Buying a home in Tennessee? You’ve probably heard it’s one of the most affordable states in the South, but is that really true compared to places like Texas, Georgia, and Florida? For U.S. home buyers, the numbers behind housing, taxes, groceries, and utilities matter far more than hype. This guide breaks down Tennessee’s cost of living from a buyer’s perspective and answers the most common questions about moving to the Volunteer State.
Tennessee’s Overall Cost of Living: The Big Picture
Tennessee’s cost of living index sits at about 90, roughly 10% lower than the national average. That looks great on paper, but this figure is an average of very different markets. Nashville’s boom has sent housing costs soaring, while smaller cities and towns remain firmly affordable.
- What this means for you as a home buyer: Tennessee’s reputation for low costs is real, but only if you choose the right area. Your budget will stretch much further in Memphis or Clarksville than it will in Nashville.
Housing Costs: Tennessee’s Biggest Draw
Housing usually takes up the largest share of a household budget, so it’s the category where Tennessee can shine for buyers—if you shop strategically.
Nashville: High Demand, High Prices
Nashville’s growth has been phenomenal, but the median home price has climbed past $400,000. Rents have followed suit. If you want to live here, be prepared for prices more like a national metro than a “cheap” Southern city.
Memphis: Budget-Friendly Standout
Memphis offers a median home price around $200,000—about half of Nashville’s—plus more affordable rents. For first-time buyers or anyone relocating from a pricier state, Memphis gives you a lower entry point without sacrificing urban life.
Knoxville & Chattanooga: The Middle Ground
These mid-sized metros sit between the extremes. Prices are higher than Memphis but well below Nashville, with a strong blend of amenities and value.
- Takeaway for buyers: Tennessee’s affordability is uneven. If you’re buying for value, Memphis and smaller towns like Clarksville will stretch your dollar farthest. If you’re moving for job opportunities, Knoxville or Chattanooga can offer a balance.
Taxes: Tennessee’s Quiet Advantage
No State Income Tax
One of Tennessee’s biggest selling points is its 0% state income tax. Compared with Georgia and North Carolina, where state taxes reduce your take-home pay, Tennessee lets you keep more. Retirees benefit too—Social Security and pensions aren’t taxed.
High Sales Tax Offsets Some Savings
The downside is a high sales tax—7% statewide, plus local add-ons. Everyday purchases, furniture for your new home, and renovation materials can cost more than you expect.
- Takeaway for buyers: If you’re relocating from an income-tax state, your paycheck goes further. Just budget for higher sales tax when furnishing or remodeling your home.
Grocery and Utility Costs: Middle of the Pack
Food Prices
Grocery prices are about average for the South. You won’t see the deep discounts of some Midwest states, but you’ll avoid the sticker shock of coastal markets.
Utilities
Tennessee enjoys lower-than-average electricity costs thanks to the Tennessee Valley Authority’s low-cost power. That’s a hidden advantage for homeowners. However, if your home relies on electric heating, winter bills can spike.
Takeaway for buyers: Lower utility rates are a plus for ongoing costs, but always ask about a home’s heating system and energy efficiency.
Tennessee vs. Other Southern States: How It Stacks Up
State | Cost of Living Index | Median Home Price | State Income Tax |
Tennessee | 90 (10% below U.S. avg.) | $300,000 | 0% |
Texas | 92 | $350,000 | 0% (but higher property taxes) |
Florida | 102 | $400,000 | 0% |
Georgia | 94 | $350,000 | 1%–5.75% |
Texas: Slightly More Expensive with High Property Taxes
Texas looks similar on the surface but comes with higher property taxes that can add thousands per year to your housing costs.
Florida: High Demand, High Prices
Florida offers beaches and no state income tax, but median home prices hover around $400,000 and insurance—especially flood coverage—can be significant.
Georgia: Affordable Housing but State Income Tax
Georgia’s housing costs are comparable to Texas, but state income tax takes a slice out of earnings.
Takeaway for buyers: Tennessee sits in a sweet spot—cheaper housing than Florida or Texas, no income tax unlike Georgia, and a balanced mix of costs across categories.
Finding Tennessee’s Affordability Sweet Spots
- Best deals: Memphis, Clarksville, Johnson City.
- Balanced markets: Knoxville and Chattanooga.
- Premium market: Nashville and its suburbs.
Don’t base your decision on state averages. Drill down by city to see where your budget fits. The difference between Nashville and Memphis could mean hundreds of dollars a month in mortgage or rent.
Income Needed to Live Comfortably in Tennessee
For most of the state, a salary of $50,000–$70,000 supports a moderate lifestyle. In Nashville, you’ll need more than $70,000 to maintain the same standard of living.
Pro Tip: Use a mortgage affordability calculator with local property tax and insurance estimates for each city. The same salary can go much further in Memphis than in Nashville.
Tennessee as a Retiree Destination
No state income tax, moderate housing costs outside of Nashville, and a range of smaller affordable towns make Tennessee attractive for retirees. Social Security and pensions go further, and lower utility costs help fixed incomes stretch farther. Just remember to factor in the high sales tax when budgeting for everyday expenses.
FAQs
Is Tennessee really cheaper than other Southern states?
Yes and no. Tennessee offers low taxes and affordable housing—especially outside of Nashville—but high sales tax and average grocery costs offset some of those savings. Compared to Texas and Florida, Tennessee’s housing is generally cheaper. Compared to Georgia, you’ll save on income tax but not necessarily on everyday expenses.
Which Tennessee city offers the best affordability?
Memphis is by far the best deal for home buyers, with median home prices around $200,000. Knoxville and Chattanooga also offer solid affordability compared to Nashville’s much higher costs.
How much do I need to earn to live comfortably in Tennessee?
A salary of $50,000–$70,000 works for most parts of Tennessee except Nashville, where you’ll need more to maintain the same standard of living.
Is Tennessee good for retirees?
Yes. No state income tax means Social Security and pensions go further, and affordable housing in small towns makes it an attractive option for retirees.
The Bottom Line:
Tennessee’s affordability is real—but uneven. Taxes favor earners and retirees, utilities are cheaper than average, and housing can be a bargain in the right city. Compared to other Southern states, Tennessee offers one of the best mixes of low housing costs and no income tax, especially outside of Nashville.
For home buyers on a budget, Memphis and smaller cities like Clarksville deliver the strongest value. For those seeking a blend of affordability and lifestyle, Knoxville and Chattanooga are appealing. Nashville remains the cultural and economic powerhouse, but at a price closer to national metro averages.
