What Is The Cost Of Living In Kentucky? (Taxes, Housing, & More)

Kentucky has a reputation for horse racing, bourbon, and moonshine; this state knows how to have a good time. It also has a low cost of living, making it appealing to the over 4.5 million residents. Of course, there are also lots of tornadoes, but all of the pros seem to make living here worth it.

Kentucky boasts a lower cost of living than the US average across all major points, including housing, transportation, and healthcare. On a cost of living index placing the national average at 100, Kentucky is 83.6. Depending on where you live in the state, the cost of living drops down even more.

Kentucky is full of outdoor adventure, relaxing with a bourbon on the rocks, and friendly people. However, before you decide to move, it’s always advisable to know the potential impact on your bank account. Check out the costs of housing, taxes, transportation, and more if you’re thinking about calling “The Bluegrass State” home.

Kentucky has experienced home appreciation rates above the national average over the past five years. The annual rate for the five years is 4.59%, and it’s jumped to 7.55% in the last quarter.

About 38% (the most considerable portion) of homes in the state fall between $118,000 and $237,000. However, roughly 13.5% of houses fall below $60,000, with about 1% costing above one million. Of course, the exact city you decide to call home plays a huge part in finding affordable housing.

Another thing to consider when comparing home prices in different areas is the median income. Typically, cities with higher home prices feature a higher median income, but that isn’t always the case. Therefore, it’s essential to look at both elements when choosing your future home.

The median income in Kentucky is $50,247, and this number goes up or down depending on the city. This chart lays out the median home price and income for popular cities in Kentucky.

Kentucky features a sales tax and property taxes lower than the national average. However, the state’s income tax is about on par with the US average. Plus, counties add between 0.01 and 2.5% of local income taxes.

The state sales tax is 6%, and it is statewide. Therefore, no matter what city you go shopping in, your sales tax is the same. The state’s gas tax is 24.6 cents per gallon, and for a 20-pack of cigarettes, you’ll pay $1.10 in tax. For alcohol, taxes in Kentucky are high, 83 cents a gallon for beer and $7.35 per gallon for liquor.

Property taxes in Kentucky are some of the lowest in the country. They average $1,257, roughly 0.83% of a home’s value. However, some counties have a rate as low as 0.51% and as high as 1.17%.

On the cost of living index, Kentucky comes below the national average of 100, scoring 94.2. Of course, a lot depends on where you shop and how often you eat out. However, you shouldn’t have to worry about groceries breaking your bank.

In general, your food budget should be 11% of your annual income, 6% for groceries, and 5% for dining out. Since Kentucky’s median income is $50,247, a typical food budget might be about $5,527 per year.

Here’s a look at what you could expect to pay for common food items in various Kentucky cities.

For colleges, tuition and fees average about $6,331 for in-state students. Out-of-state students pay an average of $18,352.

The highest tuition in the state is $44,700 at Berea College in Berea, Kentucky. Alternatively, Trend Setters’ Academy of Beauty Culture-Elizabethtown features the lowest tuition at $4,800.

If you decide to send your children to private school, tuition sometimes takes a significant bite out of your budget. However, tuition costs in Kentucky fall below the national average by a few thousand dollars.

Transportation is typically the second-largest piece of your budget, so it’s worth paying attention to average costs. If you plan to move to Kentucky, the state’s average of 89.1 on the living cost index seems appealing. However, the state has some of the highest car insurance premiums in the country.

Gas prices average about $2.35 a gallon, and the average commute is roughly 22.5 minutes. Almost 82.4% of commuters opt to drive alone for their commute instead of using public transportation or a rideshare program. Drivers pay an average of $1,606.70 a year on gas and $390.02 on car repairs.

Most Kentucky households own two cars. The average car insurance premium in Kentucky is between $748 and $2,128 a year, depending on whether you choose minimum or full coverage. Both of these averages are higher than the average national cost of car insurance – namely $565 for minimum annual coverage and $1,674 for full annual coverage.

Though, rates can vary depending on the city you live in, the insurance company you go with, and your age and driving record. To help illustrate how car insurance premiums vary based on where you live, the following table outlines average car insurance rates in 10 cities in Kentucky:

When it comes to the state of Kentucky, it doesn’t get much more affordable than Monticello. While the median household income is only $25,510, the average cost of living is 24% lower than the national average and nearly 16% lower than the state average. The median home value in Monticello is $100,400 and median income for homeowners is $34,821, meaning approximately $812 per month is allocated towards housing expenses.

While monthly homeownership costs are low, rental costs are even lower in Monticello. Renters enjoy an average rental price of just $473 per month. With low housing and living costs, it’s easy and comfortable to live in Monticello, Kentucky with relatively low wages.

Related Questions

What are healthcare costs in Kentucky?

Compared to the US average, Kentucky’s healthcare costs are slightly lower at 93.9. However. As with most health insurance plans, your premium depends on things like coverage and age.If you’re young and healthy, you could choose a basic plan for about $238 a month. If you’re older, about 40, you’d pay about $304 for the same catastrophic plan. A 60-year-old would pay closer to $646. However, if you decide to go with more top-of-the-line coverage, expect to pay between $479 and $1,300 per month. 

What is Kentucky’s crime rate?

Overall, Kentucky boasts a reasonably low crime rate, at about almost half of the national average for violent crimes. Property crimes are a little closer to the national average but still fall slightly below.Your chances of becoming a victim of a violent crime in Kentucky are 1 in 461. Your chances of becoming a victim of a property crime are about 1 in 53. In Kentucky, there are approximately 9,701 violent crimes in a year and about 84,769 property crimes.

Kentucky boasts an affordable cost of living, low crime rate, and laid-back atmosphere. It can be a great place to live, especially if you’re a fan of hunting, horse racing, and bourbon. Depending on the city you call home, you could pay more or less than the state average, so consider all of your options.

Homes prices are well below the national average in Kentucky and rent is only about $961 per month on average. The cheapest place to live in Kentucky is Monticello, with an average rent of just $473 per month. Your typical household in Kentucky brings in about $50,247, which is enough to live comfortably and higher than the U.S average.