$8,000 a Year Just to Drive: Southern States Hit Hardest by Car Ownership Costs

Sweet Home Alabama? Maybe not, when you consider that car ownership costs take a massive 13% of Bama folks’ annual income, ranking it in 2nd place. That’s roughly $8300 dollars every year – or an all-in luxury vacation to the Caribbean!

If you had almost $9,000 per year spare in your bank account, what would you spend it on? That’s how much the average Arkansas driver could save each year without a car. In this state, which ranks 3rd place in Wheelsaway’s Cost Pressure Index (CPI), ownership costs wipe out 14% of the median income. Drivers here are also in the top 5 regions in the U.S. searching for cheap car insurance online, with thousands feeling the pinch of ownership. 

Floridians fare best out of the top 10, with an index score of 8.96. With the average Floridian taking home a higher median income than other states on our list at $74,568, some may be better placed to absorb the 11% car ownership costs they face each year, which come in at roughly $8200.

The sunshine state still faces some of the highest ownership costs in the country though, and sits in the top 5 regions searching for information about refinancing cars online.

Rank	State	Cost Pressure Index (CPI)
1	Mississippi	11.37
2	Alabama	11.04
3	Arkansas	10.99
4	Louisiana	10.57
5	South Carolina	10.38
6	Georgia	10.36
7	West Virginia	10.19
8	Oklahoma	9.54
9	Kentucky	9.26
10	Florida	8.96

Why are southern states the most expensive?

According to Wheelsaway’s Cost Pressure Index (CPI), all of America’s highest-paying states sit in the South and Southeast. Lower median incomes, geography and more uninsured drivers could play a role in the price of ownership. 

Fatality and crash risk

The higher the crash risk, the higher the insurance premium. 2025 data from the National Safety Council, which looks at state motor vehicle deaths and percent changes, indicates that some of our most expensive states for car ownership (Florida, Georgia, Alabama, and Louisiana) also had some of the highest numbers of deaths on the roads recorded by traffic authorities over a 12-month period. 

Rural roads and outdated infrastructure in these states may play a role in the increase in fatality and crash risk. Even if you’ve got a perfect driving record, living in one of these areas could increase your monthly insurance costs.

“Geography is a big factor here. States like Alabama and Louisiana are known for their significant stretches of rural roads, where we often see higher fatality rates per mile than in urban areas. In these locations, emergency response times can be longer, which can worsen outcomes from serious collisions”, explains Wheelsaways automotive expert Luke Oswald. 

In fast-growing urban areas like Georgia and Florida, outdated intersections and interchange designs haven’t kept pace with increased traffic volumes, which may have contributed to an increase in accidents and fatalities. 

More uninsured drivers 

In states with large numbers of uninsured drivers, the risk that a claim involves an uninsured driver increases. Insurance premiums in these states can sometimes be higher than the national average, as insurance companies spread the cost of risk across all drivers. 

Mississippi, which takes first place in Wheelsaways index, has the highest number of uninsured drivers of any U.S. state, according to the most recently available data from the Insurance Information Institute.  Florida also sees 20% of uninsured drivers on its roads – insurance premiums here are significantly higher, with drivers paying the second-most expensive rates in the nation for full coverage insurance. 

High registration and finance costs

Data suggests that Mississippi drivers face fees as high as $719. Other states from our index with high registration costs include: 

• Florida: $297
• Alabama: $393

Approximately 85% of new cars are financed rather than purchased with cash. Lenders require full-coverage insurance for buyers looking to finance, so states with higher insurance rates will also feel an indirect increase in their finance costs. Some states like Florida also allow higher APR’s, pushing the monthly finance cost up even more. 

Lower median income

Median income data from the United States Census Bureau indicates that southern states have the lowest median incomes of any other region in the U.S.

Mississippi has the lowest, with an average median household income of $56,447.

The cheapest states for car ownership

Our Cost Pressure Index puts Hawaii as the cheapest state for car ownership, followed closely by Washington D.C., and Massachusetts. 

The median income in Hawaii is one of the highest in the U.S., at $100,389 – 78% higher than the median income of our most expensive state, Mississippi. In Hawaii, car ownership costs take up around 9% of income. That means Mississippians spend nearly double the share of income on car ownership than Hawaiians. 

Washington D.C ranks the 2nd cheapest state for car ownership where the average driver spends approximately 8% of their income on associated costs. Here, the median income is also much higher at $109,870. A slightly higher volume of searches relating to cheap car insurance and refinancing options puts D.C. slightly below Hawaii on the Cost Pressure Index. 

Coming in at 3rd is Massachusetts. With a lower median income and a slightly higher percentage spent on ownership costs, Massachusetts residents part with a few extra dollars per year compared to those in D.C. 

Iowa sits at the higher end of our cheapest states in 10th place. Here, the average resident can expect to spend around 11% of their income on car ownership costs – around $8,600 per year. That’s slightly higher than the 10th most expensive state in our index, Florida. However, search data in Florida suggests that residents here are feeling the pinch more than in Iowa.

Tips for more affordable car ownership

While most driving expenses are unavoidable, there are a few things you can do to lessen the strain, like reducing the cost of your auto insurance. 

Lowering your insurance premiums

If you’re in the market for a new car, certain safety features can reduce the risk of accidents and lower your premiums. 

Telematics programs can be used to fine-tune your driver risk profile. Some auto insurers claim discounts of up to 30-40%, depending on driving habits. 

“If you have ADAS systems, it’s worth shopping around – not all insurers recognize the benefits, but with the right provider, you could fetch some decent savings”.

Wheelsaway compared offers from Progressive Insurance for a 2022 Toyota Camry, which includes ADAS features like automatic emergency braking, blind spot monitor, and rear cross-traffic alert.

Without enrolling in its ‘snapshot’ telematics program, the vehicle was quoted $1828 per year. With enrollment using the plug-in device, the quote dropped to $1556 – that’s an instant saving of $272 per year just for enrolling an ADAS-equipped model in a telematics program.

You could also opt for an older model, which will be cheaper to purchase and insure, and keep it until you need to junk it. Older models may not have advanced ADAS systems, but they also won’t require any of the costly repairs that come with maintaining these, which may save you money in the long-term. 

Wheelsaway’s analysis of offers from Progressive Insurance shows a saving of $450 per year, when comparing insurance between a 2022 (with telematics enrolment) and a 2014 Toyota Camry.

Registration fee exemptions

Most registration fees are fixed; however, you may be eligible for fee exemptions that can drastically reduce your annual payment. Exemptions and reductions may vary, but are commonly offered to people who meet the criteria below: 

• Retired
• Disabled
• Military personnel 
• Own an EV or hybrid vehicle (state dependent)

In some cases, your car registration may be deductible. If you itemize your taxes and are self-employed, you can deduct the amount of your car registration fee that’s based on the vehicle’s value by submitting it as a business expense to the IRS.

Note: license fees are not deductible. You also can’t deduct the total amount you’ve paid, just the portion that’s based on your vehicle’s value. 

Not all states offer value-based registration fees. Contact your local DMV for more information about the process in your state. 

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