What Is the Cost of Living in Alabama?

Alabama offers a unique blend of Southern charm and affordable living. Understanding the cost of living here can help you make informed decisions about relocation, budgeting and lifestyle. This article breaks down key expenses like housing, utilities, transportation and healthcare to give a clear picture of what to expect. So, what is the cost of living in Alabama? Whether you’re considering a move or simply curious, you’ll understand the essentials of living in this state.

How Much Is the Income in Alabama?

Alabama has a land area of 50,651.0 square miles and a water area of 1,769.0 square miles, making it the 28th largest state by area. Its median household income is $62,212, reflecting moderate earnings compared to the national average. 

Age groups between 45 and 64 report the highest median income, around $75,342, while younger and older cohorts earn less. The unemployed persons per job opening ratio is 0.7. Considering the highest states with employment reaching 1.3 or higher, it is among the best states related to unemployment.

How Much Is the Cost of Living in Alabama?

Determining your living expenses can be complicated and takes into account various factors. The state’s overall cost of living remains approximately 3.1% below the national average, making it affordable for many residents. Smaller cities such as Anniston and Dothan rank among the cheapest places to live in Alabama.

Additionally, it ranks second for the lowest housing costs among states, with the average price of a single-family home at $170,184. The average rent for a two-bedroom apartment in the state is about $1,046. 

How Much Are Home and Rental?

Anniston scores 5.5 out of 10 in livability rankings, placing it at number 355 nationally and seventh within Alabama. Housing costs contribute significantly to affordability in Anniston. The median home value here is $141,900, considerably lower than the national average of $370,489.The median home value in the Yellowhammer State sits around $149,600 — making Anniston more accessible compared to similarly sized cities elsewhere. 

Dothan supports a larger population of about 70,763 and has a median age of 38.4. It scores 5.9 out of 10 in livability and ranks 190th nationally and fifth within the state. Median home values in Dothan reach $187,797, well below the national benchmark. This pricing structure offers greater homeownership opportunities without compromising quality of life. 

How Much Is the Health Care Cost?

The average health care spending is $9,280 per person, placing the state below the national top spenders. This figure includes expenses for hospital care, physician services, nursing home care and prescription drugs, covering both private and public health funding. 

Compared to the District of Columbia — where spending reaches $11,944 per capita — this state remains one of the most affordable states for health care.

How Much Is the Grocery Cost?

The average weekly grocery bill in Alabama totals $271.64, reflecting moderate spending compared to other states. Residents spend around 2.34% of their income on groceries, placing it among the states with the highest percentage of income allocated to food. 

Over the past five years, grocery prices have risen nearly 25 percent nationwide. Despite these increases, the state maintains relatively affordable grocery costs due to its lower overall income levels and regional pricing dynamics. 

How Much Do the Utilities Cost?

Utility bills account for a significant share of household expenses, reaching about 11% of the state’s median monthly income. This places it among the top states where utility costs consume a larger portion of earnings, alongside West Virginia, Mississippi and Louisiana. 

While the U.S. average monthly utility bill stands at approximately $583, many state’s households face higher relative costs due to local energy rates and climate factors. These expenses cover electricity, natural gas, water, sewer, trash, internet, phone and streaming services. Managing utility bills are very important for overall affordability for residents, especially when combined with other living costs.

How Much Is the Transportation?

The average transportation expenses in the state are $2,178.20 per year, significantly lower than the national average of $9,826. Drivers in the Yellowhammer State also benefit from lower gas prices, paying around $3.09 per gallon compared to the U.S. average of $3.46. 
Auto insurance premiums in the state average $1,087.61 for full coverage, which is lower than the national figure of $1,189.50. These combined expenses make transportation one of the more affordable categories in Alabama’s cost of living.

How Much Is the Education Cost?

College costs slightly less than the national average. In-state students at public four-year institutions pay $22,204 per year, with tuition and fees totaling $11,081. Out-of-state students pay 87.5 percent more, totaling $28,315. 

Private colleges average $28,575 annually, about 42 percent below the national rate, while room and board add $10,889. Public 2-year schools cost $5,048 for in-state students and $9,432 for those out of state. Auburn University is the most expensive public college, with in-state costs reaching $25,092.

How Much Are the Tax Rates?

The state’s income tax system is graduated, with individuals taxed up to 5% depending on earnings.  Although income tax rates remain modest, the state relies heavily on sales tax to generate revenue. The state has one of the highest combined state and local sales tax rates at 9.44%, including a 5.44% average local rate. This is the highest nationwide. This structure means everyday purchases like groceries and clothing can become costly, particularly for lower-income residents.

The region has one of the highest combined state and local sales tax rates in the U.S., at 9.44%. This includes an average local rate of 5.44 % — the highest in the nation. As a result, everyday purchases like groceries, clothing and household goods can add up quickly, especially for lower-income households.

Is Alabama Expensive to Live In?

It is generally more affordable compared to the national average. While sales taxes rank among the highest nationally, overall expenses remain manageable for most residents.

However, certain costs like groceries and utilities take up a larger share of income compared to other states. Overall, the state offers a cost-effective lifestyle without sacrificing access to essential services and amenities.

How Much Money Do You Need to Live in Alabama?

The living wage for a family of four is $80,777, and the median income is $80,845 annually. However, Alabama also has one of the highest poverty rates in the nation, with 15.6% of its residents living at or below the poverty line.

How Does It Rank in Terms of Cost of Living?

Cost of living indexes provide a clear way to compare basic expenses like housing, food, transportation and healthcare across regions. These indexes use the national average as a baseline of 100, so a lower score indicates more affordable living costs. Alabama’s cost of living index is 87.9, about 3% below the national average, making it one of the most affordable states to live in. 

This ranking reflects the state’s overall affordability, supported by lower housing, transportation and utility costs. Such rankings help employers set wages, guide government benefits and assist individuals in making informed relocation decisions.

Is Alabama Expensive to Live In?

It is generally more affordable compared to the national average. While sales taxes rank among the highest nationally, overall expenses remain manageable for most residents.

However, certain costs like groceries and utilities take up a larger share of income compared to other states. Overall, the state offers a cost-effective lifestyle without sacrificing access to essential services and amenities.

How Much Money Do You Need to Live In the State?

The living wage for a family of four is $80,777, and the median income is $80,845 annually. However, Alabama also has one of the highest poverty rates in the nation, with 15.6% of its residents living at or below the poverty line.

Where Is Alabama Ranked in Cost of Living?

Cost of living indexes provide a clear way to compare basic expenses like housing, food, transportation and healthcare across regions. These indexes use the national average as a baseline of 100, so a lower score indicates more affordable living costs. Alabama’s cost of living index is 87.9, about 3% below the national average, making it one of the most affordable states to live in. 

This ranking reflects the state’s overall affordability, supported by lower housing, transportation and utility costs. Such rankings help employers set wages, guide government benefits and assist individuals in making informed relocation decisions.

Income levels are moderate, and the state faces a higher poverty rate. Overall, Alabama is a good option for affordable living with access to essential services, but careful budgeting is needed for certain expenses.

Frequently Asked Questions About Alabama Cost of Living

Is It a Good State to Relocate to for Affordability?

Yes, Alabama offers affordable housing and transportation costs, but groceries, utilities and sales taxes may require careful budgeting.

How Much Is the Cost of Living in Alabama per Month?

Monthly expenses in Alabama vary by lifestyle, but on average, include housing, utilities, groceries, transportation and healthcare. Combined, these create a cost of living in Alabama per month. This is generally lower than the national average, making it budget-friendly for many residents.

What Is the Average Cost of Living in Alabama?

Alabama’s cost of living index is 87.9, about 3% below the national average, making it one of the most affordable states to live in compared to the cost of living by state nationwide.

Are Utilities Expensive in Alabama?

Utility bills in Alabama account for about 11% of the state’s median monthly income, which is higher than the national average. 

How Does Alabama’s Healthcare Cost Compare Nationally?

Healthcare spending in Alabama averages $9,280 per person, lower than many states, making healthcare relatively affordable.

Alabama Cost of Living: Enjoying Without Breaking the Bank

Alabama’s cost of living is lower than the national average, thanks to affordable housing and transportation. Some expenses like groceries, utilities and taxes take a larger share of income. Moderate incomes and access to services make it a budget-friendly option. Careful budgeting helps manage costs, making Alabama appealing for many residents.