Property Taxes in Alabama

Effective Rate

Alabama's average effective property tax rate is about 0.37%-0.39% of home value (SmartAsset: 0.38%; Tax Foundation: 0.37%), making it one of the two or three lowest property tax states in the country - roughly 59% below the ~0.92%-0.99% national average effective rate. Rates vary considerably by county: from about 0.18% in rural counties like Choctaw up to roughly 0.44%-0.60% in counties such as Lee, Shelby, and Jefferson (Birmingham area), which has the highest effective rate in the state.

Example: The median Alabama homeowner pays approximately $788-$890 per year in property taxes (SmartAsset: $890/year statewide median; other current sources cite $788-$813/year), versus a national median property tax bill of roughly $2,400-$3,200/year - meaning the typical Alabama household pays about one-quarter to one-third of what the median U.S. household pays. For comparison, Shelby County (median home value ~$349,200) has a median annual bill of about $1,688, while Montgomery County (median home value ~$207,700) is close to the statewide norm at about $914/year.

Exemptions

H-1 Regular Homestead Exemption

Amount: Exempts up to $4,000 of assessed value from state property tax and up to $2,000 of assessed value from county property tax

Available to all owner-occupants regardless of age or income, no application income test. Because Alabama assesses residential property at only 10% of fair market value, actual dollar savings are modest (roughly $20-$30/year at typical millage rates) but the exemption is automatic once filed with the county revenue commissioner.

H-2/H-3 Age 65+ (or Totally Disabled) Limited-Income Exemption

Amount: H-3: full exemption from all state, county, and municipal ad valorem taxes for those 65+ with combined federal taxable income of $12,000 or less. H-2: full state exemption plus up to $5,000 of assessed value exempted from county tax, similar ~$12,000 income threshold.

Requires proof of age 65+ (or permanent and total disability, any age) and an annual renewal form sent each October in lieu of a tax bill, due back by December 31 to keep the exemption for the following year.

H-4 Age 65+ Exemption (No Income Limit)

Amount: Full exemption from the state portion of property tax with no assessed-value cap, plus the regular county homestead exemption of up to $2,000 of assessed value

Unlike H-2/H-3, H-4 has no income test - available to any homeowner 65 or older regardless of income, though it does not eliminate county/municipal taxes beyond the standard $2,000 county exemption.

Alabama's low effective rates stem from assessing residential (Class III) property at only 10% of fair market value before applying millage rates, so headline millage numbers look deceptively large compared to the tiny effective rate on full market value. Practical tip: homestead exemptions in Alabama are not automatic beyond the base H-1 - homeowners (especially those 65+) must file the appropriate exemption paperwork (and renew age/income-based exemptions annually each fall) with their county Revenue Commissioner/Tax Assessor to actually receive the reduction; failing to renew can result in a full, un-exempted bill the following year. Sources consulted: SmartAsset Alabama Property Tax Calculator, Tax Foundation (2026 Alabama location page and property-taxes-by-state-county map), Alabama Department of Revenue "Homestead Exemptions" and "I am over 65" FAQ pages, and county revenue commission sites (Mobile, Cullman, Baldwin, Madison).

Facts on this page reflect research current as of 2026-07-05. Programs, rates, and laws change — confirm current figures with the relevant state agency before relying on them.

Related Resources

Down Payment Assistance in Alabama Transfer Tax & Closing Costs in Alabama Buyer-Agent Agreements in Alabama Seller Disclosure Laws in Alabama Find Agents in Alabama Home Affordability Calculator