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Total cost of car ownership

When you buy a new car, the purchase price is the main focus. However, there are a number of expenses that come with owning a car, some annual and some more or less regular.

To get the real cost of owning a car, you need to add up car insurance, sales tax, gas, registration, and repair costs. All of this added up is referred to as the total cost of ownership, and it can vary dramatically by vehicle and based on where you live.

In fact, the cost of ownership varies quite a bit by state. Over five years, the most expensive state, Wyoming, for total cost of ownership came in at $16,357 more than the cheapest state, New Hampshire, which is a difference of $3,271 a year. 

KEY TAKEAWAYS
  • New Hampshire is the cheapest state for car ownership due to low insurance rates and no sales tax.
  • Wyoming is the most expensive state for car ownership due to high insurance rates, a hefty sales tax, and a higher percentage of cars with poor gas mileage.
  • The total cost of ownership can vary greatly; over five years the least expensive state breaks down to $3,271 a year, while the most expensive state came in at $16,357 a year.

How to calculate total cost of ownership for a car

In order to calculate the five-year cost of owning a vehicle we collected car ownership-related numbers from multiple sources, as well as using our most recent data for average auto insurance costs. Our research included:

  • Sales tax
  • Registration costs
  • Gas prices
  • Average miles per gallon
  • Average number of miles driven by state
  • Repair costs
  • Extra repair costs associated with road conditions

Wyoming is the most expensive state to own and operate a car, while New Hampshire has the lowest cost of ownership. Take a look at the top ten most and least expensive states for car ownership.

States with the highest cost of car ownership

The top 10 most expensive car ownership states over a five-year period:

  • Wyoming -- $36,106
  • California -- $30,987
  • Louisiana -- $30,793
  • Michigan -- $30,556
  • Oklahoma -- $30,433
  • Arkansas -- $28,448
  • Georgia -- $27,718
  • Texas -- $27,562
  • New Mexico -- $27,347
  • North Dakota -- $27,021

States with the lowest cost of car ownership

The 10 cheapest states to own a car over a five-year period:

  • New Hampshire -- $19,749
  • Wisconsin -- $21,074
  • Massachusetts -- $21,196
  • Ohio -- $21,384
  • Vermont -- $21,737
  • Maine -- $21,994
  • Oregon -- $21,997
  • Hawaii -- $22,623
  • Alabama -- $22,750
  • Alaska -- $22,766

New Hampshire doesn't have sales tax, which makes a difference, and also has very low insurance rates. According to Insurance.com's most recent data, New Hampshire has insurance rates 22% below the national average. Wyoming, on the other hand, has insurance rates above the national average, a hefty sales tax, expensive gas and a higher percentage of cars with poor gas mileage.

Multiple factors go into the cost of owning a car and we found that the different metrics vary widely. One state may have expensive car insurance rates. The same state might have no sales tax. One state may have high gas prices, while at the same time a higher percentage of cars with excellent gas mileage.

Curious where you state falls in our rankings? Here's the complete list of states:

StateTotal including all costs over five years
Wyoming$36,106
California$30,987
Louisiana$30,793
Michigan$30,556
Oklahoma$30,433
Arkansas$28,448
Georgia$27,718
Texas$27,562
New Mexico$27,347
North Dakota$27,021
South Dakota$26,739
Kentucky$26,727
Indiana$26,540
Minnesota$26,531
New Jersey$26,240
Montana$26,119
Mississippi$26,063
Maryland$25,962
Florida$25,758
Washington$25,702
Iowa$25,540
Colorado$25,453
Missouri$25,407
Rhode Island$25,348
Nevada$25,207
South Carolina$24,988
Utah$24,923
North Carolina$24,780
Illinois$24,713
Nebraska$24,691
Arizona$24,327
Kansas$24,263
Delaware$24,140
Virginia$23,821
New York$23,634
West Virginia$23,560
Idaho$23,284
Tennessee$23,279
Connecticut$23,218
Pennsylvania$22,848
Alaska$22,766
Alabama$22,750
Hawaii$22,623
Oregon$21,997
Maine$21,994
Vermont$21,737
Ohio$21,384
Massachusetts$21,196
Wisconsin$21,074
New Hampshire$19,749
National average$25,281

State sales tax and car ownership

The majority of states charge sales tax on cars. Tax rates range from a shocking 9.46 percent in Tennessee down to 1.76 percent in Alaska. Currently, there are four states that don't have a sales tax and two of those states are in the top 10 lowest cost of ownership states.

While sales tax absolutely impacts a state's ranking, it doesn't automatically translate into a low cost of ownership, Delaware and Montana don't have sales tax, but those states didn't finish in the top 10 cheapest states.

Here is the sales tax rate by state and how much that tax costs for a $25,000 vehicle:

Sales tax rate by state

StateSales tax rateSales tax on $25K car
Alabama9.10%$2,275
Alaska1.76%$440
Arizona8.33%$2,083
Arkansas9.41%$2,353
California8.54%$2,135
Colorado7.52%$1,880
Connecticut6.35%$1,588
Delaware0.00%$0
Florida6.80%$1,700
Georgia7.15%$1,788
Hawaii4.35%$1,088
Idaho6.03%$1,508
Illinois8.70%$2,175
Indiana7.00%$1,750
Iowa6.80%$1,700
Kansas8.68%$2,170
Kentucky6.00%$1,500
Louisiana10.02%$2,505
Maine5.50%$1,375
Maryland6.00%$1,500
Massachusetts6.25%$1,563
Michigan6.00%$1,500
Minnesota7.42%$1,855
Mississippi7.07%$1,768
Missouri8.03%$2,008
Montana0.00%$0
Nebraska6.89%$1,723
Nevada8.14%$2,035
New Hampshire0.00%$0
New Jersey6.60%$1,650
New Mexico7.66%$1,915
New York8.49%$2,123
North Carolina6.95%$1,738
North Dakota6.80%$1,700
Ohio7.15%$1,788
Oklahoma8.91%$2,228
Oregon0.00%$0
Pennsylvania6.34%$1,585
Rhode Island7.00%$1,750
South Carolina7.37%$1,843
South Dakota6.40%$1,600
Tennessee9.46%$2,365
Texas8.17%$2,043
Utah6.77%$1,693
Vermont6.18%$1,545
Virginia5.63%$1,408
Washington9.18%$2,295
West Virginia6.37%$1,593
Wisconsin5.46%$1,365
Wyoming5.75%$1,438

*Source: The Tax Foundation

Cost of auto insurance

Auto insurance premiums are a huge factor in the cost of owning a car and where you live has a major impact on that cost. In some states you may pay double what someone in another state pays for coverage. As an example, Michigan residents pay the highest rates in the country with the average car insurance premium running $2,611 while drivers in Maine are only paying $845. This is a difference of $1,766 every year.

Michigan's high insurance costs help push it into the top five states for the most expensive total cost of ownership. Louisiana and Oklahoma also made it into the top five, thanks to high insurance costs.

There are a number of reasons that car insurance costs vary so dramatically between states. Michigan, for example, has a very expensive, very unique no-fault car insurance system. 

There are other reasons that insurance rates are high or low. Here are four major factors that influence car insurance rates in your state:

  • State government-mandated coverage: Alaska's mandatory minimum liability coverage levels are twice Alabama's, for instance. Higher auto liability limits result in higher premiums.
  • Crime rates: If your state has lower property crime levels, your comprehensive insurance coverage, which covers stolen vehicles, may be less costly than in high-crime areas.
  • Population density: Crowded roads create high accident rates, affecting collision coverage costs. This is why more rural states typically enjoy lower car insurance rates.
  • Wildlife and weather: Areas prone to high winds or hail or that have lots of wildlife (deer, for instance) can cause expensive vehicle damage, which is also covered by comprehensive coverage. States located in areas prone to hail damage and other major storms will always be a bigger risk and more expensive for insurance.

Auto insurance costs by state

Insurance.com commissioned Quadrant Information Services to calculate auto insurance rates from six large carriers (Allstate, Farmers, GEICO, Nationwide, Progressive and State Farm) in 10 ZIP codes per state.

Rates are based on full coverage for a single, 40-year-old male who commutes 12 miles to work each day, with policy limits of 100/300/50 ($100,000 for injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage.

Here's the breakdown of car insurance rates by state, ranked from most to least expensive:

StateAverage auto insurance ratesCompared to national average of $1,457
Michigan$2,611$1,154
Louisiana$2,298$841
Florida$2,219$762
Oklahoma$1,966$509
California$1,846$389
Rhode Island$1,834$377
Delaware$1,828$371
New York$1,789$332
Texas$1,779$322
Georgia$1,777$320
Colorado$1,761$304
Connecticut$1,640$183
Wyoming$1,602$145
Montana$1,600$143
Kentucky$1,594$137
Arkansas$1,566$109
Maryland$1,546$89
Nevada$1,525$68
New Jersey$1,520$63
West Virginia$1,472$15
Arizona$1,449($8)
South Carolina$1,433($24)
Mississippi$1,409($48)
Washington$1,401($56)
Kansas$1,398($59)
New Mexico$1,382($75)
Minnesota$1,362($95)
Tennessee$1,297($160)
Illinois$1,296($161)
Nebraska$1,291($166)
Alabama$1,287($170)
Oregon$1,286($171)
Hawaii$1,275($182)
Missouri$1,272($185)
South Dakota$1,262($195)
Massachusetts$1,245($212)
Utah$1,206($251)
Pennsylvania$1,187($270)
Alaska$1,183($274)
Indiana$1,181($276)
Ohio$1,175($282)
North Dakota$1,164($293)
Vermont$1,100($357)
North Carolina$1,095($362)
New Hampshire$1,087($370)
Virginia$1,063($394)
Iowa$1,047($410)
Idaho$1,040($417)
Wisconsin$951($506)
Maine$845($612)

Driving and gas costs

The cost of fuel can vary by quite a bit depending on where you call home. According to data collected by the American Automobile Association, California residents were paying the most for gas, averaging $3.69 a gallon. Alaska, Hawaii, Illinois, Nevada, Oregon, and Washington are all over the $3 a gallon mark while everyone else is paying in the $2.00-$3.00 range.

Added up over the course of a year, $1.00 a gallon really adds up, you may pay hundreds if not thousands more for gas. Gas prices are only one factor in your annual cost of gasoline. Your car's gas mileage and how much you drive also play a role.

AAA numbers show that Hawaii ranks number one when it comes to mpg, averaging 20.4 with New York and Delaware rounding out the top three. On the low end of the mpg pole are Alaska (13.60) and Wyoming (our most expensive total cost of ownership state) with an average of 13.7 mpg. Low mpg and expensive gasoline push up your total cost of ownership.

How many miles you drive every year will also impact your total cost of ownership. Wyoming residents top this list, cruising roughly 21,821 miles a year which is over double the miles driven in Alaska where they only hit 9,915 miles a year.

States with cheaper gas, but with cars with lousy gas mileage and whose drivers travel longer distances may still pay more at the pump over a year.

Here is each state's average regular gas prices, average miles per gallon and average number of miles driven annually:

Driving and gas costs by state

StateMPGMilesAvg price per gallonAnnual cost
Alabama18$16,054$2.38$2,270
Alaska14$9,915$3.14$2,461
Arizona17$14,493$2.79$2,254
Arkansas15$14,974$2.40$2,957
California18$14,435$3.69$2,907
Colorado17$13,443$2.65$2,216
Connecticut18$11,595$2.88$1,959
Delaware19$14,802$2.50$2,329
Florida18$11,836$2.57$1,850
Georgia17$18,920$2.62$2,934
Hawaii20$11,104$3.65$2,053
Idaho16$15,318$2.90$2,591
Illinois16$12,921$3.01$2,466
Indiana16$17,821$2.74$3,155
Iowa15$15,074$2.56$2,880
Kansas17$14,742$2.49$2,319
Kentucky16$17,370$2.55$2,877
Louisiana15$14,805$2.36$2,565
Maine17$15,420$2.71$2,661
Maryland17$14,834$2.66$2,410
Massachusetts17$11,759$2.74$1,975
Michigan17$14,121$2.84$2,421
Minnesota17$17,887$2.61$2,960
Mississippi17$17,699$2.35$2,646
Missouri17$17,396$2.49$2,619
Montana15$14,556$2.80$2,849
Nebraska15$15,128$2.58$2,656
Nevada15$12,869$3.25$2,471
New Hampshire16$12,931$2.63$2,215
New Jersey14$11,927$2.80$2,352
New Mexico18$18,369$2.57$3,008
New York20$11,871$2.87$1,666
North Carolina18$15,729$2.54$2,861
North Dakota15$15,725$2.68$3,162
Ohio16$12,906$2.73$2,162
Oklahoma18$18,891$2.43$2,807
Oregon18$14,032$3.15$2,531
Pennsylvania16$12,435$2.90$2,329
Rhode Island19$12,781$2.73$1,999
South Carolina16$16,020$2.41$2,531
South Dakota15$15,505$2.70$2,969
Tennessee17$15,462$2.47$2,307
Texas17$16,347$2.48$2,569
Utah17$15,442$2.85$2,826
Vermont17$13,458$2.74$2,081
Virginia16$15,464$2.49$2,743
Washington17$12,837$3.29$2,610
West Virginia18$14,283$2.67$2,260
Wisconsin19$15,188$2.71$2,297
Wyoming14$21,821$2.73$4,699

Sources: Federal Highway Administration; American Automobile Association

Repair costs

Cars need to be repaired from time to time and while repair costs do vary by state the range is not as wide as other metrics, such as insurance and sales tax. The range varies from the low $300s to the upper $300s so most drivers are paying roughly the same regardless of where they live.

In using this data, we surmised that drivers in each state may need one repair job each year and added that amount to the annual cost of owning a car.

Here is the average repair cost by state:

Repair costs by state

StateAverage Repair Cost
Alabama$374.09
Alaska$362.12
Arizona$360.85
Arkansas$363.10
California$385.42
Colorado$375.57
Connecticut$393.16
Delaware$373.94
Florida$366.68
Georgia$395.05
Hawaii$389.19
Idaho$362.24
Illinois$352.54
Indiana$360.95
Iowa$339.93
Kansas$352.67
Kentucky$368.36
Louisiana$366.56
Maine$337.74
Maryland$379.49
Massachusetts$363.71
Michigan$333.26
Minnesota$353.28
Mississippi$370.06
Missouri$357.80
Montana$373.76
Nebraska$349.75
Nevada$372.36
New Hampshire$345.70
New Jersey$384.92
New Mexico$360.99
New York$377.28
North Carolina$375.42
North Dakota$339.78
Ohio$335.26
Oklahoma$358.04
Oregon$366.37
Pennsylvania$359.63
Rhode Island$379.61
South Carolina$370.07
South Dakota$364.79
Tennessee$372.84
Texas$361.89
Utah$374.17
Vermont$357.48
Virginia$381.68
Washington$368.43
West Virginia$358.50
Wisconsin$337.89
Wyoming$366.63

Sourece: CarMD

Poor road conditions can factor into the total cost of ownership as they result in lower mpg and more vehicle repairs. The Department of Transportation did a study that estimated the effect poor road conditions have on drivers' wallets. According to their data, New Jersey drivers pay an extra $601 for road condition-related repairs. California drivers fork over an average of $586 to repair cars damaged by road conditions.

On the other extreme, Georgia drivers only pay an average of $60 per year. This clearly highlights that car ownership costs are often beyond your control.

Here are the added repair costs connected to road conditions by state:

StateAnnual extra costs
Alabama$141
Alaska$359
Arizona$205
Arkansas$308
California$586
Colorado$287
Connecticut$294
Delaware$257
Florida$128
Georgia$60
Hawaii$515
Idaho$305
Illinois$292
Indiana$225
Iowa$381
Kansas$319
Kentucky$185
Louisiana$408
Maine$245
Maryland$422
Massachusetts$313
Michigan$357
Minnesota$250
Mississippi$419
Missouri$380
Montana$184
Nebraska$282
Nevada$233
New Hampshire$259
New Jersey$601
New Mexico$291
New York$403
North Carolina$241
North Dakota$237
Ohio$212
Oklahoma$425
Oregon$173
Pennsylvania$341
Rhode Island$467
South Carolina$255
South Dakota$324
Tennessee$182
Texas$343
Utah$197
Vermont$424
Virginia$254
Washington$272
West Virginia$273
Wisconsin$281
Wyoming$236

Source: Department of Transportation

How to reduce the total cost of ownership for your car

We've shown you how much each average driver pays for owning a car. The good news is that you can control some of those costs.

Sure, you can't avoid taxes, higher gas prices and registration expenses, but there are ways to reduce some of the costs of owning a car.

Shop around for auto insurance

Insurers base rates on risk. That can include where you live, what you drive, how much you drive, who's driving your car, your driving record and even your credit history.

Insurance companies don't base risks the same. One insurer may consider you risky. Another may give you amazing rates.

So, it's critical to shop around for car insurance. Get quotes for the same coverage from multiple insurers and see how much you can save.

Check out Insurance.com's car insurance coverage calculator to see how changing coverage, raising or lowering deductibles and adding services affects your costs.

Raise your deductible

One easy way to reduce the cost of car insurance is by increasing your deductible.

The deductible is what you pay for repairs when you file a claim. So, if you have a $500 deductible and your car suffers $2,000 worth of damage, you'll pay the $500, while the insurer picks up the rest.

The higher the deductible, the lower the premiums. If you raise your premium, you'll be less apt to file a claim and you'll need to pay more if you do.

If you raise your deductible, make sure you have money set aside to pay the deductible if you need to file a claim.

Take advantage of discounts

Insurers offer auto insurance discounts. You can save by bundling policies, showing loyalty, being a new customer, not getting into accidents or having a child who's a great student.

Those discounts differ by car insurance company. Make sure to ask each insurer how much you would save from the various discounts that it offers.

Buy a car with better gas mileage

There's nothing you can do about paying higher gas prices. However, you can make sure you own a vehicle with the best gas mileage possible.

As our research shows, your car's gas mileage can play an even more important role than what you pay at the pump. Switching to a vehicle that gets you another 10 or 20 miles per gallon can save you thousands annually. Every bit helps if your state's average gas price is closing in on $4 a gallon.

Factors affecting the cost to own a car

The state in which you live has a profound effect on the cost of vehicle ownership. While some higher costs are often unavoidable, such as sales tax and registration, you do have control over others, including the number of miles you drive and the fuel-efficiency of the car you choose.

Because auto insurance represents one of the greatest costs of car ownership, compare car insurance quotes to obtain the lowest price auto insurance.

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