What it costs to live and work in Alabama: the minimum wage, state income tax, sales tax and median rent, from official sources, and what they mean for your monthly budget.
| Alabama | Source | |
|---|---|---|
| Minimum wage | $7.25 an hour | US Department of Labor, Wage and Hour Division: State Minimum Wage Laws |
| State income tax | 2 % to 5 % | Tax Foundation: State Individual Income Tax Rates and Brackets, 2026 (rates as of January 1, 2026) |
| State sales tax | 4 % | Tax Foundation: State and Local Sales Tax Rates, Midyear 2026 |
| Median gross rent | $1,077 a month (2024) | US Census Bureau, American Community Survey 2024 1-year estimates, table B25064 (Median Gross Rent) |
Alabama has no state minimum wage law, so the federal minimum of $7.25 an hour applies.
Alabama taxes income at 2 % to 5 %; the top rate applies above $3,000 of taxable income for single filers.
The state rate is 4 %; local sales taxes add 5.46 % on average, for a combined 9.46 %.
What income does rent in Alabama take?
A common rule of thumb is to keep rent at or below 30 % of gross income. At the median rent of $1,077 a month, that means a household income of about $43,100 a year before tax.
Good to know
- Local sales taxes more than double the state rate: the average combined rate is 9.46 %.
- Alabama lets you deduct federal income tax paid from state taxable income.
Sources
- US Department of Labor, Wage and Hour Division: State Minimum Wage Laws (2026-07-01)
- Tax Foundation: State Individual Income Tax Rates and Brackets, 2026 (rates as of January 1, 2026) (2026-02-19)
- Tax Foundation: State and Local Sales Tax Rates, Midyear 2026 (2026-07-06)
- US Census Bureau, American Community Survey 2024 1-year estimates, table B25064 (Median Gross Rent) (2025-09)