Have you ever wondered why car ownership is more expensive in different states? What are the costs in your area?
Owning a car is not an investment. From the moment you get in your car, you start spending money, and the value of the vehicle declines. No matter where you are, car ownership involves substantial expenses. However, these costs can vary greatly between states due to maintenance, auto insurance, fuel prices, taxes, and various fees, which fluctuate significantly depending on where you live.
Each state sets its own sales tax rates on vehicle purchases, and many also charge additional registration fees, which impact total expenses. For example, states like California have higher sales taxes and registration fees than Florida or Texas, where the costs are much more affordable.
Insurance rates add to the cost of owning a car. States with elevated accident rates, theft incidents, or uninsured drivers tend to have higher insurance costs. For example, insurance premiums are higher in big cities with high density than in other areas.
Another factor is fuel costs, which can vary due to state-specific taxes and regulations. States with elevated fuel taxes, like California, usually experience higher gas prices, which impacts the total cost of owning a car.
Maintenance expenses can also fluctuate depending on the climate. Some areas have increased maintenance costs due to weather conditions.
Considering these main factors, we compiled a list of the ten states where car ownership is the most expensive.
10. Kansas
Owning a car in Kansas would cost less than average if not for higher taxes and fees, which are around $500 above the national average. This high cost is due to the no-fault insurance model, which requires drivers to maintain Personal Injury Protection (PIP) coverage. This coverage addresses medical bills, lost income, and additional expenses, regardless of which party is responsible for an accident.
However, gas prices in Kansas are only about $2.66 per gallon due to the state’s proximity to oil refineries and lower fuel taxes. However, people in this state tend to use their cars frequently, likely because a large percentage of the population lives in rural areas, and public transport options are limited.
With typical car ownership expenses exceeding $6,000 yearly, Kansas ranks among the top 10 most expensive states.
9. Wyoming
Wyoming’s spot among the ten most expensive states to own a car is earned by slightly above-average insurance costs, $73 per year, and higher taxes and fees. Insurance costs are elevated because of a greater frequency of accidents, especially on rural roads and in diverse weather conditions. The state endures severe winters, contributing to dangerous driving conditions and higher accident rates.
Wyoming’s gasoline costs per capita are above average, ranging between $2.50 and $4.00. This price is due to local taxes, market fluctuations, and seasonal factors influencing gas prices.
Another reason this state ranks ninth most expensive for car ownership is that people primarily live in rural areas, so driving distances are long. With gas prices above average, longer drives will raise monthly expenses.
8. Kentucky
Kentucky is one of the ten most expensive states to own a car. Like Kansas, it has a no-fault insurance model, which raises insurance rates compared with the national average. Kentucky has experienced increased traffic accidents, which has caused insurance companies to reevaluate the risk and increase premiums.
Taxes can be relatively high, particularly if you own a pricey vehicle. In Kentucky, vehicle property tax is based on the car’s value. Through vehicle-related taxes, owners also contribute to infrastructure maintenance, leading to increased expenses. Overall, the cost of owning a car in Kentucky is about $360 higher than the national average.
7. Mississippi
Drivers in Mississippi face a trifecta of automobile-related expenses. In addition to higher taxes and fees than most states, they incur greater insurance and gasoline costs than the national average.
This state imposes a sales tax on vehicles of around 7% of the purchase price. Additionally, there is an ad valorem tax that is calculated annually based on the car’s value. It seems that in Mississippi, you have to pay a lot extra if you want a new fancy car.
According to the Insurance Research Council, the state has the nation’s highest rate of uninsured drivers, at 29.4%. This leads insurance companies to raise premiums to cover uninsured drivers.
6. Colorado
Colorado residents pay less than the average per capita for gasoline yearly compared to other states. However, the state’s average insurance costs, taxes, and fees are significantly higher than the national average.
Like Kentucky, Colorado has a vehicle ownership tax calculated annually based on the car’s value. This tax, along with vehicle registration fees, significantly increases the cost of owning a car.
Also, Colorado has a high rate of accidents and is prone to natural disasters, such as fires and storms. Because of these risks, insurance companies increase rates to cover the costs. Also, these risks might explain why the state has a mandatory insurance requirement, which requires all drivers to have minimum insurance coverage. All this adds up, and it is no surprise that the cost of owning a car in Colorado is not cheap.
5. Michigan
It’s ironic that Michigan, known as the heart of America’s auto industry, has such high driving costs. While the state’s average gasoline prices, taxes, and fees are relatively low, drivers face some of the country’s highest auto insurance premiums.
Michigan drivers spend roughly $800 more annually on car insurance than the typical American driver. This increased cost comes from the state’s no-fault insurance system, which requires drivers to have Personal Injury Protection (PIP) coverage. This coverage provides unlimited medical insurance for all car-related accidents. Medical costs, particularly those associated with car accidents, are significantly higher than the national average.
In the past years, Michigan has reported high rates of accidents due to its increasing traffic and bad weather conditions. This has also raised the cost of premiums every year.
4. California
California is an expensive state to own a car in, with costs nearly $1,000 above the national average. Gas, taxes, fees, and auto insurance are significantly higher, making driving a privilege that comes at a steep price on the Golden State’s roads.
California has one of the highest living costs, which affects everything from housing to car insurance and maintenance. Like other states, California has multiple taxes and fees, including registration and vehicle purchase taxes, which are calculated based on a car’s value. Maintenance and repairs may also cost more here because of the high demand and the high cost of labor.
According to the Tax Foundation, it is expensive even for visitors, as California has the highest gas tax in America, at about 66.98 cents per gallon.
3. Louisiana
Louisiana has one of the highest car ownership costs in the nation, currently ranking third overall. This can be attributed to a combination of elevated insurance premiums and sales tax rates. The state also experiences a fair share of accidents and car thefts, and unfortunately, the high number of uninsured drivers increases insurance prices. Louisiana is also known for its vulnerability to hurricanes and floods, which can certainly contribute to the rising cost of premiums.
Additionally, the state’s legal framework features specific laws and regulations that guide personal injury claims and insurance settlements. Juries often award significant amounts in personal injury cases, which can lead to considerable settlements. Together, these aspects contribute to the state’s higher auto insurance rates.
2. Florida
Residents in the Sunshine State benefit from fuel costs, taxes, and fees that are lower than the national average. Nonetheless, some of the country’s highest average car insurance rates offset these savings. Florida has the highest accident rate, so it is no surprise that the premium rates are expensive. Also, the predisposition to hurricanes and flooding influences the amount spent on insurance.
U.S. News reports that Florida residents spend approximately $800 more annually on vehicle insurance than the typical American. Additionally, the Insurance Research Council notes that over 20% of Florida drivers are uninsured. It may look expensive, but it is better to have insurance to protect yourself under these conditions.
1. Nevada
While many people move to Nevada to escape high taxes, they soon face the highest car ownership costs in the nation. After arriving, drivers encounter slightly above-average per capita gasoline prices, taxes, and fees that significantly exceed national standards, and expensive car insurance premiums.
In Nevada, vehicle registration is mandatory, with different fees according to the vehicle’s value, type, and the county where it’s registered. Also, this state has a state sales tax, and local taxes may apply. Overall, owning a vehicle in Nevada is around $900 more expensive annually than the national average.
Considering that the accident rates are going up in many states and also there are a lot of uninsured drivers on the road, it may be a good idea to equip your car with a new Everlit Survival Car Emergency Kit from Amazon. Drive carefully and stay safe!
Do you know any tips for reducing the costs of owning a car? Share your thoughts in the comments below! If you enjoyed this article, be sure to check out this one as well: Did You Know About These Popular 7 Car Insurance Secrets?
