Taxes & Insurance in Homewood
Homewood applies Alabama's near-flat state income tax and a genuinely high combined sales tax rate, with property tax running above the state median but insurance costs benefiting from Homewood's inland, non-hurricane-exposed location.
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Learn moreAlabama's graduated income tax, functionally near-flat for most earners
Alabama taxes income at 2% up to $500 (single) / $1,000 (MFJ), 4% up to $3,000 (single) / $6,000 (MFJ), and 5% above that -- meaning most working income lands in the top bracket almost immediately. Alabama's real, uncapped federal-income-tax deduction (one of only 3 states offering it) brings the effective rate down meaningfully -- one 2026 estimate cited roughly 4.08% at $100,000 income.
A genuinely high combined sales tax rate
Homewood's combined 2026 sales tax rate is 10.0% -- 4.00% Alabama state, 1.00% Jefferson County, 4.00% Homewood city, and 1.00% special district -- among the higher combined rates documented across this dataset's Alabama markets.
Property tax above the Alabama median, well below the national median
Homewood's effective property tax rate is 0.74%, above Alabama's statewide median (0.47%) but still well below the national median (1.02%). The median annual property tax bill is $4,078, reflecting Homewood's genuinely higher home values rather than an unusually high rate alone.
Inland location keeps homeowners insurance favorable
As an inland Jefferson County suburb with zero hurricane exposure, Homewood benefits from the same favorable insurance positioning documented for Birmingham and other inland Alabama markets in this dataset -- inland cities generally run 12%-14% below the Alabama statewide insurance average, itself pulled upward by the state's hurricane-exposed Gulf Coast cities.
Key takeaways
- Alabama's income tax functions as a near-flat 5% for most earners, meaningfully softened by the state's real federal-tax-deduction offset.
- Homewood's combined 10.0% sales tax rate is among the higher rates documented across this dataset's Alabama markets.
- Property tax (0.74% effective, $4,078 median annual bill) runs above the Alabama median but well below the national median.
- Homewood's inland location keeps homeowners insurance meaningfully below Alabama's statewide average, which coastal hurricane exposure pulls upward.
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