ride of choice, family size, and the number of cars you choose to own, your transportation costs can vary widely. We’ve broken down estimates of these costs as calculated by MIT’s Living Wage Calculator for 2024.

Health Care

Average Health Care Costs in Alabama: $7,505 per person, per year

The average annual per-capita cost of health care in Alabama is $7,505, according to the BEA’s Person Consumption Expenditures report.

Within the Southeast, Alabama has the second-lowest health care costs, with only South Carolina coming in cheaper.

While health care costs can vary depending on your age, health history, and location, you can minimize your expenses by shopping policies across multiple insurance providers. Alabamans can shop for health insurance providers using the federal insurance marketplace, HealthCare.gov.

Child Care

Average Child Care Costs in Alabama: $714 to $1,031 per child, per month

Regardless of who you are, there’s no getting around childcare costs when it comes to having a family. Fortunately, Alabama happens to have the second-lowest child care costs in the country, according to the Economic Policy Institute. Only Mississippi had lower child care costs.

However, that doesn’t mean that child care is cheap; far from it. Depending on the type of care you need, child care can cost thousands of dollars a month. This can be especially unforgiving for younger families where both spouses have to work.

If you need help paying for child care costs, the Alabama Department of Human Resources lets eligible families apply for Subsidized Day Care Services. Check out the Federal Child Care and Development Fund website for more information.

We’ve provided estimates of the average child care costs in Alabama below, per data from CostofChildCare.org.

Taxes

Highest Marginal Tax Rate in Alabama: 5%

Alabama has a graduated-rate income tax structure where the highest tax bracket is assessed at a 5% marginal tax rate, according to the Tax Foundation’s State Individual Income Tax Rates and Brackets for 2025.

Taxes are a part of Alabama’s cost of living that can’t be avoided. Its top marginal tax rate isn’t too bad, especially when stacked against other southern states like Georgia, which has a top tax rate of 5.39%, or South Carolina, with a rate of 6.2%. But that’s also more than its neighbors Tennessee and Florida, which have no income tax.

Miscellaneous Costs

Now that we’ve covered the everyday costs of living, let’s take a look at the costs of some of Alabama’s greatest attractions.

•  Gallon of Milo’s Famous Sweet Tea, founded in 1946 and headquartered in Bessemer, AL: starts at $3.72

•  Adult tickets to the U.S. Space and & Rocket Center in Huntsville, AL: $30

•  Shrimp & Grits at Classic on Noble in Anniston, AL: $17-$28

•  A Famous Fried Chicken Lunch Plate at Martin’s in Montgomery, AL: $12.99

Alabama’s collection of beautiful woodlands and gulf shores certainly doesn’t cost anything to visit; it’s one of those unique states where individuals can hike in the morning and enjoy sandy coastal beaches in the afternoon.

The state of Alabama is also rife with historic and educational attractions, from the U.S. Space & Rocket Center to the USS Alabama Battleship Memorial Park.

However, the one defining feature of Alabama is football.

Akin to a religion, you haven’t experienced college football until you’ve been to Alabama. The University of Alabama-Auburn University rivalry is one of the most heated rivalries in American football, and this matchup plays out every year at the annual Iron Bowl.

This matchup is especially heated as both schools are located within the same state and locals are split across each team. This contention plays out between neighbors, coworkers, and even within families.

Alabama certainly has its vibes. Whether you’re trying to beat the hot summers, sipping on a sweet tea or your favorite brand of “coke,” or you’re enjoying a barbeque cookout at the tailgate of your favorite football team, you’re sure to find something about Alabama that fits your niche.

Recommended: What Are the Average Monthly Expenses for One Person?

How Much Money Do You Need to Live Comfortably in Alabama?

While the amount you need to live comfortably will vary based on your lifestyle, MIT’s Living Wage Calculator cites that the typical single, childless Alabaman will need to earn $20.50 an hour, or $42,640 per year, to qualify for a “living wage” in the state.

When it comes to costs, Alabama doesn’t do half bad, as U.S. News & World Report’s Affordability Rankings ranked Alabama the 3rd most affordable state in the union, which is close to MERIC’s ranking of the 5th lowest cost of living in the U.S. Depending on your personal tastes and income, a comfortable life in Alabama is more within reach than you may think.

What City Has the Lowest Cost of Living in Alabama?

The city of Anniston has the lowest cost of living in Alabama, according to the Council for Community and Economic Research’s (CCER) 2024 Cost of Living Index data.

To help you compare the cost of living across different cities in Alabama, we’ve displayed the three cities with the lowest cost of living in the State.