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 Trail 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: $40,816 per year
The average cost of living in Kentucky is $40,816 per person, according to 2021 personal consumption expenditure data from the Bureau of Economic Analysis .
Living in Kentucky is generally very affordable; Kentucky was ranked the state with the ninth-lowest cost of living in the United States by U.S. News & World Report .
Looking at the Southeast, which statistically has a lower cost of living than the rest of the United States, Kentucky actually weighs in as the third-most affordable state out of 12, trailing only West Virginia and Arkansas.
Here’s a breakdown of the average annual expenditures by category.
Average Annual Per-Capita Cost in Kentucky
Housing and Utilities
Food and Beverages (non-restaurant)
Gas and Energy Goods
All Other Personal Expenditures
Housing Costs in Kentucky
Average Housing Costs in Kentucky: $574 to $1,187 per month
Kentucky’s typical home value in February 2023 was $188,241, Zillow said. Compare that with the national median sales price of $359,000 for U.S. homes, according to the National Association of Realtors®.
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 values rose 9.3% over the past year, which is actually faster than the average growth in U.S. home prices over that same period: 6.8%.
The 2021 census data provides a sense of typical monthly housing costs.
• Median monthly mortgage cost: $1,241
• Median studio rent: $573
• Median one-bedroom rent: $677
• Median two-bedroom rent: $831
• Median three-bedroom rent: $954
• Median four-bedroom rent: $1,218
• Median five-bedroom (or more) rent: $1,236
• Median gross rent: $830
Housing costs will vary depending on your location. Take a look at the typical home values for major cities in Kentucky, according to Zillow January 2023 housing data.
Typical Home Price
Utility Costs in Kentucky
Average Utility Costs in Kentucky: $386 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.
Average Kentucky Bill
Cable & Internet
Sources: U.S. Energy Information Administration, Electric Sales, Revenue, and Average Price, 2021; Inspirecleanenergy.com; DoxoInsights, U.S. Cable & Internet Market Size and Household Spending Report 2022; and Rentcafe.com, What Is the Average Water Bill?
Groceries & Food
Average Grocery & Food Costs in Kentucky: $308.58 per person, per month
If Kentucky’s average monthly cost for non-restaurant food and groceries is $3,703, that’s $308.58 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.
Average Transportation Costs in Kentucky: $5,477 to $15,530 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.
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 5% is levied on income earned in Kentucky as of tax year 2023, which is slightly below the national average. However, local cities and counties can levy additional income taxes on top of the state tax.
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: $67 to $87
• 750 ml bottle of Jim Beam Kentucky Bourbon: $17.49
• Eight-piece bucket of Kentucky Fried Chicken: $18.99
• A mint julep lemonade: $10 at Doc’s Bourbon Room
• Louisville Slugger: $69.99 and up
Dressing up in Southern digs and attending the Kentucky Derby costs as little as $67, but choice seats for the Derby can easily cost thousands of dollars, and exclusive seats for the elite few can cost as much as $13,000 apiece!
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 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.
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 $15.45 per hour, or $32,136 a year, to qualify for a living wage.
As mentioned, Kentucky has the ninth-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 22nd in its 2022 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 in Kentucky compares with the rest of the South, here is the city with the lowest cost of living, according to the Council for Community and Economic Research’s Second Quarter Cost of Living Index.
Tupelo has the lowest cost of living of any major city in the Southeast. Located in the seat of Lee County in northern Mississippi, the city is a hub of vibrant Southern culture and also happens to be the birthplace of Elvis Presley.
SoFi Home Loans
Raise a mint julep or bourbon toast to Kentucky, where an affordable lifestyle awaits. Will your next home have a lawn of bluegrass?
Although there are many home loans on the market to choose from, SoFi offers a range of mortgage loans at competitive interest rates and with as little as 5% down.
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