Cost of Living in Kentucky

By Kenny Zhu

(Last Updated – 04/2025)

The birthplace of bourbon, Abraham Lincoln, and the famed Kentucky Derby has a lot to be proud of.

From the majestic foothills of the Appalachian Mountains to the legendary distilleries of the “bourbon trail,” Kentucky is chock-full of history, beauty, and culture.

Its 4.5 million residents can testify that there are plenty of reasons to check out the Bluegrass State, and its low cost of living is one of them. Here are details about the various expenses that make up the cost of living in Kentucky.

What’s the Average Cost of Living in Kentucky?

Average Cost of Living in Kentucky: $47,272 per year

The average cost of living in Kentucky is $47,272 per person, according to recent personal consumption expenditure data from the Bureau of Economic Analysis.

Living in Kentucky is generally very affordable; Kentucky was ranked the state with the seventh-lowest cost of living in the United States by U.S. News & World Report.

Here’s a breakdown of the average annual expenditures by category.

Housing Costs in Kentucky

Average Housing Costs in Kentucky: $794 to $1,393 per month

Kentucky’s typical home value in February 2025 was $211,465, Zillow said. Compare that with the national median sales price of $357,138 for U.S. homes, according to Zillow.

Kentucky housing prices are more affordable than the rest of the country for both renting and owning.

However, Kentucky isn’t immune to the rising home prices seen around the country. Kentucky home prices rose 4.7% over the past year, which is actually faster than the average growth in U.S. home prices over that same period: 3.0%, according to Redfin.

Recent census data provides a sense of typical monthly housing costs.

•  Median monthly mortgage cost: $1,393

•  Median studio rent: $794

•  Median one-bedroom rent: $797

•  Median two-bedroom rent: $917

•  Median three-bedroom rent: $1,078

•  Median four-bedroom rent: $1,099

•  Median five-bedroom (or more) rent: $1,309

•  Median gross rent: $929

Housing costs will vary depending on your location. Take a look at the typical home values for major cities in Kentucky, according to Zillow February 2025 housing data.

Utility Costs in Kentucky

Average Utility Costs in Kentucky: $359 per month

Utility expenses will take a bite out of your monthly budget. Here are some of the typical utility charges that Kentuckians pay every month.

Sources: U.S. Energy Information Administration, Electric Sales, Revenue, and Average Price; Statista.com, “Average monthly residential utility costs in the United States by state”; DoxoInsights, U.S. Cable & Internet Market Size and Household Spending Report; and Rentcafe.com, What Is the Average Water Bill?

Groceries & Food

Average Grocery & Food Costs in Kentucky: $352 per person, per month

If Kentucky’s average monthly cost for nonrestaurant food and groceries is $4,226, that’s about $352 a month.

Of course, food costs will vary widely depending on where you live within the state. For example, food in Lexington can be more affordable when compared with other major cities in the south. On the same scale, a more cosmopolitan city like Louisville is more costly.

Below are the city rankings from the most recent report by the Council for Community and Economic Research for food costs in Kentucky and four of its neighboring states, Tennessee, Virginia, West Virginia, and North Carolina.

Transportation

Average Transportation Costs in Kentucky: $10,480 to $19,500 per year

Whether you’re commuting to work or making an annual pilgrimage to see the University of Kentucky’s Wildcats play, transportation costs can add up. What’s more, these figures will change depending on the size of your household.

Here’s a breakdown of transportation costs in Kentucky, according to the most recent data from MIT’s Living Wage Calculator.

Health Care

Average Health Care Costs in Kentucky: $9,463 per person, per year

According to the Bureau of Economic Analysis’ latest report, annual health care costs in Kentucky are typically around $9,463 per person. That works out to around $789 per person per month.

The total costs will vary depending on the quality of an individual’s health insurance and their medical needs.

Those looking for affordable health insurance in Kentucky can find more information through the Kentucky Health Benefit Exchange.

Child Care

Average Child Care Costs in Kentucky: $750 to $1,189 per child, per month

Child care costs can really put a dent in parents’ budgets. How much of a dent can depend on the type of care sought.

For parents unable to bear the full brunt, the state Child Care Assistance Program helps eligible families pay for child care.

Typical costs in Kentucky, according to CostofChildCare.org.

Taxes

Kentucky state income tax: 4.0%

Kentucky is one of 11 states with a single-rate income tax structure, meaning that all Kentucky residents pay the same income tax rate regardless of how much they earn.

Meanwhile, the majority of U.S. states employ graduated-rate income tax structures, as does the federal government.

A flat tax of 4.0% is levied on income earned in Kentucky as of January 1, 2025, which is slightly below the national average. However, local cities and counties can levy additional income taxes on top of the state tax.

According to the Tax Foundation’s State Tax Competitiveness Index, Kentucky ranks 22nd in terms of its effective tax rate, placing it in the lower-to-middle end of the country when it comes to tax burdens. Tax burden measures the total amount of taxes paid, including sales, income, and property taxes.

Miscellaneous Costs

Now that we’re done with everyday expenses, let’s take a look at the price tags on the local food and fun that Kentucky’s known for.

•  General admission tickets to the Kentucky Derby: start at $75

•  A “Hot Brown” open faced sandwich smothered in gravy at The Brown Hotel in Louisville: $31

•  A 30-minute tour at the Jim Beam distillery in Clermont: $20 (adults 21+)

•  A mint julep at The Silver Dollar in Louisville: $12

•  Ticket to the Louisville Slugger Museum and Factory tour: $24 (ages 13-59), $23 (60+), $16 (6-12), Free (5 and younger).

Dressing up in Southern digs and attending the Kentucky Derby costs as little as $75, but choice seats for the Derby can easily cost thousands of dollars, and exclusive seats for the elite few can cost almost $300,000 for the most luxury of suites.

Whiskey aficionados will fit right in, as Kentucky happens to be the birthplace of bourbon; legend has it that Elijah Craig invented Kentucky bourbon using charred barrel-aging techniques. Today, 95% of the world’s bourbon is made and aged in Kentucky.

Connoisseurs who want to check out the bourbon production process can take the Kentucky Bourbon Trail, which tours some of Kentucky’s most famous distilleries. Admission to each distillery can cost anywhere from $5 to $20, and locations open to tours include household names like Buffalo Trace, Wild Turkey, and Maker’s Mark.

Whether you’re munching on a Hot Brown sandwich while sipping any kind of “coke,” or enjoying mint juleps at the Derby, the Bluegrass State has something for everyone.

A word about that nickname: It’s not about music; it’s about grass.

Recommended: Average Monthly Expenses for One Person

How Much Money Do You Need to Live Comfortably in Kentucky?

According to MIT’s Living Wage Calculator, the average single, childless individual working a standard 40-hour work week, 52 weeks a year, needs to earn $20.09 per hour, or approximately $41,787 a year, to qualify for a living wage.

As mentioned, Kentucky has the seventh-lowest cost of living in the United States, according to U.S. News & World Report’s Affordability Rankings. Within the Southeast, Kentucky has the third-lowest cost of living among 12 states.

MERIC ranks Kentucky a bit less affordable, placing the state 17th in its most recent Cost of Living data series. That means Kentucky is still among the 25 states with the lowest cost of living, in MERIC’s assessment.

What City Has the Lowest Cost of Living in the Southeast?

To give you a sense of how the cost of living compares in Kentucky, here are two of its cities’ cost-of-living details, according to the Council for Community and Economic Research’s Cost of Living Index.