The short version
- Social Security taxed?
- No
- Income tax
- Brackets 2%–5%
- Property tax on a $300,000 home
- ≈ $1,110 / yr ($92 / mo)
- Everyday cost index (U.S. = 100)
- 89
- January / July high
- 56°F / 91°F
- Sales tax (state + local avg)
- 9.46%
Retiring in Alabama
Some of the lowest property taxes and living costs in America. Watch out: sales taxes are among the highest, and rural healthcare is spotty.
How Alabama taxes your retirement income
Social Security: not taxed at all.
Pensions: Defined-benefit pensions exempt; 401(k)/IRA withdrawals taxed.
401(k) and IRA withdrawals: No general exclusion for 401(k)/IRA withdrawals.
The setup: Brackets 2%–5%.
Property tax & senior breaks
The average effective property tax rate is about 0.37% — roughly $1,110 a year ($92 a month) on a $300,000 home. Your county sets the real number.
Help for seniors: Homeowners 65+ are exempt from the state portion of property tax; extra relief by income.
Try your own home value in the Property Tax Estimator.
Everyday costs & sales tax
Overall cost of living runs about 11% below the U.S. average. The combined state and average local sales tax is 9.46%.
Weather
January days top out around 56°F and July days around 91°F, with roughly 213 sunny days a year. Watch out for: Tornadoes statewide; hurricanes on the Gulf coast.
Healthcare
UAB anchors strong care in Birmingham; rural access is thin.