Living in Alabama is less expensive than it is on average across the U.S. as a whole. According to data from the Bureau of Economic Analysis, goods and services in the state cost 13.6% less than they do on average nationwide. Compared with all other states, Alabama has the third lowest overall cost of living.
In general, living in dense, urban metro areas is more expensive than living in more rural areas. Alabama is home to 12 metropolitan areas. The most expensive in the state is the Daphne-Fairhope-Foley metro area, where the cost of goods and services is 9.7% lower than the national average and 3.9% higher than the statewide average.
Alabama Housing Costs
Housing is one of the largest components of cost of living. In Alabama, the typical home is worth $137,200, $67,700 less than the national median home value of $204,900. Across the state, the median price of a home built in 1939 or earlier is $100,000, while the median value of a home built in 2014 or later is $230,100.
The typical renter in Alabama spends $772 a month on housing, $251 less than the $1,023 national median monthly rent. Monthly rent for a one-bedroom in the state is $600, while the typical rent for a unit with five or more bedrooms is $1,130.
Across the state, 31.4% of occupied homes are rented, less than the 36.2% national average and the 15th lowest renter rate of any state.
Alabama Transportation Costs
Transportation can also be a significant component of cost of living. In Alabama, 94.3% of commuters drive to work, compared to 85.5% of commuters nationwide. On average, the typical motorist in the state drives 14,498 miles a year. Taking into account average fuel economy and the average cost of gas -- regular fuel cost an average of $1.93 a gallon in Alabama in mid-2020 -- the average motorist in the state can expect to spend $1,155 on gas alone in one year.
Other transportation costs, like car insurance premiums, can vary by state. In Alabama, the average car insurance premium is $1,062, less than the $1,517 national average, according to data from Insure.com. And according to data from the EPI, the average single adult in the state spends $10,292 a year on transportation.
Alabama Health Care Costs
Out-of-pocket costs and insurance premiums for health care -- assuming at least a basic level of health insurance coverage -- are relatively high in Alabama. Average health care costs for a single adult in the state total $4,769 per year, compared to the national average of $4,266. For a family of four, average annual health care costs total $14,385 -- $1,435 more than the comparable national average of $12,950.
Alabama Food Costs
Food is another every day expense that has a significant impact on the overall cost of living in an area. Data from the U.S. Department of Agriculture shows that the cost of food varies from state to state.
In Alabama, a single adult spends an average of $3,210 on food annually, and a family of four spends $9,271 on average. For context, the nationwide average annual food expenditure is $3,240 for a single adult and $9,354 for a family of four. These estimates are calculated for a nutritionally adequate diet of food purchased at a grocery store for at home preparation.
Alabama Child Care Costs
For families, child care adds thousands of dollars to overall annual spending. The average annual cost of child care for a 4 year old child in Alabama is $5,098, well below the national average of $8,903. Similarly, it costs an average of $12,931 to care for a 4 year old child and an 8 year old child per year in Alabama compared to the national average of $15,853.
Alabama Taxes
Few expenses vary as much from state to state as taxes. Accounting for state and federal income taxes, as well as Social Security contributions and Medicare payroll, the average adult working in Alabama pays $6,084 annually in taxes -- slightly below the national average of $6,542.
Excluding federal taxes and incorporating state and local taxes such as property and sales taxes -- the state and local tax burden in Alabama is lower than the average across the U.S. as a whole. Per capita state tax collections in Alabama come out to $2,262 per year, compared to the $3,151 average across all states.
Cost of Living by County or County Equivalent
Just as cost of living varies from state to state, it also varies from place to place within states. In Alabama, Shelby County, home to the city of Hoover, has the highest overall cost of living for a family of four at $89,433 per year, well above the statewide average of $77,433 per year.
Meanwhile, Franklin County is the least expensive place in Alabama. The average annual cost of living for a family of four in the area is just $68,723, $8,710 less than it is across the state as a whole. Russellville is the most populous community in Franklin County.
Note that monetary figures are rounded to the nearest dollar and calculated differences may not always add up perfectly to the nearest dollar.
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