What Is the Average Cost of Living in Tennessee?

The cost of living is the financial outlay required to maintain a standard of living, encompassing essential expenditures such as housing, food, taxes, and healthcare in a specific location. Understanding the average cost of living in Tennessee provides valuable insight for those considering residing in the state.

Understanding Cost of Living Metrics

The cost of living is typically quantified through indices, such as the Cost of Living Index (COLI). These indices compare living expenses across different geographic regions by measuring consumer spending across a “basket” of common goods and services, including housing, utilities, groceries, healthcare, transportation, and childcare expenses. Most indices establish a base value of 100, representing the national average. Locations with an index value above 100 indicate a higher cost of living, while those below 100 suggest a lower cost. The Council for Community and Economic Research (C2ER) compiles and publishes these quarterly indices, providing a reliable source for regional cost comparisons.

Key Cost Categories in Tennessee

Tennessee generally boasts a lower cost of living compared to the national average, consistently ranking among the more affordable states. In October 2024, the state’s overall cost of living was approximately 9.85% lower than the national average, positioning it as the 5th cheapest state. The total yearly personal consumption cost for a Tennessean averaged $42,469 in 2021.

Housing

The median home price in Tennessee was about $383,300 in January 2025, slightly below the national median of $407,500 in December 2024. For renters, the average overall rent across the state was $1,362 per month as of August 2025, considerably lower than the national average of $1,645. A one-bedroom apartment averaged $1,025 per month, while a two-bedroom typically cost $1,115 per month in October 2024.

Utilities

Utility costs in Tennessee are often lower than national averages. Residents can expect to pay around $389 per month for average utility expenses statewide. In specific areas like Chattanooga, monthly electricity bills average about $135, with water and sewer services ranging from $30 to $50, and internet services around $60 per month.

Grocery and Food Expenses

A single resident in Tennessee spends approximately $251 per person each month on groceries and food. For a household comprising two adults and two children, these costs can reach an estimated $12,575 annually, or roughly $1,048 per month.

Transportation

Transportation costs vary, with annual expenses ranging from $5,477 to $15,530. Most Tennesseans rely on personal vehicles for commuting due to limited walkability. Vehicle insurance averages around $2,400 per vehicle annually, reflecting a general increase in insurance costs nationwide. Additionally, the state imposes a gas tax of 27.4 cents per gallon.

Healthcare

Healthcare expenses in Tennessee are significant, as the state ranks 14th in the U.S. for healthcare costs. The average annual premium for single coverage through employer-provided health insurance is about $1,686, with an average deductible of $2,174. For individuals purchasing health insurance independently, a benchmark Affordable Care Act (ACA) plan averaged $501 per month in 2024, slightly exceeding the national average of $477. A typical doctor’s visit can range from $82 to $126, while an emergency room visit averages $2,060. Hospital stays average approximately $2,590 per inpatient day.

Regional Variations within Tennessee

The “average” cost of living in Tennessee presents a statewide overview, but actual expenses can differ significantly based on specific geographic locations. Major metropolitan areas typically exhibit higher costs compared to more rural parts of the state. This disparity is most evident in housing, utilities, and transportation expenses.

Nashville

Nashville, as the state capital and a rapidly growing city, generally has a higher cost of living. In April 2024, the median home price in Nashville was approximately $478,060, while average rents for a one-bedroom apartment were around $1,772 and a two-bedroom around $2,059.

Memphis

Conversely, Memphis offers a more affordable living experience. In October 2024, a one-bedroom apartment in Memphis averaged $957, and a two-bedroom averaged $1,114, with the median home sale price at $180,000.

Knoxville

Knoxville presents a more moderate cost environment. Average rents for a one-bedroom apartment were $1,095 and for a two-bedroom $1,376 in October 2024. The median home price in Knoxville was $346,000 in April 2024, indicating its growing popularity and relatively balanced housing market.

Chattanooga

Chattanooga also maintains a comparatively affordable living standard. The median home price in Chattanooga was $344,000 in May 2024, with average one-bedroom rents around $1,400.

Rural Areas

Rural areas across Tennessee generally feature lower housing and rental costs than urban centers. However, this affordability often correlates with fewer employment opportunities and potentially lower wages, which can offset some of the savings on living expenses. The choice of location within Tennessee can significantly impact an individual’s overall budget and financial comfort.

Factors Influencing Tennessee’s Cost of Living

Several factors contribute to Tennessee’s overall cost of living. The state’s tax structure plays a substantial role in its affordability. Tennessee does not impose a state income tax on wages, salaries, or other work-related income.

Sales Tax

Sales tax rates in Tennessee are among the highest in the country. The statewide sales tax rate is 7%, but local jurisdictions can add up to an additional 2.75%. The average combined state and local sales tax rate is approximately 9.55%. Most groceries are subject to a reduced sales tax rate of 5.5%.

Property Taxes

Property taxes, in contrast, are comparatively low, with an average effective rate of 0.56% of owner-occupied housing value. Local governments determine these rates, leading to variations across counties and cities.

Economic Growth

Economic growth and a dynamic job market influence the cost of living. Tennessee has experienced significant economic expansion, particularly in manufacturing and tourism. This growth, coupled with a steady influx of new residents, increases demand for housing and services, which can exert upward pressure on prices.

Population Trends

Population trends directly affect the supply and demand for housing. As more people move to Tennessee, the demand for available housing rises, often outpacing supply. This imbalance contributes to increasing home prices and rental rates, despite the state’s general affordability. The median number of days homes remain on the market was 49 days in June 2024.