Is It Expensive to Live in Tennessee?

Understanding the financial landscape of a state like Tennessee is a practical step for individuals and families considering a move. The cost of living involves examining various expenditures that collectively determine how far one’s income can extend.

Tennessee’s Overall Cost of Living

Tennessee generally presents a more affordable living environment compared to the national average. The state’s overall cost of living index typically registers around 89.8 to 90.4, with 100 representing the national median. This indicates that expenses in Tennessee are approximately 9% to 10% lower than what most Americans pay across the country. This affordability extends across several categories, including housing, food, and transportation.

The state’s economic structure and regional characteristics contribute to this lower cost profile. While some areas may approach or slightly exceed the national average, the statewide average remains comparatively low.

Key Household Expenses

Housing represents a significant portion of household expenditures in Tennessee, though it remains more affordable than the national average. The median sale price for a home in Tennessee was around $383,300 in January 2025, which is lower than the national median of approximately $407,500. Rental costs also tend to be lower, with the average apartment rent in Tennessee ranging from about $1,362 to $1,775 per month in August 2025, which is generally 20% to 30% below the national median.

Utility expenses are another important consideration for residents. The average monthly energy bill, encompassing electricity, is around $140 to $184. Natural gas costs typically fall between $64 and $101 per month, while water bills average about $36 to $43 monthly. Internet service adds approximately $70 to monthly expenses, bringing the total average utility costs to roughly $389 to $397 per month.

Transportation costs in Tennessee are also generally below the national average, with a transportation cost index of 93.2. Annual transportation expenses can range from $5,477 to $15,530, depending on household size and vehicle use. Car insurance premiums for full coverage are around $2,090 per year, and gasoline prices are typically lower than the national average, with Nashville seeing prices around $2.80 to $2.90 per gallon.

Regarding groceries, the typical person in Tennessee spends about $251 per month, or just over $3,000 annually, on food. Healthcare costs in Tennessee are also slightly below the national average, with a healthcare cost index of 95.3. An average Bronze health insurance premium is about $398 per month, and doctor’s visits typically range from $82 to $126.

Understanding Taxes in Tennessee

Tennessee’s tax structure significantly influences the overall cost of living. A prominent feature is the absence of a state income tax on wages and salaries. This can result in considerable savings for residents compared to states that levy a personal income tax.

The state relies heavily on sales tax as a primary source of revenue. The base state sales tax rate is 7%, which is then augmented by local sales taxes that can range from 0% to 3%. This combination leads to an average combined state and local sales tax rate of 9.55%. Food items are subject to a lower state sales tax rate of 4%.

Property taxes in Tennessee are assessed at the local level by counties and cities. The average effective property tax rate in the state is comparatively low, typically ranging from 0.48% to 0.67% of a property’s market value. For residential properties, the assessed value, which is the basis for property tax calculation, is set at 25% of the appraised market value. Property appraisals are conducted periodically.

Cost Differences Across the State

The cost of living in Tennessee is not uniform and varies considerably based on geographic location. Major metropolitan areas typically have higher expenses, particularly for housing. Nashville, for example, is the most expensive city in the state, with median home prices around $440,000 and average rents approaching $1,775 per month.

In contrast, other major cities like Memphis offer more affordable housing options, with median home prices in the range of $272,400 and average rents around $1,053 per month. Knoxville and Chattanooga also provide relatively lower costs compared to Nashville, with median home prices in Knoxville around $327,000 and average rents in Chattanooga around $1,253. These variations extend beyond housing to other expenses like groceries, where Knoxville tends to have cheaper prices compared to Nashville.

Rural areas and smaller towns throughout Tennessee generally offer the lowest cost of living. In these regions, housing prices and rental rates can be significantly lower, sometimes 30% to 40% below the national average. The choice of location within Tennessee can therefore have a substantial impact on an individual’s overall financial outlay.