What Is The Cost Of Living In Tennessee Vs. Ohio?

Cost of living is a major factor that many use to determine whether they want to live in one place versus another. When it comes to Tennessee vs. Ohio, both states have much to offer potential residents. On the one hand, Tennessee is one of the fastest growing states in the nation, and those who choose to move there are attracted to the abundant beauty, charm, lively atmosphere, and culture of the state.

Meanwhile, on the other hand, Ohio has all four seasons, great healthcare, excellent job opportunities, and a number of exciting theme parks. But, how do these two states stack up in terms of cost of living?

The cost of living index in Tennessee is just 87.6, meaning it is about 12% more affordable to live in Tennessee than the national average (100). Ohio, on the other hand, has a cost of living index of 82.6, so it is more affordable than both Tennessee and the national average. The median price of a home in Tennessee is $231,600, which is about 26% lower than the national average of $291,700. Meanwhile, the median home price in Ohio is $179,700 – under the national average and only about 22% cheaper than Tennessee.

Aside from median housing prices, let’s explore how the cost of living compares in Tennessee vs. Ohio.

When you consider the fact that the median home price in the state of Tennessee is $231,600, it is more expensive to purchase a home here than in Ohio. With Ohio’s median home price of $179,700, you’d be looking at spending about 29% more on a home in Tennessee than Ohio.

Currently, the housing market in Tennessee is on fire, with homes selling quickly and, in most cases, for over the asking price. Like much of the country, buyers are outpacing the available homes in Tennessee. This was a direct result of both COVID-19 pandemic and a major influx of people to the state. There are simply too many buyers in Tennessee than there are homes, which has created a supply and demand imbalance.

The median home values in Nashville rose by about 16% in the last year, but home prices are rising all throughout the state. It is predicted that homes may continue to rise gradually into 2022. Local housing markets have accelerated because of a strong demand among buyers, but the homes for sale took a steep decline during 2020 and 2021.

A very similar situation is taking place in Ohio. Home sales in the state were up 10% in June 2021 compared to the previous year, which indicates that the housing market is still competitive. The competitive market resulted from record low interest rates and not enough houses. Almost the entire state is experiencing an increase in average home prices compared to last year, due to the overwhelming demand.

While it may be a good time to sell a home in Ohio or Tennessee, it is more competitive and more expensive than normal for buyers. Regardless, Ohio continues to be one of the most affordable housing markets in the country, and home prices are still lower than in Tennessee.

Based on the table above, you can see that lower housing costs are a benefit of living in Ohio over Tennessee. However, prices vary depending on where you live in either state. For instance, while the majority of Tennessee has median home prices below the national average, the median home price in Nashville is above the national average, at $341,700. Whereas, homes all across the state of Ohio are below the national average.

Although both Tennessee and Ohio have average statewide median home prices below the national average, housing costs in Ohio remain between 15 and 20 percent cheaper than Tennessee.

There are twenty-one total states in the U.S. with average monthly rental rates below $1,000. With a statewide average monthly rent of just $869, Tennessee is considered an affordable place for renters. Generally speaking, states that have the lowest rental prices also have some of the lowest costs of living, and this is certainly the case for Tennessee.

With that said, the table below displays a more comprehensive look at the average monthly rent in some of Tennessee’s major cities:

Although Tennessee does not have a state income tax on salaries, wages, bonuses or any other form of work income, the state did collect the “Hall Income Tax.” This was named after the Tennessee state senator who sponsored the legislation back in 1929. It only applied to earnings from investment and interest dividends and for 2020 it was a 1% tax. Though, as of tax year 2021, the Hall Income Tax is eliminated. Moving forward, Tennessee will not have a state income tax.

Ohio, on the other hand, has what’s known as a progressive state income tax. This means that you pay taxes based on your taxable income. While the state income tax rate is somewhat low compared to other states with an income tax, numerous municipalities in Ohio also charge an additional income tax. The state collects taxes based on income brackets, ranging from half a percent to as much as 4.797%. Whereas, the Ohio municipal income taxes consist of rates as high as 3% in some areas.

Tennessee’s statewide base sales tax is 7%, which alone is tied for the second-highest rate in the country. Though, cities and counties across the state also collect extra sales taxes that range from 1.50% to 2.75%. This means that the highest sales tax that you could pay in Tennessee is 9.75%, which happens to be the total sales tax rate in Nashville.

Ohio’s statewide sales tax rate is 5.75%, but, like Tennessee, counties in the state also collect their own sales tax that ranges from 0.75% to 2.25%. With that said, the lowest possible sales tax in Ohio is 6.50% and the highest rate is 8%. Ohio’s average sales tax rate is 7.17%, the 21st-highest rate in the country.

One of the major advantages of living in Tennessee is the fact that homeowners in the state pay some of the lowest property taxes in the country. The median statewide property tax paid is $1,220, which translates to an average effective property tax rate of 0.64%. While this is the 15th-lowest effective rate in the country, rates vary depending on where you live in Tennessee. For example, Shelby County has a high rate of 1.42%, while Pickett County has the lowest at under 0.37%.

Dissimilarly, Ohio has the 13th-highest average effective property tax rate in the country, at a rate of 1.48%. Since this tax is primarily collected at the county level, the rate will vary based on what county you live in. For example, the effective property tax rate in Cuyahoga County is 2.44% but the effective rate in east Ohio’s Lawrence County is just 0.87%. Although property taxes in Ohio are above the national average of 1.07%, the rates are still lower than most of the neighboring Midwest states.