Alabama Salaries 2025
Affordable living with aerospace and automotive growth
Median Household Income
Alabama Salary Overview 2025
Alabama offers one of the most affordable cost-of-living environments in the United States, making it an attractive destination for workers seeking strong purchasing power. With a median household income of approximately $56,200âbelow the national median of $74,580âAlabama compensates with housing costs 40-50% below national averages and an overall cost of living 13% below the national baseline.
The state's economy has transformed significantly over the past two decades, evolving from its traditional manufacturing and agricultural base into a diversified powerhouse featuring aerospace, automotive, biotechnology, and technology sectors. Huntsville, known as "Rocket City," has emerged as one of the fastest-growing tech hubs in the Southeast, home to NASA's Marshall Space Flight Center, Redstone Arsenal, and a growing cluster of defense contractors and tech startups.
Alabama's moderate state income tax (2-5% across brackets) combined with low living costs means workers often enjoy greater disposable income than their counterparts in high-tax coastal states. For comprehensive salary data, see salary trends 2025 and average US salary.
Alabama Salary Snapshot
| Metric | Alabama | National Average |
|---|---|---|
| Median Household Income | $56,200 | $74,580 |
| Mean Household Income | $73,400 | $97,300 |
| Per Capita Income | $31,300 | $37,638 |
| Minimum Wage (2025) | $7.25/hr (federal) | $7.25/hr (federal) |
| Cost of Living Index | 87 (13% below avg) | 100 |
| Top Income Tax Rate | 5% | Varies by state |
Salaries by Alabama Metro Area
Huntsville â Rocket City Tech Hub
Median Household Income: $72,000
Huntsville stands out as Alabama's economic crown jewel, with household incomes rivaling many larger metros. The city's concentration of aerospace, defense, and technology employers drives salaries significantly above state averages. Software engineers at defense contractors like Northrop Grumman, Lockheed Martin, and Boeing command $95,000-$140,000, while NASA and Army civilian positions offer stable federal pay scales. The emerging commercial tech sector, including companies like Meta's data center and numerous startups, has intensified competition for talent.
Huntsville's cost of living remains remarkably affordable despite rapid growthâmedian home prices around $320,000 provide exceptional value compared to traditional tech hubs where similar engineering salaries might require $800,000+ home prices.
Birmingham â State's Largest Metro
Median Household Income: $58,000
Birmingham serves as Alabama's largest city and a regional healthcare, banking, and legal services hub. The UAB Health System is the state's largest employer, with healthcare salaries competitive with national benchmarks: registered nurses $62,000-$85,000, physicians $220,000-$450,000 depending on specialty. The city's banking sector (Regions Financial headquarters) offers finance salaries of $55,000-$150,000+ for experienced professionals. Downtown revitalization has attracted tech startups and remote workers seeking urban amenities at Southern prices.
Mobile â Gulf Coast Industry
Median Household Income: $48,500
Mobile's economy centers on its deep-water port, shipbuilding (Austal USA), aerospace manufacturing (Airbus), and petrochemical industries. Skilled trades command premium wages: welders $50,000-$75,000, electricians $55,000-$80,000, marine engineers $70,000-$110,000. The Airbus manufacturing facility has created an aerospace cluster with engineering salaries of $75,000-$120,000. Waterfront living at a fraction of Florida Gulf Coast prices attracts retirees and remote workers.
Montgomery â State Capital
Median Household Income: $51,000
Montgomery's economy relies heavily on state government, Maxwell Air Force Base, and Hyundai's major manufacturing facility. Government positions follow GS pay scales with locality adjustments, while Hyundai and its suppliers offer manufacturing salaries of $45,000-$75,000 for production roles and $70,000-$110,000 for engineering positions. The legal and lobbying sectors serving state government provide opportunities for attorneys ($70,000-$150,000+).
Auburn-Opelika â University Town
Median Household Income: $54,000
Auburn University drives the local economy, with faculty salaries ranging from $65,000 for assistant professors to $150,000+ for senior faculty in engineering and business. Research positions in Auburn's growing research park offer $60,000-$100,000. The healthcare, retail, and construction sectors benefit from steady university-related growth. The area attracts retirees and remote workers with its college-town amenities and affordability.
| Metro Area | Median Income | Cost of Living | Key Industries |
|---|---|---|---|
| Huntsville | $72,000 | 92 | Aerospace, Defense, Tech |
| Birmingham | $58,000 | 89 | Healthcare, Banking, Legal |
| Mobile | $48,500 | 85 | Shipbuilding, Aerospace, Port |
| Montgomery | $51,000 | 86 | Government, Automotive, Military |
| Auburn-Opelika | $54,000 | 88 | Education, Research, Healthcare |
Top Paying Industries in Alabama
Aerospace & Defense
Alabama's aerospace sector, concentrated in Huntsville, offers the state's highest salaries. Engineers at NASA, Army Materiel Command, and major contractors (Boeing, Lockheed Martin, Raytheon, Northrop Grumman) earn $85,000-$160,000. Program managers and technical leads can exceed $180,000. Security clearances often command 10-20% premiums. The Space Camp tourism and education sector adds unique opportunities.
Automotive Manufacturing
Alabama's automotive corridor includes Mercedes-Benz (Tuscaloosa), Hyundai (Montgomery), Honda (Lincoln), Mazda-Toyota (Huntsville), and hundreds of suppliers. Production workers earn $45,000-$65,000 with benefits, significantly above retail and service wages. Engineers command $75,000-$130,000, while plant managers and executives earn $150,000-$300,000+.
Healthcare
UAB Health System anchors Alabama's healthcare sector, with competitive salaries for the region. Registered nurses: $58,000-$82,000; nurse practitioners: $95,000-$125,000; physicians: $220,000-$500,000 depending on specialty. Rural hospitals and clinics often offer loan forgiveness and signing bonuses to attract talent.
Technology & Cybersecurity
Huntsville's tech sector has expanded beyond defense to include commercial software, cybersecurity, and data centers. Software engineers earn $80,000-$140,000, with senior roles approaching $160,000-$180,000. Cybersecurity specialists with clearances command $100,000-$160,000. Remote tech workers from coastal metros increasingly relocate to Alabama for lifestyle arbitrage.
| Industry | Entry Level | Mid-Career | Senior Level |
|---|---|---|---|
| Aerospace/Defense Engineering | $70,000 | $100,000 | $140,000+ |
| Software Engineering | $65,000 | $95,000 | $130,000+ |
| Automotive Engineering | $65,000 | $90,000 | $120,000+ |
| Nursing (RN) | $52,000 | $65,000 | $82,000+ |
| Skilled Trades | $40,000 | $55,000 | $75,000+ |
Alabama Tax Analysis
Alabama's tax structure is moderately favorable, featuring low income taxes but notable property taxes and sales taxes. Understanding the complete tax picture helps workers accurately compare take-home pay with other states.
State Income Tax Brackets (2025)
| Taxable Income (Single) | Tax Rate |
|---|---|
| $0 â $500 | 2% |
| $501 â $3,000 | 4% |
| $3,001+ | 5% |
Tax Burden Comparison
Alabama's flat 5% rate on income over $3,000 (with federal tax deductibility) results in effective rates lower than many states. A worker earning $75,000 pays approximately $3,500 in Alabama state tax, compared to $4,800 in California at the same income level. Combined with Alabama's low cost of living, this creates meaningful lifestyle advantages.
| Annual Salary | AL State Tax | CA State Tax | Annual Savings |
|---|---|---|---|
| $50,000 | ~$2,300 | ~$2,200 | Similar |
| $75,000 | ~$3,500 | ~$4,800 | $1,300 |
| $100,000 | ~$4,700 | ~$7,100 | $2,400 |
| $150,000 | ~$7,200 | ~$12,500 | $5,300 |
Property and Sales Tax
Alabama's property taxes average 0.41% of home valueâamong the lowest in the nation. However, local sales taxes can push combined rates to 9-10% in some jurisdictions. The state offers a homestead exemption reducing property taxes for primary residences, particularly beneficial for seniors.
Alabama Cost of Living Analysis
Alabama's cost of living index of 87 (13% below national average) makes it one of America's most affordable states. Housing drives much of this advantage, with median home prices 40-50% below national levels and rents similarly reduced.
| Expense Category | Alabama | National Average |
|---|---|---|
| Housing Index | 71 | 100 |
| Median Home Price | $230,000 | $420,000 |
| Median Rent (2BR) | $1,050 | $1,400 |
| Groceries Index | 95 | 100 |
| Utilities Index | 97 | 100 |
| Transportation Index | 89 | 100 |
| Healthcare Index | 92 | 100 |
Housing Affordability by Metro
| Metro Area | Median Home Price | Median Rent (2BR) | Affordability Rating |
|---|---|---|---|
| Huntsville | $320,000 | $1,250 | Excellent |
| Birmingham | $245,000 | $1,100 | Excellent |
| Mobile | $195,000 | $950 | Outstanding |
| Montgomery | $185,000 | $900 | Outstanding |
| Auburn-Opelika | $285,000 | $1,150 | Very Good |
Purchasing Power Analysis
A salary of $60,000 in Alabama provides equivalent purchasing power to approximately:
⢠$85,000 in Austin, TX
⢠$105,000 in Denver, CO
⢠$130,000 in Seattle, WA
⢠$165,000 in San Francisco, CA
This purchasing power advantage makes Alabama particularly attractive for remote workers earning coastal salaries while enjoying Southern affordability.
Highest Paying Jobs in Alabama 2025
| Occupation | Average Salary | Top 10% Earn |
|---|---|---|
| Physicians/Surgeons | $290,000 | $450,000+ |
| Aerospace Engineers (Senior) | $135,000 | $175,000+ |
| Dentists | $180,000 | $280,000+ |
| IT Managers | $125,000 | $165,000+ |
| Pharmacists | $125,000 | $150,000+ |
| Attorneys | $110,000 | $200,000+ |
| Software Engineers | $95,000 | $140,000+ |
| Nurse Practitioners | $108,000 | $130,000+ |
| Financial Managers | $115,000 | $175,000+ |
| Engineering Managers | $140,000 | $185,000+ |
Alabama Minimum Wage 2025
Alabama does not have a state minimum wage, defaulting to the federal minimum of $7.25/hour. However, market wages for entry-level positions typically exceed this floor:
Actual Entry-Level Wages
| Position | Typical Starting Wage |
|---|---|
| Fast Food | $10.00 â $12.00/hr |
| Retail | $11.00 â $14.00/hr |
| Warehouse | $14.00 â $18.00/hr |
| Manufacturing Entry | $15.00 â $20.00/hr |
| Healthcare Support | $12.00 â $16.00/hr |
Major employers like Amazon, Walmart, and Target have established $15+ starting wages in Alabama, effectively creating market-driven minimums well above the federal floor. Automotive plants and their suppliers typically start production workers at $17-$22/hour plus benefits.
Alabama Job Market Outlook 2025
Alabama's job market shows robust growth in several sectors, with Huntsville consistently ranking among America's fastest-growing metros. Key trends for 2025:
Growth Sectors
Aerospace & Defense: NASA's Artemis program, Space Force activities, and private space companies drive continued expansion in Huntsville. Boeing's SLS rocket, Blue Origin's engine facility, and numerous defense programs ensure sustained demand for engineers and technicians.
Automotive: The Mazda-Toyota joint venture in Huntsville and continued investment by Mercedes, Honda, and Hyundai create ongoing opportunities in manufacturing and engineering. Electric vehicle component suppliers are establishing Alabama operations.
Technology: Remote work migration and lower costs have attracted tech companies and workers. Meta's data center, Google's investment in Bridgeport, and growing startup ecosystems in Huntsville and Birmingham signal technology sector expansion.
Healthcare: An aging population and expanded healthcare infrastructure drive demand for medical professionals throughout the state. Rural areas offer loan forgiveness and incentives to attract providers.
Employment Projections (2025-2030)
| Sector | Projected Growth | Job Openings (Annual) |
|---|---|---|
| Healthcare | +15% | 12,000+ |
| Technology | +18% | 5,500+ |
| Advanced Manufacturing | +8% | 4,500+ |
| Aerospace/Defense | +12% | 3,500+ |
| Construction | +10% | 4,000+ |
Frequently Asked Questions
Is Alabama a good state for salary vs. cost of living?
Alabama offers exceptional value for salary-to-cost-of-living ratio, particularly in Huntsville where tech and aerospace salaries approach coastal levels while housing costs remain 50-70% lower. A $100,000 salary in Huntsville provides lifestyle equivalent to $150,000-$180,000 in major coastal metros.
What's the job market like in Huntsville?
Huntsville has one of America's strongest job markets, with unemployment consistently below national averages and robust demand for engineers, IT professionals, and skilled trades. The city regularly ranks among the best places for STEM careers. Security clearances significantly enhance earning potential in the defense sector.
How do Alabama salaries compare to neighboring states?
Alabama salaries are generally comparable to Mississippi and slightly below Georgia and Tennessee. However, lower cost of living often makes Alabama the better value proposition. Huntsville salaries exceed most metros in neighboring states except Nashville and Atlanta.
Should I relocate to Alabama from a high-cost state?
For workers in aerospace, defense, or manufacturingâor those with fully remote positionsâAlabama offers significant lifestyle upgrades. However, job opportunities in some fields (finance, media, fashion) are limited compared to major metros. Research your specific industry's presence before relocating.
What's the weather and quality of life like?
Alabama features mild winters (average January temperature 45°F) and hot, humid summers. The state offers diverse outdoor recreation (Gulf Coast beaches, Appalachian foothills, numerous lakes), college football culture, and Southern hospitality. Urban amenities in Birmingham and Huntsville continue to improve, though cultural scene differs from major coastal cities.