What does the cost of living in Tennessee look like in real terms? Whether you’re drawn by the allure of Nashville or the tranquility of the Smoky Mountains, it’s the practical details—like housing affordability, utility averages, and tax implications—that can ultimately sway your decision. This concise guide breaks down the living costs you’re curious about, setting you up for a smart and informed move to Tennessee.

Noteworthy Numbers

• Tennessee’s cost of living is generally considered affordable, with an average home value around the $300,000 mark and rent prices falling 20%–30% below the national average.
• Utility costs in Tennessee are quite reasonable, with an average electric bill of around $140 per month, while the average monthly costs for gas and water typically around are $101 and $36, respectively.
• Tennessee is tax-friendly with a 7% sales tax on most items, lower on food, and no state income tax, which particularly benefits retirees and property sellers.

Affordable Housing in Tennessee

When it comes to housing, Tennessee's cheapest cities shine bright as a beacons of affordability. Let’s break down the housing landscape to understand what makes the Volunteer State such an attractive place to call home.

Home Values

Housing is one of the biggest impacts on a place’s cost of living, and Tennessee housing is cheap compared to the national average. Overall, homes for sale in Tennessee are around 20% more affordable than the national average. On Tennessee’s cost of living index, where the national average is represented as 100, housing scores a mere 79.4.

Tennessee is a big area, though, and the median home price can vary wildly depending on where you look. Here’s a peek into some of the biggest markets:

• Homes for sale in Nashville typically sell in the mid-$400s
• Homes for sale in Memphis typically sell in the high $100s
• Homes for sale in Knoxville typically sell in the mid-$300s 

Of course, these are still generalizations. There are affordable neighborhoods in Nashville, just as there are expensive neighborhoods in Memphis.

Rent Prices

Renting in Tennessee also offers a great deal of value, even in the most expensive cities. The average rent for an apartment in Tennessee is a reasonable $1,730, and in Nashville, the heart of Tennessee, the average rent is only slightly higher at around $1,760 per month. Rental prices in Tennessee typically fall 20%-30% below the national average.

Utility Costs: Electricity, Gas, and Water

Now, let’s switch gears and look at utility costs in Tennessee. These are essential expenses that can considerably impact your cost of living. The good news is that compared to other states, Tennessee offers a more affordable picture.

The average monthly electric bill in Tennessee is around $140 per month. However, this cost can vary significantly based on the size of your home. For instance, for a 500 sq. ft. home, you’d be looking at an average bill of around $36, while for a 3,000 sq. ft. home, it shoots up to over $210.

Apart from electricity, gas and water expenses also contribute to the overall utility costs, averaging $101 and $36 per month, respectively, for the typical Tennesseean.

Grocery Expenses and Food Costs

Food is a significant part of any household budget, and in Tennessee, you’re in for some pleasant surprises. The average annual non-restaurant food cost per person in Tennessee is just over $3,000, which averages to $251 per person per month. This is quite affordable, especially when you consider that for a two-person household, the average monthly grocery bill in the United States ranges from $510 to $820.

However, it’s worth noting that grocery costs can vary across Tennessee’s major cities. For instance, Knoxville is the most affordable, with a grocery cost index of 89.9, while Nashville is the most expensive at 97.5. So, while the overall picture is quite positive, precise costs can depend on where in Tennessee you choose to hang your hat.

Healthcare Affordability in Tennessee

Access to quality healthcare can significantly impact overall living expenses. In Tennessee, the average healthcare cost is around $6,950 per person, per year, positioning it close to the national average. However, these costs can vary based on various factors, including one’s location, medical needs, and the coverage they choose.

For instance, in Memphis, health insurance premiums can vary significantly. Older individuals tend to pay higher premiums, and the most affordable options are typically found in the Bronze tier. The most cost-effective option, Ambetter’s Silver plan, averages $470 monthly, whereas Blue Cross Blue Shield’s plan has a higher premium of $524 and a lower Maximum Out-of-Pocket cost of $4,210. These examples illustrate how healthcare costs can fluctuate even within a single state.

Transportation Expenses: Gas Prices and Commute Times

Next up, let’s take a look at transportation costs. As of March 2024, the average gas price in Tennessee was:

• $3.09 per gallon for regular gasoline
• $3.50 per gallon for mid-grade gasoline
• $3.87 per gallon for premium gasoline
• $3.82 per gallon for diesel

Moreover, an added bonus for residents of Tennessee cities is that they spend less time commuting on an annual basis compared to the majority of U.S. residents. This not only saves time but also contributes to lower transportation costs, making Tennessee an even more appealing destination for those considering relocation.

Taxation in the Volunteer State

Tennessee is often lauded as a tax-friendly state, and for good reason! The state has a sales tax of 7% on most items, while food is subject to a lower tax rate of 4%. However, depending on the county, the sales tax can range from 8.5% to 9.75% due to additional local taxes.

But here’s the kicker: Tennessee imposes no state income tax, no tax on pension income, and has relatively low property taxes. This provides significant tax relief to its residents, especially retirees. Plus, homeowners in Tennessee are not subject to state capital gains taxes upon the sale of their property. All these tax breaks have earned Tennessee its reputation as the 3rd most tax-friendly state.

Childcare Costs Across Tennessee

Childcare is a significant expense for some families, and in Tennessee, these costs can vary widely. The average monthly cost for infant care in Tennessee is about $830; for a toddler, it’s about $770; and for children over 2 years old, the cost is about $675.

Naturally, childcare costs can also differ across cities in Tennessee. For instance, Clarksville offers the most affordable childcare, with average monthly costs of $610 for infants, $587 for toddlers, and $526 for children 2 years old and older. In contrast, in Nashville, families typically pay $933 for infant care, $867 for toddler care, and $705 for children 2 years old and older per month. This signifies the importance of location when considering childcare costs in Tennessee.

Miscellaneous Living Expenses in Tennessee

Apart from the main expenses, there are various other costs associated with living in Tennessee. These include:

• Entertainment costs
• Sports costs
• Restaurant costs
• Clothing costs

For instance, a visit to Graceland in Memphis can set you back anywhere from $28 to $225, while a ticket to Dollywood in Pigeon Forge starts at $92.

Does the Cost of Living in Tennessee Fit Your Budget?

By now, you should have a clearer picture of what it costs to live in Tennessee. Whether you’re considering housing, utilities, groceries, healthcare, transportation, taxes, childcare, or other living expenses, the Volunteer State offers a competitive and affordable cost of living.

So, if you’re dreaming of buying a home in Tennessee—the land of country music and the Great Smoky Mountains—its affordability might just make your dream a reality. After all, who wouldn’t want to live comfortably in one of the most affordable states in the country?

Frequently Asked Questions

Is it expensive to live in Tennessee?

In general, Tennessee is not expensive to live in. The cost of living in Tennessee is relatively low compared to other states, with housing, utilities, groceries, and clothing all below the national average. This answer can change if you're looking to live in one of the state's most expensive counties.

Why is it so cheap to live in Tennessee?

Living in Tennessee is cheap due to factors such as no state income tax, low property taxes in many counties, and a growing economy that has led to job growth. This has helped keep housing and living costs affordable.

How much do you need to make to live comfortably in Tennessee?

Most residents typically need to make around $42,060 annually, or $20 an hour, to live comfortably in Tennessee. This is slightly lower than the national average, and it varies based on industry and experience.

What is the average cost of living in Tennessee?

The cost of living in Tennessee is generally 3–16% lower than the average U.S. city, making it one of the more affordable options nationally. You can expect to spend less on living expenses compared to many other places in the United States.