A recent study by LendingTree found the states with the highest and lowest average annual cost to own a vehicle, taking into account auto insurance, repair, fuel and sales tax costs.
Most Expensive States
Drivers in Nevada, Florida and Louisiana face the steepest annual car ownership costs. Nevada is the most expensive, costing drivers $6,118.86, mainly due to high auto insurance rates. Florida and Louisiana are close behind, with costs of $5,681.58 and $5,663.40, respectively.
Cheapest States
New Hampshire, Maine and Ohio offer the lowest car ownership expenses. New Hampshire leads with a minimal annual cost of $3,029.58, followed by Maine and Ohio with costs just above $3,500.
Fuel Costs
Wyoming, Indiana and Mississippi have the highest annual fuel costs. Wyoming tops the list at $2,742.78, which is attributed to its higher annual mileage. The state's drivers travel around 20,000 miles each year -- significantly more than the U.S. average of 14,050 miles.
Sales Tax
Louisiana, Tennessee and Arkansas have the highest annual sales tax costs on cars, with Louisiana drivers paying about $400.13. Meanwhile, drivers in Delaware, Montana, New Hampshire and Oregon pay no sales tax on cars.
Auto Insurance
In the states where it costs the most to own a car, auto insurance premiums are usually the culprit. In fact, car insurance is so high in Nevada, Florida and Michigan that it makes up more than half of the cost of car ownership (56.2%, 57.5% and 58.9%, respectively).
Nevada has the priciest auto insurance at $3,439 annually. Florida and Michigan follow, with premiums of $3,267 and $3,151, respectively.
Maine, New Hampshire and Vermont have the cheapest average car insurance. Not coincidentally, they’re also some of the least expensive states for car ownership. New Hampshire is cheapest overall, followed by Maine. Vermont is sixth-cheapest.
Insurance is high in some states and low in others because insurance requirements and regulations, crash rates and the costs of medical treatment and car repairs vary widely across states and regions.
Some states require different types of car insurance coverage. Michigan and Florida, for example, require personal injury protection (PIP), while most states don’t. These additional coverages lead to additional premiums.
Finally, inflation can make it difficult to afford bills, including car insurance premiums. When repair and medical costs increase, so do the costs of claims. How much an insurance company pays for claims directly impacts how much drivers pay for coverage.
Although the cost of living has climbed steadily over the past decade, the number of cars per household hasn’t budged much. A higher percentage of households had three or more cars available in 2023 compared to 2014, but only by 1.8 percentage points, according to an analysis of the U.S. Census Bureau 2023 American Community Survey with one-year estimates.
2014
• No vehicles available: 9.1%
• 1 vehicle available: 33.7%
• 2 vehicles available: 37.3%
• 3 or more vehicles available: 19.9%
2023
• No vehicles available: 8.4%
• 1 vehicle available: 33.3%
• 2 vehicles available: 36.5%
• 3 or more vehicles available: 21.7%
