Memphis, TN vs Birmingham, AL Cost of Living (2026)

Memphis has a cost of living index of 89.2, about 10.8% below the national average. Housing runs below the national baseline, with a housing index of 83.6. Typical apartment rent is about $1,576 a month, and median home values are around $412,965. The median household income is approximately $50,000.

A $100,000 salary in an average-cost city stretches to about $112,100 in Memphis. That extra room can make it easier to save, pay down debt, or stretch for a better housing setup. Several everyday categories, especially miscellaneous costs and transportation, stay below the national baseline.

Tennessee has no state income tax on wages. There is no Memphis city income tax on wages either. The sales tax rate, however, is high: combined state and local sales tax in Shelby County runs around 9.75%. Property taxes in Memphis are moderate in dollar terms, given low home values, though effective rates as a percentage of assessed value run around 1.5 to 1.8%.

Memphis's affordability comes with context. The city has high crime rates relative to national averages, and neighborhood quality varies significantly across relatively short distances. The metro area's suburban communities, particularly Germantown, Collierville, and Cordova in Shelby County, offer better school systems and lower crime rates at higher housing costs than the city core, though still well below national averages. Workers evaluating Memphis should think carefully about which part of the metro they would actually live in, rather than treating the city as a uniform option.

Birmingham has a cost of living index of 90.3, about 9.7% below the national average. Housing runs below the national baseline, with a housing index of 76.1. Typical apartment rent is about $1,126 a month, and median home values are around $417,139. The median household income is approximately $56,000. Birmingham has a significant healthcare sector, with the University of Alabama at Birmingham and its affiliated hospital system being among the largest employers in the region, providing wages at the higher end of the local scale for medical professionals.

A $100,000 salary in an average-cost city stretches to about $110,700 in Birmingham. That extra room can make it easier to save, pay down debt, or stretch for a better housing setup. Most everyday categories stay manageable here, although utilities still run a bit high.

Alabama has a progressive income tax that tops out at 5%. Birmingham charges an occupational tax of 1% on income earned within the city. Jefferson County previously had a county occupational tax, but that was repealed. The combined state and city burden is moderate. Sales tax in Jefferson County runs around 10%, including city and county levies, which is on the higher end nationally.

Birmingham's cost structure reflects both its genuine affordability and the underlying economic factors that produce it. Average wages in the region are below national norms, and high-wage employment is concentrated in healthcare, law, and a smaller technology sector. Workers who secure jobs paying national salaries, or who work remotely for coastal employers, occupy a financially favorable position. The metro has seen investment in its Midtown and Lakeview neighborhoods, with restaurant and retail activity growing, though at prices that remain significantly below comparable urban neighborhoods in more expensive cities.