Cost of Living in Tennessee
Things cost about ▼ 8% less in Tennessee than the national average.
What Things Cost in Tennessee
Compared to the US national average
See raw index numbers
US national average = 100. Source: BEA Regional Price Parities 2023.
Tennessee has no state income tax, a cost of living about 6% below the national average, and Nashville, which has been the single hottest relocation destination in America for the better part of a decade. The music, food, and nightlife are the visible draw. The no-income-tax structure and affordable housing (by booming-city standards) are the financial draw. Nashville's growth has pushed prices up, but Chattanooga, Knoxville, and Memphis remain genuinely affordable. Tennessee funds itself through a 7% sales tax (the highest base rate tied with Indiana and Mississippi), so the tax burden is shifted from income to consumption.
Tennessee at a Glance
Taxes in Tennessee
Tennessee has no state income tax. That's money in your pocket that residents of most other states don't keep. The combined sales tax averages 7%. Property taxes run about 0.56% of home value, which on a $272,800 median home means roughly $1,528/year.
Cities in Tennessee
Ranked from least to most expensive. Index 100 = national average.
Explore Tennessee
FAQ About Tennessee
Nashville's affordability has eroded with its popularity. Median home prices in the metro now exceed $272,800, and desirable neighborhoods like East Nashville, 12South, and the Gulch are significantly more. By comparison to Austin, Denver, or other booming cities, Nashville is still competitive. The surrounding area (Murfreesboro, Lebanon, Clarksville) offers more affordable options. The zero income tax and low property taxes help offset rising housing costs.
Tennessee's combined sales tax averages about 9.55%, among the highest in the nation. The state rate is 7% with local additions of about 2.55%. Groceries are taxed at a reduced state rate of 4% (plus local). This high sales tax is how Tennessee funds itself without an income tax. For a household spending $4,000 per month on taxable goods and services, the sales tax amounts to roughly $380 per month.
Yes. Memphis has one of the lowest costs of living of any major metro in the country. Median home prices are around $272,800, and you can find quality homes in desirable areas like Midtown, Cooper-Young, and East Memphis for well under $209,800. Combined with no state income tax, the financial value is exceptional. The city has challenges with crime in some areas, but the affordability, music culture, and barbecue make it a genuine option for budget-conscious relocators.