2025 Cost of Living in Tennessee: Is the Volunteer State Affordable?

Over the last couple of decades, people have found plenty of reasons to move to Tennessee. Cool cities, beautiful scenery and plenty of jobs are some things that have attracted nearly 600,000 people to the state since 2010. Of course, there's also another factor: cost of living. Living in Tennessee has been a bargain for years, but just how affordable is the state? To find out, we've broken down how Tennessee scores on the elements that make up the cost of living index.

How Is The Cost Of Living Index Calculated

This index is essentially a cost of living calculator that accounts for key living costs like food, healthcare, and housing, then compares those to the national average. The national average is expressed as 100. Numbers below that average represent a lower-than-average cost of living, while numbers above 100 express a higher cost of living. Each living cost is measured based on its relationship to that average. For instance, if food costs thirty cents less in Alaska than the average, then Alaska is assigned a food cost of 70. Once you've determined each living cost for a state, then you give weight to each category based on how much of a budget it tends to command. For instance, housing costs are weighted more heavily than food because they usually take up more of the budget. Finally, the weighted categories are averaged to determine the state's total cost of living. Whew, now let's move on to Tennessee...

Is Tennessee A Cheap State To Live In?

In short, Tennessee enjoys an especially low cost of living. According to a study conducted by the World Population Review, in 2021 Tennessee is the country's sixth cheapest state to live in. That's pretty standard for The Volunteer State, where living costs have historically landed it in the top ten for affordability.

Grocery costs

Tennessee's grocery bills are rated a 95 according to our cost of living calculator, which means that groceries tend to cost 5% less than the U.S. average. This might not seem like much, but five cents on the dollar adds up quickly when you're feeding a family. Tennessee and its surrounding region are home to robust agricultural production and food processing that efficiently provide affordable grocery options. This grocery discount is just another small factor that makes a big difference in the Tennessee cost of living.

Housing costs

Cost of buying a home in Tennessee

As in any state, Tennessee housing values can vary dramatically based on the area where you're looking to buy. Still, as long as you aren't browsing in Nashville's swankiest neighborhoods, you can expect to pay well below the national average. Tennessee's median home value is around $165,000. That's around $65,000 less than the national average, and represents a huge cost of living advantage for the state. Even attractive urban areas offer affordable housing options. Chattanooga, for instance boasts a remarkably reasonable median home cost of only $150,100. Options, like these, offer big city living at small-town prices.

Cost of renting a home in Tennessee

The Tennessee rental market is also quite accessible. Rent for all types of properties usually rests 20%-30% below the national average. That means a studio apartment throughout much of the state rents for around $600, while a three-bedroom house can be found for just over $1100. This varies by location and city, for instance, Nashville rent options are normally just above average. All things considered, though, in Tennessee you'll find some of the best median rent prices in the country.

Healthcare costs

Healthcare costs in Tennessee aren't optimal in every location. Not every place has an ideal supply of doctors, and the population is prone to some indulgences that don't always lead to the highest overall health rankings. Despite these drawbacks, some of the most expensive areas actually have the most reasonable health-related costs. Davidson county, home to Nashville, boasts remarkably cheap health bills compared to the rest of the state.

Utility costs

The cost of utilities, across nearly all of Tennessee, are 4%-5% lower than the average in the United States. This is thanks largely to the awesome energy generation of the TVA and the state's abundance of freshwater. Services like these help provide for even the most rural, remote locations at a price that doesn't harm the overall cost of living.

Transportation costs

Getting around Tennessee is a surprisingly easy proposition. Modest gas prices and shorter-than-average commutes will consistently keep money in your pockets. Tennesseeans spend less time in their cars on an annual basis than most other U.S. residents, which leaves more room in the budget for new arrivals to explore the rest of the state.

How Much Are Taxes In Tennessee

Property taxes

Tennessee has no state property taxes, and leaves it up to local jurisdictions to determine and collect their own. Fortunately, most of these local governments keep tax rates modest. Urban areas have higher tax rates of around .820% of assessed value, while the state average is just .640%. Compared to the national average of 1.070%, these property tax thresholds are quite low, and represent huge long-term savings relative to other parts of the U.S.

Sales tax

Tennessee's sales taxes are higher than some other states, but that ensures that the state's millions of visitors are helping foot the bill for services that residents enjoy. On a state level, the tax on food is 5%, while most everything else includes a 7% sales tax. There's also an option for local governments to tack a little extra onto that rate. However, considering the tax breaks across the rest of the state's books, the sales tax is fairly reasonable.

State income tax

The rumors are true! Tennessee has no state income tax. That means you pay nothing to the state for the money you make.

Capital gains/pension tax

Tennessee does tax your gains on investments. So you'll have to pay back small percentages of your stock dividends and bond interest. However, there's no state pension tax, so retirees who call Tennessee home find that their dollars go a long way.

Is It Expensive To Live In Tennessee

According to all these factors, Tennessee is simply one of the most budget-friendly states in the U.S. As long as you don't plan on living in the most luxurious of Nashville suburbs, your cost of living is exceedingly reasonable. Places like Chattanooga and Memphis offer some of the most manageable suburban real estate in the country. Then smaller but charming cities, like Clarksville and Johnson City, make living in Tennessee an even better bargain. But even if you do call Nashville home, you're paying to live in one of the most attractive, up-and-coming cities in the country. It's simply the kind of place where the cost of living is a little higher because everyone wants to live there.

The cost of living in Tennessee is especially impressive because the area provides such great value. Conveniently-located, low cost cities are dotted throughout the state, all offering distinctly different lifestyles and entertainment options. Combine that with some of the best cultural experiences and natural beauty that the United States has to offer, and Tennessee doesn't just provide limited cost of living, but high quality of life. Between the housing bargains, forgiving taxes (don't forget that income tax break), and feasible living expenses, there just aren't many places like it to call home.

How Does the Cost of Living in Tennessee Compare to the National Average?

As you might expect based on previous sections, living in Tennessee is one of the most budget-friendly decisions you can make in the entire United States. Rural areas, while never too far from a city, offer a cost of living that's sometimes 30%-40% below the national average. Even second-tier cities like Chattanooga are well below the national average according to our cost of living calculator. Nashville, for all its style and status as the most expensive place to live in the state, still comes in at just above the national average for cost of living. Basically, wherever you reside in Tennessee, you're getting a spectacular value compared to just about every other place in the country.

States with the highest cost of living

Hawaii

The real estate and grocery prices on this remote island location are astronomical. Considering the state's lack of accessibility and space, this is no great surprise.

California

Median home values are staggering, and high gas prices keep transportation expensive. This helps explain why Nashville has seen a steady flow of Californians making the move to Tennessee.

New York

You've heard this story before. High taxes, a large population, and cutthroat competition for resources make the Big Apple an expensive bite.

Oregon

Ironically enough, private land is limited in the Beaver State, which means housing expenses can be high. This, along with a bloated tax policy and upper-tier transportation costs, makes for an unpleasant cost of living threshold.

Massachusetts

Another densely populated Northeastern state where people pay a lot of money for a little space.

States with the lowest cost of living

Mississippi

Plenty of ports, agriculture, and cheap housing make Mississippi an unbelievably attainable place to call home.

Arkansas

Costs like housing and taxes are negligible in Arkansas compared to other parts of the U.S.

Oklahoma

Oklahoma's central location helps keep prices down, as it's never far from natural resources. This means it doesn't take much money to build houses or snag some food.

Missouri

Home to the cheapest gas in the country and everything else is quite reasonable as well.

New Mexico

New Mexico is at the front of the cost of living pack in nearly every category but groceries.

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