Alabama Minimum Wage 2026: $7.25/hr

Alabama Minimum Wage After Tax in 2026

A full-time Alabama worker at $7.25 an hour grosses $15,080 a year. After $0 in federal income tax, $1,154 in FICA and $489 in state income tax, take-home pay is about $13,438 a year, or $1,120 a month and $258 a week.

Alabama Minimum Wage 2026: No State Law, No City Law

Alabama has no state minimum wage law -- but it goes further than most states without one. In 2016, Alabama enacted the Minimum Wage Act, which explicitly preempts cities, counties, and other local governments from establishing any minimum wage above the federal level. This double layer of inaction (no state minimum) and prohibition (no local minimum) makes Alabama uniquely restrictive among Southern states.

The context matters. The Alabama Minimum Wage Act was enacted within days of Birmingham passing its own $10.10 minimum wage ordinance -- a direct response to the largest city in the state attempting to address wages locally. The legislature's rapid action made clear that the intent was to prevent cities from acting where the state had chosen not to.

The Birmingham Minimum Wage Case

In 2016, the Birmingham City Council voted 6-1 to approve an ordinance phasing in a $10.10 minimum wage for the city. The ordinance was to take effect over two years. Three days after Birmingham's vote, the Alabama legislature passed House Bill 174, preempting all local minimum wage ordinances. Governor Robert Bentley signed the bill into law immediately.

The NAACP Legal Defense Fund and other organizations sued on behalf of Birmingham workers, arguing the preemption law was racially discriminatory because it specifically targeted and nullified Birmingham's ordinance -- a law passed by a majority-Black city council affecting a majority-Black city. The Eleventh Circuit Court of Appeals ultimately upheld the state preemption law in 2019, ruling the law did not violate the Constitution on its face. The case became a nationally watched example of state legislatures overriding local wage democracy.

Automotive Manufacturing Above the Minimum

Alabama has attracted significant automotive manufacturing investment. Mercedes-Benz produces vehicles in Vance (Tuscaloosa County), Honda in Lincoln (Talladega County), Hyundai in Montgomery, and Toyota in Huntsville. These facilities pay significantly above minimum wage -- hourly rates for assembly workers typically range from $20 to $35 per hour depending on experience and classification. The presence of these facilities has helped raise average manufacturing wages in Alabama well above the minimum wage floor for workers fortunate enough to obtain those jobs.

However, automotive manufacturing employment is a relatively small slice of Alabama's total workforce. The much larger service economy -- retail, food service, healthcare support, domestic work -- operates primarily at or near minimum wage.

Healthcare Industry Wages

Alabama's healthcare sector, anchored by UAB Medicine in Birmingham and regional hospitals throughout the state, employs large numbers of support staff including certified nursing assistants, dietary workers, and environmental services employees who often start near minimum wage. Several Alabama hospital systems have voluntarily raised their minimum starting pay to $15 or $17 per hour, but smaller healthcare facilities and rural hospitals may still pay closer to the federal minimum.

The Port of Mobile is one of the Southeast's major shipping terminals, handling significant container, bulk, and liquid cargo. Dock workers and longshoremen represented by the International Longshoremen's Association (ILA) earn union wages well above the minimum. However, the surrounding logistics, warehousing, and support economy includes positions at or near minimum wage. Mobile's economy also includes significant aerospace manufacturing (Airbus assembly) that pays above-minimum wages for production positions.

Agricultural Sector and Exemptions

Alabama's agricultural sector -- poultry, catfish, cotton, soybeans, and timber -- employs workers who may fall under federal agricultural exemptions depending on farm size and employment classification. Workers on very small farms, piece-rate harvest workers, and certain domestic agricultural employees may not be covered by FLSA minimum wage requirements, leaving them with no wage floor under Alabama's absence of state law.

Alabama Does NOT Conform to OBBBA

Alabama does not conform to the OBBBA 2026 federal overtime and tips tax exemption at the state level. Alabama workers who earn overtime premium pay continue to owe Alabama state income tax on that overtime income at regular state rates, even though they may owe no federal income tax on that same overtime under OBBBA. This means Alabama minimum wage workers who earn overtime receive less benefit from OBBBA than workers in most other states.

Our research team manually verifies every wage law against primary sources including the Alabama Department of Labor, the IRS, U.S. Department of Labor, and Alabama court records. The Birmingham preemption case details verified against Eleventh Circuit court records and Alabama Code. We audit state labor bulletins weekly.

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