Average Salary in Alabama (AL)

Alabama's $59,609 median household income is well below the national average, but the cost-of-living index of 88 pulls effective purchasing power back toward the middle of the pack. The state's economy has changed meaningfully in the past twenty years. Huntsville, anchored by Redstone Arsenal and NASA Marshall Space Flight Center, has become one of the largest aerospace-and-defence employment clusters in the country — the city's median wages now exceed Atlanta's in several engineering categories. Further south, automotive manufacturing built by Mercedes-Benz, Hyundai, Honda, and Toyota has turned a crescent around Birmingham and Montgomery into a Tier-1 supplier hub. The state income tax is a simple three-bracket structure (2 to 5 percent), but Alabama is one of only three states that still allows a deduction for federal income taxes paid on state returns — an unusual feature that benefits higher earners disproportionately. The $7.25/hour minimum wage remains at the federal floor, and Alabama has no state minimum wage law on the books at all. Property taxes are among the lowest in the country (effective rates below 0.5%), which is part of why housing stays genuinely affordable statewide. Full income, employment, and tax breakdown follows.