The Cost of Living in Kentucky in 2023

The southeastern commonwealth of Kentucky is a fantastic destination to find southern culture. It’s renowned for its bluegrass music, bourbon and moonshine, college basketball and delicious Southern cuisine. Some of its biggest industries include coal, tobacco and automobile manufacturing.

Its landscapes range from rolling hills to the wooden peaks of the Appalachian Mountains. Beneath it all winds Mammoth Cave, the longest-known cave system in the world. But Kentucky is arguably best known for its horse culture. As the home of the Kentucky Derby, the raising, breeding and racing of horses are integral to Kentucky’s way of life and identity.

From the picturesque scenery to the southern culture, you’re thinking Kentucky would be a fine place to set down roots. But hold your horses. You also need to consider what the cost of living in Kentucky is like to determine if it fits your budget and needs. What may sound great could be a horse of a different color. Luckily, Kentucky is, by and large, a very affordable place to live.

From housing to groceries, many aspects of life here cost below the national average. This article breaks down the cost of living in different areas around Kentucky to help you make educated choices about where to live.

The Cost of Living in Kentucky: Housing prices

If you love big-city life, Kentucky isn’t for you. The state has only two major cities, which are Louisville and Lexington. Louisville is the biggest metropolitan area in the state, with 628,594 residents, according to 2021 census. Lexington and the surrounding Fayette County follow with 321,793 residents. But what Kentucky lacks in quantity of big cities, it makes up for with quality. Both Lexington and Louisville are bustling metropolises that are seats of culture, industry, business, athletics and history.

You can save big on rent living in this southern state. Housing costs in Kentucky sit well below the national average. This is true of both Louisville and Lexington, as well as small- to mid-sized cities across the state like Frankfort, the state’s capital. Renters and prospective homeowners have plenty of affordable cities and areas to choose from. Here’s what you can expect to pay for renting an apartment or buying a home in different Kentucky cities.

Lexington

Housing costs in Lexington, the Horse Capital of the World, are 24.6 percent below the national average. A one-bedroom apartment costs an average of $1,254 per month. A more spacious two-bedroom will run you approximately $1,607. While these rates may look good compared to other big cities, there’s a catch. The cost of a one-bedroom is up 33 percent from the previous year. Two-bedroom apartments are up even more, rising a whopping 56 percent. While housing costs here are currently affordable, they’re clearly on the rise and fast.

The cost of buying a home here is also going up, but not as steeply. Since 2021, the average cost of buying a house in the Lexington area has climbed 16.8 percent. The median price for a home here is $297,000.

Louisville

Despite being the bigger city, housing prices in Louisville are lower than in Lexington. This is good news for locals of this friendly and fun-loving city. It keeps more cash in their pockets for classic Louisville activities like cheering on the Cardinals at football and basketball games or sipping Kentucky bourbon at local distilleries.

Housing costs here are 22.6 percent below the national average. With a wide range of different neighborhoods to choose from, you can expect to pay around $1,040 per month for a one-bedroom apartment or $1,199 for a two-bedroom. Same as with Lexington, though, the average cost of rent is going up. Rental costs for one- and two-bedroom apartments are up 19 and 21 percent, respectively.

Average rents here are less expensive than in Lexington. But at the same time, Louisville housing costs sit slightly closer to the national average.

Louisville’s housing market has seen some growth over the past year, going up 11.4 percent from the previous year. The median price for purchasing a home here is $255,000.

Food prices

While it would be great to live exclusively off Kentucky Fried Chicken, a balanced diet is necessary. Luckily, food prices around Kentucky are a few points below the national average. The average Kentucky resident shells out between $2,801 and $3,200 for food for the entire year. This puts them in ninth place for states with the lowest average grocery costs. Here’s how far below the national average Kentucky’s two biggest cities rank:

  • Lexington is 6.4 percent below
  • Louisville is 6.2 percent below

Both Lexington and Louisville are pretty much neck-and-neck when it comes to food costs and prices for food items. A half-gallon of milk in Louisville costs $1.52 compared to $1.85 in Lexington. A loaf of bread in Lexington will set you back $3.88 versus $3.46 in Louisville. And good news for fried chicken lovers. A two-piece meal costs exactly $1.12 in both cities. At those prices, you can bring home the Kentucky fried goodness all the time.

The comparative costs for dining out are also pretty similar and drive down the overall cost of living in Kentucky. A casual meal out at an inexpensive restaurant costs roughly $15 in Louisville and $13.50 in Lexington. But say you’re going out for a special occasion and celebrating with a fancy three-course meal at a mid-range restaurant. The price difference grows 39.13 percent, costing $57.50 in Louisville and $80 in Lexington.

Utility prices

Utility costs in Kentucky are one of the few costs of living areas that exceed the national average. As the fifth-biggest coal producer in the United States, the majority of the state’s energy comes from coal. Roughly 69 percent of the electricity generated was coal-powered. If the negative environmental impacts of that leave a bad taste in your mouth, don’t worry. Alternative and sustainable energy sources like hydroelectric and biomass are on the rise. Here’s how the cost of utilities in Kentucky’s biggest cities compares to the national average:

  • Lexington is 5.4 percent above
  • Louisville is 2.7 percent above

Locals in Lexington will be paying out slightly more for their utilities than Louisville residents. Average total energy costs per month in Lexington come out to $190.87 and $187.17 in Louisville. Total energy combines electricity, natural gas and other sources of energy. The cost of Internet service, which is a modern necessity, is also pretty close. In Louisville, 60 megabits per second costs. $62.27. In Lexington, it’s slightly pricier at $69.00.

Total cost of transportation in Kentucky compared to neighboring states: expect lower prices overall

Transportation prices

Most cities and counties around Kentucky have some form of public transit which affect the overall cost of living in Kentucky cities. This almost exclusively consists of bus fleets. Thanks to the state’s history as a railroad hub, passenger rail routes offer regional connections around the state. Amtrak currently serves four different Kentucky cities, including Louisville. While no cities in Kentucky have a subway system for mass transit, Louisville does have a system of former freight subways no longer in use.

Kentucky has a giant automobile manufacturing industry, so using cars is a way of life here. But cities still offer affordable and far-reaching public transit options. Here’s how transportation prices around Kentucky stack up against the national average.

  • Lexington is 6.1 percent below
  • Louisville is 8.4 percent above

There’s a pretty clear difference between the two, with Louisville exceeding the national average by a lot. Louisville is a big car city and is a big, spread-out city in general. With higher gas prices and more areas to cover, it stands to reason why prices are higher here.

Transportation costs: Lextran in Lexington

Lextran Public Transit provides public transportation throughout the city. Its service doesn’t extend to the surrounding Fayette County area. Their fleet consists of 71 buses running 25 fixed routes. The entire system has nearly 900 different stops around town.

A single one-way ride on a Lextran bus costs $1.00, with free transfers valid for 90 minutes. A Day Pass runs $3.00. A 30-Day Pass doesn’t offer a discount for buying in bulk, coming out to a dollar a day at $30. Reduced fares and passes are available for children, the elderly and students. A semester pass for students of the nearby University of Kentucky costs $50.

Having affordable and reliable public transportation in Lexington is important. Apart from the university area and downtown, most areas are not very walk- or bike-friendly. The city’s walk score is 53. The bike score is barely higher at 56. Despite the low cost and various routes, public transit in Lexington is only ranked 33. Many residents rely on cars to get around and live comfortably.

Transportation costs: TARC in Louisville

Consisting of 227 buses covering 30 different routes, TARC offers public transit throughout Louisville and its broader metro area. This includes parts of Clark County and Floyd County in neighboring Indiana. 33 of its 227 buses are hybrid-electric and 15 are all-electric.

TARC has several different fare structures. A one-way ride costs $1.75 if you pay with cash. But if you use the company’s MyTARC card, a single ride costs $1.50. Riders can also transfer within two hours of paying upon boarding. Passes with the MyTARC card include $3.50 for a full day pass and $50 for a 30-day pass. These options only apply to their local fixed routes, however. Fares are different for express and circulator routes. A single ride with a MyTARC card on an Express Route is $2.50. Reduced fares and passes are available for eligible riders like youth between 6-17 and people who are 65-plus.

To make the TARC more attractive to residents, there’s been talk of eliminating fares. By offering free bus service, local officials hope it would ease congestion by incentivizing more people to use the bus. It would also have sustainability benefits.

RiverLink tolls the three bridges connecting Kentucky to Indiana. The tolling system is all-electronic, so drivers will find no tollbooths or lines on the bridges. Rates vary depending on whether or not you have a RiverLink account and transponder. If you have neither and are passing through, high-resolution cameras capture a photo of your license plate and send information to you about paying the toll.

Louisville is not the most walkable or bikeable city, either. Its walk score is a low 46. The bike score is slightly better at 51. Public transit around town has a transit score of only 33. As a major car city, most residents here have and use their own cars. But prepare to pay for parking. A monthly parking pass for downtown costs between $55 and $65.

Healthcare prices

It’s easy to see low or affordable average healthcare costs and get excited. But healthcare is one of the most difficult costs of living areas to quantify. This is because health and, therefore, caring for our health is so subjective. Healthcare costs can vary widely depending on factors like pre-existing conditions, prescription costs, location and other factors. Some cities and areas have cheaper healthcare, in general. It’s recommended you see your general care physician at least once a year. The same is true for dentists and optometrists.

That being said, healthcare costs in Kentucky fall well below the national average. Yet it’s also one of the unhealthiest states in America. But Kentucky locals can expect to pay less than the national average for care. How much less varies by city:

  • Lexington is 18.7 percent below
  • Louisville is 21.2 percent below

One of the reasons healthcare costs are lower is because Kentucky hospitals are frequently ranked as some of the best in the region. If you need to go to the doctor in Louisville, your out-of-pocket costs will be around $82.50. In Lexington, it’s $93. Heading to a dentist for a cleaning and check-up costs $86.67 in Louisville compared to $93 in Lexington. An over-the-counter bottle of Ibuprofen costs the same in both cities at $9.49.

living in kentucky means plenty of chances to take bourbon tours

Goods and services prices

Miscellaneous goods and services are Kentucky’s other main cost of living area that exceeds the national average. This broad category encompasses everything from going to get a haircut to taking your clothes to the dry cleaners. But it’s still an essential part of everyone’s monthly budget. All those smaller costs can quickly add up. Here’s how Kentucky cities compare to the national average for miscellaneous goods and services:

  • Lexington is 8.9 percent above
  • Louisville is 7.0 percent above

Since Lexington and Louisville are great cities for having a social life, you need to keep an eye on these expenditures. Going to see a movie in Lexington costs around $11.05. Heading to catch a feature film in Louisville though is $11.61. Do you do yoga? You’ll pay about $20 per class in Louisville but $14 in Lexington.

The costs of taking care of others in your life also fall under this category. This includes regular expenses like taking pets to the vet and childcare. Taking your furry best friend to get checked up at the vet costs around $61.67 in Louisville and $60.37 in Lexington. For childcare, you’ll be paying far more in Louisville. The cost of a month of preschool or kindergarten in Louisville sets you back over $1,000. In Lexington, the amount is nearly halved to $538.88.

Living in Kentucky: Taxes

Kentucky’s overall state sales tax is 6 percent. One benefit of living here is that individual cities or counties don’t levy an extra sales tax. So, you’re only paying 6 percent sales tax no matter where you are in the state. Say you go out and spend $1,000 on fine Kentucky bourbon. With the 6 percent tax rate, $60 of that $1,000 goes to taxes.

  • Lexington has a combined tax rate of 6 percent
  • Louisville has a combined tax rate of 6 percent

Other taxes you should consider before moving to a new state are income taxes. Income taxes are higher in some states than in others. If you want less money being taken directly out of your paycheck, you want to live in a state with lower income taxes. In Kentucky, income tax is a flat 5 percent.

living in kentucky means plenty of chances to take bourbon tours

Living in Kentucky: How much do you need to earn?

You want to make enough money to take advantage of all the fun things to do while also paying for your essentials like housing and groceries. Since housing generally takes the biggest chunk out of a person’s monthly budget, it’s used as the metric to determine how much money you need to earn to comfortably live somewhere. Experts recommend that you only spend 30 percent of your gross monthly income on housing. That leaves 70 percent for groceries, bills, savings and all those miscellaneous goods and services.

According to the U.S. Census, the median household income in Kentucky is $52,238. The average rent in Kentucky is $1,082 for a one-bedroom apartment. Assuming the 30 percent rule, you’d need to make at least $3,606 per month. That comes out to roughly $43,272 annually for the average working adult.

If you’re unsure what Kentucky city fits into your budget, use this handy rent calculator to crunch some numbers and see if you can afford the overall cost of living.

Living in this great state

There are many benefits to living in Kentucky. You can live in a vibrant big city but go into the beautiful countryside riding horses within minutes. It has great food, sports and a welcoming population. It’s also an overall affordable state in general. With most costs of living categories falling under the national average, various cities and towns in the commonwealth are bound to fit a wide range of budgets.

The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of June 2023.

Moving?

Get connected with the best moving company!

like a boss!

Sign up to keep up with all the best…

Rent like a boss!

Sign up to keep up with all the best…