Total cost of car ownership by state in 2023

Car ownership expenses go beyond the purchase price. Some expenses are annual, while others are irregular but still contribute to the total cost of ownership.

To get the true cost of owning a car, consider car insurance, sales tax, gas, registration and repair costs. All of this added up is the total cost of ownership. And the total cost to own a car can vary dramatically not only by vehicle, but also by location.

The cost of ownership varies quite a bit by state. The most expensive state, California, has an average five-year cost of ownership of $27,168, while in Alaska, the cheapest state, the average is a much more affordable $16,305.

How to calculate the total cost of ownership for a car

To calculate the five-year cost of owning a vehicle, we collected car ownership-related numbers from multiple sources and used our most recent data for average auto insurance rates. Our research included:

• Sales tax
• Registration costs
• Gas prices
• Average miles per gallon
• Average number of miles driven by state
• Average annual car maintenance costs (repairs)
• Extra repair costs associated with road conditions

California is the most expensive state to own and operate a car, moving up from the second spot last year, with a yearly cost of $7,198, which translates into $27,168 over five years. On the other end of the spectrum, Alaska is the cheapest state, moving up from the No. 10 spot last year with a yearly cost of $3,613 or $16,305 over five years. 

Take a look at the top 10 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 five years:

1. California -- $27,168
2. Louisiana -- $26,484
3. Florida -- $25,565
4. Missouri -- $25,035
5. Wyoming -- $24,361
6. Nevada -- $24,344
7. Michigan -- $23,983
8. New Mexico -- $23,945
9. Arizona -- $23,294
10. South Carolina -- $22,831

States with the lowest cost of car ownership

The 10 cheapest states to own a car over five years:

1. Alaska -- $16,305
2. Oregon -- $16,607
3. New Hampshire -- $17,181
4. Ohio -- $18,167
5. Idaho -- $18,373
6. Pennsylvania – $18,705
7. Iowa -- $18,762
8. Virginia -- $18,395
9. Maine -- $18,992
10. Wisconsin -- $19,038
11. Tennessee -- $19,096

Alaska is one of five states that doesn't have a state sales tax, but it does allow localities to charge their own rates. Ohio, the fourth cheapest state for the total cost of ownership, currently has the cheapest car insurance rates in the country, with an average premium of $996, pointing out how dramatically insurance costs can impact your cost of ownership.

California, on the other hand, has insurance rates well above the national average. The Golden State is the fifth-most expensive state in the country for insurance costs, with an average premium of $2,110 – it also has a hefty sales tax and expensive gas. All of that adds up to a very high cost of ownership.

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 your state falls in our rankings? Here's the complete list of states:

State sales tax and car ownership

Most states charge sales tax on cars. This can include both a state and local sales tax. According to the Tax Foundation, these five states have the highest average combined state and local sales tax rates:

• Louisiana -- 9.550%
• Tennessee -- 9.548%
• Arkansas -- 9.46%
• Alabama -- 9.25%
• Oklahoma -- 8.98%

The states with the lowest average combined rates are 

• Alaska -- 1.76 percent
• Hawaii -- 4.44 percent
• Wyoming -- 5.36 percent
• Wisconsin -- 5.43 percent
• Maine -- 5.50 percent

Currently, four states don't have any state sales tax, and three are in the top 10 lowest cost-of-ownership states.

While sales tax 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’s the average amount of sales tax paid in each state on a $25,000 vehicle:

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. In some states, you may pay double what someone in another state pays for coverage. For example, Florida residents currently pay the highest rates in the country, with the average car insurance premium running $2,517, while drivers in Ohio are only paying $996, which is a shocking difference of $1,521 every year.

Florida’s high insurance costs help make it the third-most expensive state for the total cost of ownership. Louisiana, which has the second-most expensive insurance rates, earned a second-place finish in the cost of ownership, largely due to its high insurance cost.

There are several reasons that car insurance costs vary so dramatically between states. Michigan, for example, has a very expensive, unique no-fault car insurance system. Louisiana has an above-average theft rate, which pushes up the insurance cost; it also is more litigious than other states.

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. Louisiana is a good example of how high crime rates impact insurance costs.
• 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 with 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

Here’s the average cost of a full-coverage auto insurance policy in each state.

Driving miles and gas costs

The cost of fuel can vary quite a bit depending on where you call home. According to data from the American Automobile Association, Washington residents currently pay the most for gas, averaging $4.97 a gallon as of spring 2023. 

Gas in Alaska, California, Hawaii, Nevada, Oregon and Washington is higher than the $4 a gallon mark, while other state residents pay in the $3-$4 range. Mississippi is the only state with an average gas price of less than $3.

Over a year, $1 a gallon adds up; you may pay hundreds if not thousands of dollars 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.

We calculated a state average for gas costs each year using an average mpg and the average number of miles driven in each state.

Regarding average driving miles and gas costs, Wyoming turned out to be the most expensive state, with driving and gas costs of $2,253. Wyoming residents drive a lot, averaging over 20,000 miles a year. On the other end of the spectrum, residents of New York enjoy the lowest driving and gas costs at $980. This could be because many New York City residents don’t own a car or drive at all.

A driver in a state with cheap gas may still pay more at the pump over a year if they drive a car with poor mileage or drive a lot of miles.

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

Maintenance and repair costs

Cars need to be repaired from time to time and need regular maintenance. While average car repair costs vary by state, the range is less than other metrics, such as insurance and sales tax. The range varies from the low $300s to the low $400s, so most drivers pay roughly the same regardless of where they live. 

This metric was based on one repair job each year, a number which will, of course, vary.

Connecticut had the highest repair costs at $418, while Maine had the lowest at $349 – a difference of only $69.

Here is the average repair cost by state:

Additional repair costs related to road conditions

Poor road conditions can factor into the total cost of ownership as they result in lower MPG and more vehicle repairs. 

According to the U.S. Department of Transportation statistics, Rhode Islanders pay an extra $845 a year for repair costs related to road conditions, while residents of Hawaii fork out an additional $818 a year for road condition-related repairs.

On the other end of the spectrum, Tennessee drivers only pay an average of $209 annually, highlighting that car ownership costs are often beyond your control.

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

How to reduce the total cost of ownership for your car

We've shown you how much the cost of owning a car can vary between states and what expenses you can expect in your home state. The good news is that you can control some of those costs.

Unfortunately, there is no way to 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 car insurance

Insurers consider various factors and risks when setting your premium. Insurance companies will look at where you live, what car you drive, how much you drive, who's driving your car, your driving record and your credit history (in most states).

Insurers rate risk differently, which can result in dramatically different rate quotes, so shopping around for car insurance is critical. Get quotes for the same coverage from multiple insurers (check rates with three to five different 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

This is a great way to reduce the cost of car insurance. 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. Insurers like it when you carry more of the financial risk, so if you raise your deductible, they will lower your premium.

Always choose a deductible you can easily afford, and make sure you have money set aside to pay the deductible if you need to file a claim.

Take advantage of car insurance discounts

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

“Drivers need to take advantage of all insurance discounts. Now is an important time to do an insurance check-up to review coverages and look for ways to save. Make sure you ask about all available discounts from vehicle safety to higher deductibles and multi-lines for bundling auto policies, homeowners, and even renters’ insurance,” says Carole Walker, executive director at the Rocky Mountain Insurance Association.

Discounts vary by car insurance company. Ask your insurer to do a discount check on your policy to ensure all available discounts are applied to your premium.

Buy a car with better gas mileage

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

Our research shows that 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 another 10 or 20 miles per gallon can save you thousands annually. Every bit helps if your state's average gas price is over $4 a gallon.

Final thoughts on the cost of car ownership

The state in which you live profoundly affects the cost of vehicle ownership. While higher costs are often unavoidable, such as sales tax and registration, you 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 get the best deal.

Methodology

To calculate the five-year cost of owning a vehicle, we collected car ownership-related numbers from multiple sources. Our research included: 

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

These data sources are used to determine the annual cost of ownership. Sales tax is paid once when purchasing the vehicle, but the other costs are annual. We multiply those costs by 5 to arrive at a five-year cost of owning a vehicle, assuming the costs do not change. 

Sales tax rate by state 

Tax expense on 25k vehicle, sales tax figures as of 1/1/2023 

The Tax Foundation,” State and local sales tax rates.” Accessed May 2023

Auto insurance costs by state 

Insurance.com commissioned Quadrant Information Services in 2022 to calculate auto insurance rates from six large carriers (Allstate, Farmers, GEICO, Nationwide, Progressive and State Farm) in every ZIP code in the US. 

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 100/300/100 ($100,000 for injury liability for one person, $300,000 for all injuries and $100,000 for property damage in an accident) and $500 deductibles on collision and comprehensive coverage. 

Driving and gas costs by state 

The average miles per gallon for calculating annual gas costs is roughly 24.5MPG, derived from the EPA's new car fuel economy figures. This MPG is a weighted average of the last 15 years of data, with the most recent data receiving the highest weight. 

From there, we divided each state's vehicle miles traveled (VMT) per capita by 24.5 MPG to get an average of gallons of gas consumed annually. This was multiplied by the average fuel cost in each state to arrive at an average total gas cost. 

Repair costs by state 

CarMD. “CarMD State Index.” Accessed May 2023

Additional repair costs related to road conditions 

US Department of Transportation. “USDOT Releases State-by-State Fact Sheets Highlighting Benefits of the Bipartisan Infrastructure Law.” Accessed May 2023

Sources:

• Environmental Protection Agency (EPA). “US EPA 2021 EPA Automotive Trends Report” Accessed May 2023 
• US Department of Transportation. “Transportation and Health Indicators.” Accessed May 2023
• American Automobile Association (AAA). “State gas price averages.” Accessed May 2023