Cost of Living in Tennessee: Is It Really as Cheap as You Think?

When people think about moving to Tennessee, one of the first things they hear is:
“It’s so cheap to live there.”

But is that actually true? Or is it just a headline that ignores the details?

The short answer: Yes, Tennessee can be very affordable — but how affordable depends on where your money actually goes. Let’s break it down category by category so you can see where Tennessee shines, where it’s average, and where it quietly costs more.

Food & Groceries: Cheaper Than You’d Expect

Tennessee generally comes in below the national average for groceries.

• Average monthly grocery spending:
  Roughly $298–$370 per person, depending on household size and city

• That’s about 5% lower than the national average

This applies to:

• Regular groceries

• Organic and specialty foods (often cheaper than coastal states)

If you’re coming from the West Coast, Northeast, or Florida, grocery prices are usually one of the first things you notice in a good way.

Gasoline: Consistently Cheaper 🚗

Gas prices in Tennessee are often:

• $0.30–$0.50 per gallon cheaper than the national average

Why?

1. Proximity to refineries and major fuel pipelines

2. Lower state gas taxes than many states people move here from

If you drive a lot — commuting, kids’ activities, weekend trips — this adds up fast.

Utilities: One of Tennessee’s Biggest Advantages

Natural Gas 🔥

According to the U.S. Energy Information Administration:

• Tennessee: ~$20.44 per thousand cubic feet

• U.S. average: ~$24.56 per thousand cubic feet

That means most Tennessee households pay less than the national average for natural gas.

Electricity ⚡

This is where Tennessee really stands out.

• Tennessee: ~13.1–13.3¢ per kWh

• U.S. average: ~18.0¢ per kWh

That’s roughly 25–30% cheaper than the national average.

Compared to other Southern states, Tennessee ranks 2nd lowest, behind only Louisiana — beating Mississippi, Alabama, Georgia, the Carolinas, Texas, and more.

Why is electricity so cheap?

1. TVA (Tennessee Valley Authority)
   A non-profit, federally created utility — no shareholders, no corporate taxes

2. Efficient power mix
   Hydroelectric, nuclear, and natural gas keep costs stable

3. Regulated market structure
   No retail electricity “marketing premiums” like deregulated states

Water, Wells & Septic: Generally Cheaper

Water & Sewer 💧

• Johnson City and much of Northeast Tennessee tend to fall at or below the national average

• Sewer costs can push some bills higher, depending on location

Wells

• Digging a well typically runs $25–$65 per foot

• Many local wells are around 100 feet deep

• Still often cheaper than many states — but depth matters

Septic Systems

This is a huge savings compared to coastal areas:

• Northeast Tennessee: ~$4,000–$8,000

• Many coastal states: $15,000–$30,000

Why the difference?

• Favorable soil and terrain

• Less extreme permitting and regulation

Internet & Cable: About Average

• Around $70/month locally

• Roughly $70/month nationally

Pricing is average, but speed and reliability can vary depending on whether you’re in town, the county, or a more rural area.

Insurance: Middle of the Pack (But With Big Comparisons)

Home Insurance 🏠

• Tennessee ranks around 35th nationally

• But compared to states like Florida, homeowners can save thousands per year

Auto Insurance 🚘

• Below the national average for both minimum and full coverage

“Toys” (boats, RVs, side-by-sides)

• Generally normal / average pricing

Schools & Education 🎓

K–12 Public Schools

• Parent out-of-pocket costs are on par with the national average

• Supplies, activities, tech, clothing — nothing unusually high

Big bonus:
Tennessee’s Tax-Free Weekend (last weekend in July)

• School supplies & clothing items priced $100 or less are tax-free

• Saves nearly 10% on back-to-school shopping

School Choice

• In some cases, families can live in the county but attend city schools

• Private schools (many K–12 options) are available throughout the region

College

• In-state public colleges and private universities are slightly below national averages

• ETSU is a major local affordability draw

Taxes: The Trade-Off Everyone Talks About

The Big Win

• No state income tax 🎉

Overall Tax Burden

• Tennessee ranks 46th out of 50 states (lower is better)

Property Taxes 🏡

Exceptionally affordable in many counties:

• Sullivan County: ~$872/year

• Carter County: ~$816/year

• Washington County: ~$1,269/year

• Unicoi County: ~$511/year

Even the “higher” counties are often well below national medians.

Sales Tax 🧾

Here’s the trade-off:

• One of the highest sales tax rates in the country

• Everyday spending feels more expensive than zero-sales-tax states

Tennessee relies heavily on sales tax to make up for no income tax — whether that’s a good deal depends on how you earn vs. how you spend.

Healthcare: Mixed but Often Cheaper

• Per-person healthcare spending:
  ~$8,200/year in TN vs ~$11,000 nationally

• Unsubsidized insurance premiums:
  At or slightly above national averages

Access and quality vary by location, especially in more rural areas.

Housing & Lifestyle Costs

Beyond the purchase price:

• Closing costs

• HOA fees (if applicable)

• Property taxes (usually low)

Lifestyle perks that stretch your dollar:

• Free or low-cost parks & hiking

• Lakes, outdoor recreation

• Local sporting events & family activities

Hidden Costs to Be Aware Of ⚠️

Tennessee isn’t perfect — here are the things people don’t always mention:

• Longer travel times in rural areas

• Healthcare access gaps depending on location

• Slower internet or weak cell service in some spots

• Longer shipping times

• Occasional longer power outages, especially outside city limits

Bottom Line: Is Tennessee Cheap?

Tennessee isn’t just cheap across the board — it’s strategically affordable.

You save big on:

• Housing

• Property taxes

• Utilities

• Gas

• State income tax

You pay more in:

• Sales tax

• Some healthcare premiums

• Certain rural infrastructure trade-offs

For many families, retirees, and remote workers — especially in Northeast Tennessee — the math still works heavily in their favor.

If you’re thinking about relocating and want to see how these numbers play out specifically in Johnson City or the Tri-Cities, that’s where local knowledge makes all the difference.