Cost of Living in Tennessee 2026: Full Guide

Tennessee has become one of the most popular relocation destinations in the country, and the financial math explains why. No state income tax, a cost of living index around 96 (4% below the national average), and a booming job market in Nashville have made it a magnet for remote workers, retirees, and young professionals. But the state is far from monolithic. Nashville is increasingly expensive, while cities like Memphis and Chattanooga remain remarkably affordable.

Tennessee Cost of Living Overview

The statewide cost of living index for Tennessee is approximately 96, meaning it costs about 4% less than the national average to live here. But that number masks significant variation between cities:

• Nashville-Davidson: COL Index ~102 (slightly above national average)
• Knoxville: COL Index ~89 (11% below average)
• Memphis: COL Index ~86 (14% below average)
• Chattanooga: COL Index ~90 (10% below average)
• Clarksville: COL Index ~87 (13% below average)

Compare any Tennessee city to where you live now with our cost of living calculator.

How Much Do You Save With No Income Tax in Tennessee?

Tennessee has no state income tax on wages or salaries. This is the single biggest financial advantage of living here. For a worker earning $100,000, the savings compared to other states are significant:

• vs. California (9.3% effective): Save ~$9,300/year
• vs. New York (6.5% effective): Save ~$6,500/year
• vs. North Carolina (4.5% flat): Save ~$4,500/year
• vs. Illinois (4.95% flat): Save ~$4,950/year

Tennessee makes up for the lack of income tax with a 7% state sales tax (one of the highest in the nation) plus local sales taxes that can push the combined rate to 9.75%. Groceries are taxed at a reduced rate of 4%. This means the tax advantage is greatest for high earners who spend a smaller percentage of their income on taxable purchases. See the full breakdown at our Tennessee tax page.

How Much Does It Cost to Live in Nashville?

Nashville is the engine driving Tennessee's growth. The city has added over 100 people per day in recent years, drawn by a strong job market in healthcare, music, tech, and hospitality. But that growth has pushed costs up significantly.

Nashville Housing

• Median home price: ~$440,000 (up from $250K in 2019)
• Average 1BR rent: $1,600-$1,900 (downtown/midtown), $1,200-$1,500 (suburbs)
• Property tax rate: ~0.9% (relatively low for a major metro)

Nashville Monthly Budget (Single Person)

• Rent (1BR, decent area): $1,500
• Utilities: $150
• Groceries: $400
• Transportation (car): $450
• Health insurance: $350
• Dining/entertainment: $400
• Total: ~$3,250/month

Nashville is no longer "cheap," but the combination of no income tax and moderate housing costs makes it financially competitive with most mid-tier cities. A salary of $65,000-$75,000 is comfortable for a single person.

Memphis: Deeply Affordable

Memphis is one of the most affordable large cities in America. With a COL index around 86, your dollar goes dramatically further here than in Nashville or any coastal city.

Memphis Housing

• Median home price: ~$220,000
• Average 1BR rent: $900-$1,200
• Property tax rate: ~1.5% (higher than Nashville due to Shelby County rates)

A $50,000-$60,000 salary in Memphis provides a lifestyle equivalent to $75,000-$85,000 in Nashville. For remote workers earning big-city salaries, Memphis offers exceptional value.

Knoxville and Chattanooga: The Sweet Spots

Both cities offer a compelling balance: significantly lower costs than Nashville, strong quality of life, and growing job markets.

• Knoxville benefits from the University of Tennessee, a developing tech scene, and easy access to the Great Smoky Mountains. Median home price ~$300,000. A $55,000-$65,000 salary is comfortable for a single person.
• Chattanooga has invested heavily in infrastructure, including the nation's fastest municipal internet (10 Gbps fiber). It has a growing startup scene and outdoor recreation culture. Median home price ~$310,000.

Tennessee vs. Other No-Tax States

Tennessee is not the only state without income tax. Here is how it compares to the competition:

• vs. Texas: Similar no-tax benefit, but Texas has higher property taxes (1.6-2.2% vs 0.6-1.5% in TN). Tennessee wins on property tax, Texas wins on job diversity.
• vs. Florida: Florida has higher housing costs in most metros and hurricane risk. Tennessee has more affordable housing outside Nashville.
• vs. Nevada: Nevada has a higher COL (especially Las Vegas/Reno). Tennessee is generally more affordable.
• vs. Washington State: Washington has a much higher COL, especially Seattle. Tennessee wins on affordability by a wide margin.

Is Tennessee Right for You?

Tennessee works best for people who:

• Value no state income tax and want to keep more of their paycheck
• Are comfortable with a car-dependent lifestyle (public transit is limited outside Nashville)
• Enjoy four distinct seasons and access to mountains and lakes
• Want an affordable metro with a strong job market (Nashville) or ultra-low costs (Memphis, Knoxville)

Plan your move with our relocation calculator to see exactly how your finances change if you move to Tennessee. Factor in the income tax savings, housing cost differences, and overall cost of living adjustment to make a data-driven decision.

Knoxville in Detail

Knoxville is Tennessee's best-value mid-size city for many households. Typical rents run about $950-$1,200/month for a one-bedroom, $1,100-$1,450 for a two-bedroom, and $1,400-$1,800 for a three-bedroom house. Buying at a roughly $310,000 median with 20% down at 6.8% is about $1,620/month in principal and interest, and Knox County's effective property tax rate of roughly 0.62% is among the lowest in the country.

• Neighborhoods: Bearden, Fountain City, and Farragut are popular with families; downtown and the Old City suit young professionals and cost a bit more for walkability.
• Transportation: Knoxville is car-dependent. The KAT bus system exists but will not replace a car for most residents; budget roughly $400-$550/month for a car payment, insurance, gas, and maintenance.
• Utilities: TVA power rates are among the lower ones in the Southeast; a two-bedroom typically runs about $200-$280/month for electric, water, gas, and internet.
• Healthcare and access: the University of Tennessee Medical Center anchors regional care, and McGhee Tyson Airport has direct flights to major hubs. The Great Smoky Mountains are about 45 minutes away.

For a remote worker, the state tax difference alone is meaningful. On $80,000 of income, Tennessee's $0 wage income tax compares with roughly $3,600 in a 4.5% flat-rate state. Housing savings versus a coastal city are usually larger than the tax savings. Check the Tennessee tax calculator for your own numbers.

Nashville vs. Austin: Two No-Income-Tax Cities Compared

People weighing Nashville often compare it with Austin, since both have no state income tax, strong music and food scenes, and fast growth. The differences come down to a few areas:

• Housing: Nashville tends to be somewhat cheaper. One-bedroom rents in the two cities are typically about $150/month apart (roughly $1,500 in Nashville versus $1,650 in Austin), or $1,800 a year. Home prices in both have moderated since the 2020-2022 surge, but Austin still carries a premium.
• Property tax: Texas effective rates run about 1.6%-1.8% versus roughly 0.6%-0.7% in Tennessee. Tennessee applies its rate to a lower assessed value (25% of appraised value for residential property), so effective rates already reflect that. On a $400,000 home the annual gap can be several thousand dollars in Tennessee's favor.
• Sales tax: the reverse. Nashville's combined rate is about 9.25% versus about 8.25% in Austin, which claws back some of Tennessee's property-tax advantage for high spenders.
• Jobs: Austin has the deeper tech market, with major offices from large technology firms and a big startup scene. Nashville is more diversified, with a very large healthcare-industry presence alongside music, hospitality, and growing tech.
• Everyday costs: groceries, dining, and transportation are comparable, and both cities are car-dependent. Austin's summer electric bills run higher because of the heat.

Bottom line: Nashville is the more affordable of the two, mainly through lower housing and property costs. Austin can still win for tech workers if higher salaries offset its costs; compare actual offers in the cost of living calculator and model a move in the relocation calculator.