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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Alabama VS COUNTRY B Tennessee

Side-by-side analysis of income tax, effective rates, and take-home pay for Alabama and Tennessee in 2026.

Daniel · CountryTaxCalc Updated May 2026 Tax Comparison 2026
Calculate your take-home → See all comparisons →
OVERVIEW
Alabama has progressive income tax rates from 2% to 5%, while Tennessee has no state income tax (0%). Moving to Tennessee saves $4,760/year on $100k income. Alabama has lower property taxes (0.37% second-lowest in US vs TN's 0.52%). However, both states have extremely high sales taxes (AL 9.29%, TN 9.55% highest). Overall, Tennessee offers significant tax savings for wage earners. The AL-TN border sees migration to Nashville for jobs and zero income tax.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🏈
COUNTRY A
Alabama
TAX RATE
2-5%
Progressive

3 brackets, up to 5%

🎸
COUNTRY B
Tennessee
TAX RATE
0%
No Income Tax

Constitutional prohibition

TYPICAL ANNUAL DIFFERENCE
Moving from Tennessee → Alabama at $100,000
$4,760

That's $397/month back in your pocket

Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.

GROSS INCOME
🏈 AL TAX
🎸 TN TAX
SAVINGS
10-YEAR
$50,000
$2,260
$0
$2,260
$22,600
$100,000
$4,760
$0
$4,760
$47,600
$200,000
$9,760
$0
$9,760
$97,600
$500,000
$24,760
$0
$24,760
$247,600
💡

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🏈

Alabama Pros & Cons

+ PROS
  • Lowest property tax: 0.37% (second-lowest in US) vs TN 0.52% saves $375-$1,500/year
  • Slightly lower sales tax: 9.29% (vs TN 9.55%) saves $26/year
  • Very cheap housing: Birmingham median $225k (vs Nashville $425k, 47% cheaper)
  • College football: Alabama/Auburn rivalry, SEC culture
  • Lower cost of living: 18% cheaper than Tennessee overall
− CONS
  • Income tax: 2-5% progressive costs $4,760 on $100k, $24,760 on $500k
  • Limited jobs: Birmingham 1.1M vs Nashville 2.0M metro
  • Worst schools: AL ranks #47 vs TN #32 in K-12 education
  • Brain drain: Young professionals leave for Nashville/Atlanta
  • Slow economy: AL ranks #44 for economic opportunity
🎸

Tennessee Pros & Cons

+ PROS
  • Zero income tax: Save $4,760/year on $100k, $24,760 on $500k
  • Nashville boom: Music City tech hub, healthcare (HCA), tourism
  • Better jobs: 2.0M metro (vs Birmingham 1.1M), diverse economy
  • Better schools: TN ranks #32 vs AL #47 in K-12 education
  • No retirement tax: $0 on Social Security, pensions, withdrawals
− CONS
  • Higher property tax: 0.52% (vs AL 0.37%) costs $375-$1,500 more/year
  • Highest sales tax: 9.55% (highest in US) vs AL 9.29% costs $26 more/year
  • Expensive: Nashville median $425k (vs Birmingham $225k, 47% more)
  • Hot/humid summers: 90°F+ regularly (similar to AL)
  • Traffic: I-24, I-65 congestion, limited transit
FAQ

Frequently Asked Questions

How much will I save moving from Alabama to Tennessee?

On $100,000 income, Tennessee saves $4,760/year in income tax (AL 4.76% vs TN 0%). However, TN property tax is higher (0.52% vs AL 0.37% second-lowest in US). On a $400k home, TN pays $2,080/year vs AL $1,480/year—difference of $600/year. Net savings: $4,160/year. Over 10 years: $41,600. Plus Nashville has better job market and salaries are 15-25% higher.

Why does Alabama have such low property taxes?

Alabama has the second-lowest property tax in the US (0.37%, behind only Hawaii) due to: constitutional limits on property assessment increases, strong anti-tax culture, agricultural exemptions. Schools funded more by sales/income taxes. However, this means AL has 5% income tax while neighboring TN has 0%. For homeowners, AL property tax advantage partially offsets income tax disadvantage.

Is there significant Alabama to Tennessee migration?

Yes, heavy AL → TN migration. In 2023, 16,204 people moved AL → TN (vs 8,472 TN → AL), net gain of 7,732 for Tennessee. Migration drivers AL → TN: no income tax (save $4,760+ annually), Nashville boom (better jobs), better schools (#32 vs #47). Reverse migration (TN → AL) driven by: cheaper housing (Birmingham 47% cheaper), second-lowest property tax in US (0.37%), college football culture.

Birmingham vs Nashville: which city is better economically?

Nashville wins economically: no income tax (save $4,160 annually), larger job market (2M vs 1.1M), tech/healthcare boom, better schools (#32 vs #47). Birmingham wins for: cheaper housing (47% cheaper), second-lowest property tax in US (0.37%), lower cost of living (18% cheaper). Choose Nashville for career opportunities. Choose Birmingham for maximum affordability.
From the brief
NL27%new 2027 rate, down from 30%
DK65.4kkr/mo threshold, cut from 78k
MT1940snon-dom regime unchanged since
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