But what will you actually pay for housing, utilities, and groceries? This guide breaks down the real costs of living in Tennessee so you can make a smart decision about your move to Tennessee.

Cost of Living in Tennessee at a Glance

• Overall: The cost of living in Tennessee runs about 10-15% lower than the national average for most expenses.
• Housing Costs: The typical home costs around $300,000, and rent prices are about 20-30% lower than what most Americans pay.
• Monthly Bills: Expect to pay around $140 for an average monthly energy bill, $101 for gas, and $36 for water.
• No state income tax: Tennessee only has a 7% sales tax (4% on food), which means better tax rates than many states, especially if you're retired.

Tennessee's Living Index: How It Compares

Tennessee's living index score shows just how affordable the state is. On the cost of living index where 100 represents the national median, Tennessee scores about 89.8 overall. That means costs in Tennessee are roughly 10% below what most Americans pay.

When you break down this living index by category:

• Housing costs: 79.4 (over 20% cheaper than national median)
• Transportation costs: 93.2
• Healthcare costs: 95.3
• Food costs: 94.1

These scores show why so many people find the living cost in Tennessee so appealing compared to higher cost areas.

House Prices: Much More Affordable Than Most States

When it comes to housing costs, Tennessee gives you more bang for your buck. Overall, home prices in Tennessee cost about 20% less than the national average. The state's housing costs are a major factor in its low cost status.

Home prices vary a lot depending on which Tennessee cities you're considering:

• Homes for sale in Nashville typically sell in the mid-$400,000s
• Homes for sale in Memphis typically sell in the high $100,000s (one of the lowest cost options in the state)
• Homes for sale in Knoxville typically sell in the mid-$300,000s

Don't worry if those prices sound high for Nashville - there are still affordable neighborhoods in Nashville. And even in less expensive cities like Memphis, you'll find some pricier areas too.

For the lowest cost housing, the best places to live in Tennessee include Chattanooga, Clarksville, and Johnson City, where your housing dollar stretches even further.

Renting Is Cheaper Too

Not ready to buy? Renting costs in Tennessee run less than in most states. The average apartment in Tennessee rents for about $1,730 per month.

Even in the Nashville metro area, where the cost of living is higher than the state average, rent only bumps up slightly to around $1,760 monthly. Most Tennessee renters pay 20-30% less than the national median. That's a lot of extra money in your pocket each month!

For a single adult or someone just starting out, many Tennessee cities offer even more affordable options. The lowest cost rentals can be found in smaller communities throughout the state.

Your Monthly Bills Will Be Lower

Nobody loves paying bills, but at least in Tennessee, they won't empty your wallet. According to the Energy Information Administration and other sources, here's what most people pay each month:

• Electricity: Around $140 for an average monthly energy bill
• Natural gas: About $101
• Water: Roughly $36

Your electric bill will change based on your home size. A tiny 500 sq. ft. apartment might only cost $36 per month to power, while a big 3,000 sq. ft. house could run over $210. These energy costs in Tennessee generally run lower than the national average.

Community and economic research shows that Tennessee residents enjoy more affordable utility costs partly due to the Tennessee Valley Authority's role in providing power to the region.

Grocery Shopping Won't Break the Bank

Food costs in Tennessee won't leave you hungry or broke. The typical person spends about $251 per month on groceries, or just over $3,000 per year. For comparison, the average monthly grocery bill in the United States for a couple ranges from $510 to $820.

Individual food prices in Tennessee tend to be lower than national averages. For example:

• A dozen eggs: About $3.50
• Gallon of milk: Around $3.75
• Loaf of bread: Approximately $2.50

Grocery costs do change depending on which Tennessee city you call home:

• Knoxville has the cheapest groceries (89.9 on the cost index)
• Nashville has the highest grocery prices (97.5 on the cost index)

Even in the "expensive" areas, you'll still pay less than most Americans for your food shopping, making Tennessee's cost of living quite attractive for budget-conscious shoppers.

Healthcare: About the Same as Other States

Healthcare costs in Tennessee stick pretty close to the national average. The typical Tennessean spends around $6,950 per year on healthcare.

Your actual healthcare costs will depend on:

• Your age
• Your health needs
• Which insurance plan you choose
• Where in Tennessee you live

For example, in Memphis, health insurance costs vary widely. Older people generally pay higher premiums. The cheapest option is usually Ambetter's Silver plan at around $470 monthly, while Blue Cross Blue Shield charges more ($524) but has a lower out-of-pocket maximum ($4,210).

Any financial advisor would suggest considering healthcare costs carefully when planning your move to Tennessee, as they represent a significant portion of most household budgets.

Transportation Costs: Gas Prices and Commutes

Transportation costs in Tennessee are another bright spot for your budget. As of March 2024, here's what you'll pay at Tennessee gas stations:

• Regular gas: $3.09 per gallon
• Mid-grade gas: $3.50 per gallon
• Premium gas: $3.87 per gallon
• Diesel: $3.82 per gallon

One big bonus: Tennessee drivers spend less time stuck in traffic than people in most other states. That means lower transportation costs since you'll burn less gas and waste less time during your commute.

Auto insurance in Tennessee also tends to be more affordable than the national median, with average premiums around $1,300 annually, though this varies based on your driving history and coverage needs.

Taxes: A HUGE Benefit to Living in Tennessee

Tennessee is super tax-friendly, and that's no small thing! The tax rates here are among the most favorable in the country. Here's what makes costs in Tennessee so much better from a tax perspective:

• No state income tax at all! What you earn is what you keep.
• No tax on pension income - great for retirees.
• Low property taxes compared to the national median.
• No state capital gains taxes when you sell your home.

You will pay sales tax (7% on most items, 4% on food), plus local taxes that can push the total to 8.5-9.75% depending on your county. But overall, Tennessee ranks as the 3rd most tax-friendly state in America. Your wallet will thank you!

Even with the state average sales tax being slightly higher than some states, the overall tax burden is substantially lower than the national median.

Childcare Costs: Depends on Your City

If you have kids, childcare costs in Tennessee matter. Based on economic research, the average monthly childcare costs are:

• Infant care: $830
• Toddler care: $770
• Children over 2 years: $675

These prices change based on where in Tennessee you live:

• Clarksville offers the cheapest childcare: $610 for infants, $587 for toddlers, and $526 for kids over 2.
• Nashville metro area is more expensive: $933 for infants, $867 for toddlers, and $705 for kids over 2.

For a family with children, these costs can significantly impact your overall living cost. Be sure to factor them into your budget when considering a move to Tennessee.

Other Costs: Having Fun in Tennessee

Besides the basics, you'll spend money on fun stuff too. Miscellaneous costs in Tennessee include entertainment, dining out, and more. The state has plenty of entertainment options:

• A trip to Graceland in Memphis: $28 to $225 depending on the tour package
• A day at Dollywood in Pigeon Forge: Starts at $92

Community and economic research shows that entertainment costs in Tennessee cities generally run 5-10% below the national average. Plus, you'll have costs for eating out, sports events, and new clothes. The good news is that even these higher cost luxuries are often more affordable than what you'd pay in other states with a higher cost of living index.

Is Tennessee Affordable For Your Budget?

The bottom line: Tennessee gives you more for your money than most states. Whether you're looking at housing costs, utility costs, food costs, or taxes, your dollar stretches further here.

If you're dreaming about buying a home in Tennessee—the land of country music and beautiful mountains, Tennessee's affordability makes that dream much more achievable. After all, why pay a higher cost to live somewhere else when you could enjoy one of America's most affordable states?

Common Questions About Tennessee's Cost of Living

Is Tennessee expensive to live in?

No! The cost of living in Tennessee runs less than the national average in almost every category. Housing costs, utilities, groceries, and clothing all cost less here than in most states. Some areas (like parts of the most expensive counties) have a higher cost than others, but overall, Tennessee offers a low cost alternative to many states.

Why is living in Tennessee so affordable?

Tennessee's low cost status comes from:

• No state income tax
• Low property taxes in many counties
• A growing economy with plenty of jobs
• Lower housing costs than coastal states
• Reasonable transportation costs and shorter commutes

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

Most people can live comfortably in Tennessee on about $42,060 per year, or $20 per hour. That's lower than the national median income requirement. What you'll need depends on your job, experience, and which Tennessee city you choose to live in. A single adult might need less, while a family would need more.

How much lower is Tennessee's cost of living compared to other states?

Tennessee's overall living cost runs about 3-16% lower than the average U.S. city. That means your paycheck goes further here, whether you're buying a house, paying monthly bills, or just picking up groceries. Using a living calculator can help you understand exactly how these costs in Tennessee compare to your current location.

Ready to make the move? Tennessee's mix of affordability, natural beauty, and southern hospitality makes it a great choice for anyone looking to stretch their dollars without sacrificing quality of life.