What is the Most Expensive State to Own a Car in America?

Valerie Raskovic

Created Date: Dec 17, 2025 | Modified Date: Dec 17, 2025

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When most Americans think about the costs of car ownership, they focus on the sticker price and monthly payments. However, the true cost of owning a vehicle extends far beyond the purchase price, varying dramatically from state to state. From insurance premiums and gas prices to taxes, fees and maintenance costs, the annual expense of keeping a car on the road can differ by thousands of dollars depending on where the car is registered. We analyzed multiple cost factors to determine what state is the most expensive place to own a car in the United States. We were able to fine-tune the results to 3 contenders: Michigan, Nevada and California.

Nevada

Nevada consistently ranks among the top three most expensive states for car ownership. Some estimates place car ownership cost in the state of Nevada to be anywhere between $3,200 and $6,000 annually. For auto insurance costs, with average premiums exceeding $2,400 annually. This represents a significant financial burden that's nearly double what drivers pay in some other states.

One of the top primary contributors to the exorbitantly above average cost of vehicle ownership has to do with the state’s high insurance cost, especially for vehicles registered in the state of Las Vegas. This is primarily attributed to a few key factors plaguing the state.

• Increased accidents with an above-average rate of fatalities.
• High rate of vehicle theft and burglary.
• High medical and litigation costs.
• Higher number of uninsured drivers.
• High Congestion causing traffic: While a good chunk of the state is sparsely populated, the major cities like Las Vegas experience high traffic and congestion.

Another major contributor to the higher cost of vehicle ownership in the state has to do with fuel cost. While gas prices in the state are cheaper than in California and Hawaii by as much as $1/gallon, they are still amongst the highest in the nation.  Drivers in the state typically pay around $0.65 more per gallon than other states.

Michigan

Michigan has held the dubious distinction of being amongst the most expensive states for car ownership for several years running, with the average driver spending between $4,000 and $9,000 annually to keep their vehicle on the road.

The primary driver of Michigan's high car ownership costs is its notoriously expensive auto insurance. That is directly related to the local laws. For decades, Michigan required drivers to purchase unlimited lifetime personal injury protection (PIP) benefits, making it the only state with such a requirement. While recent reforms have begun to address this issue, Michigan drivers still pay an average of $2,600 to $3,100 annually for auto insurance—more than double the national average of $1,200.

Several factors contribute to these sky-high rates:

• No-fault insurance system requiring all drivers to carry PIP coverage
• High rates of uninsured drivers (estimated at 20-25%)
• High rates of insurance fraud
• Expensive medical costs for auto-related injuries
• Urban density in Detroit and surrounding areas

Michigan also ranks among the top 10 states for high gas prices, with drivers typically paying 15-30 cents more per gallon than the national average. The state imposes a 27.2 cents per gallon gas tax which, combined with federal taxes and environmental fees, adds significantly to fuel costs. For the average driver covering 12,000-15,000 miles annually, this translates to an additional $200-400 per year compared to the national average.

Vehicle registration fees in Michigan are calculated based on the manufacturer's suggested retail price (MSRP) rather than the vehicle's current value. New car owners can expect to pay $400-800 annually for registration, with luxury vehicles commanding even higher fees.

California

While Michigan leads the pack in cost of ownership amongst most of the country, the crown goes to the state of California. The Golden State combines high gas prices (often the highest in the nation), expensive insurance rates, and significant taxes. Drivers in metropolitan areas like Los Angeles and San Francisco face average annual costs of $8,000-10,000.

High housing costs in urban areas also drive-up parking fees and garage rentals, adding hundreds to monthly expenses. Further compounding the problem are high rates of parking fines, penalties and restrictions.

Another big issue contributing to the problem is high vehicle registration costs. While the state does not have a separate excise tax bill, it more than makes up for it with registration renewal fees. Beyond paying tax for when you buy the vehicle, the state adds additional taxes and fees to the registration fees due annually.  This balloons the average registration costs to the highest national average, ranging from $250 to $800 for conventional vehicles. Since the registration renewal fee in California is based on the vehicle’s value, type and city where the vehicle is registered, it is completely possible to pay as much as $5000 or greater to renew the registration on certain premium and luxury vehicles.  

Due to a higher insurance loss claim rate partially due to recent natural weather events, higher crime rates and accident rates in major cities, some insurance agencies just stopped offering services in the state entirely. This had a devastating effect on auto insurance premiums; beyond the crazy price hikes, most insurance companies do not even offer a 12-month price lock, opting for 6-month premiums. This is primarily due to the uncertainty in the overall local market. 

Among the many other reasons why California made it to the top of the chart as the most expensive state to own a vehicle has to do with the state’s utterly insane gas prices. Due to various legislations, environmental fuel requirements and very high fuel taxes, California has more expensive gas than any other state. Gas prices in California can soar as high as $2 above the national average per gallon.

Conclusion

While California currently holds the title of most expensive state for car ownership, the landscape continues to evolve. Understanding these cost differences is crucial for anyone considering a move or evaluating the true cost of vehicle ownership. For California residents, the high costs underscore the importance of shopping around for insurance, maintaining good driving records, and choosing vehicles that balance purchase price with ongoing expenses.