A comprehensive guide to calculating the true cost of owning and operating a car, including fixed and variable expenses, state-by-state differences, and vehicle type impacts.

Jun 30, 2025

Understanding the Total Cost of Car Ownership (Dollar-Per-Mile)

Why Calculate Cost Per Mile?

For anyone who views a car primarily as transportation, knowing the total cost of ownership (TCO) in terms of dollars per mile (DPM) is invaluable. This metric tells you how much each mile of driving actually costs when you factor in all expenses - not just fuel, but also insurance, maintenance, depreciation, and more. By calculating your car’s cost per mile, you can make smarter decisions: for example, is it cheaper to drive 10 miles to the store or pay for delivery? How does the cost of your daily 30-mile commute compare to taking public transit or carpooling? Understanding your TCO per mile can even help you weigh options like buying a new car versus keeping your old one, or an electric vehicle versus a gasoline vehicle. In short, cost-per-mile is a powerful number for budgeting and planning your transportation effectively.

According to the AAA’s latest Your Driving Costs study, the average cost to own and operate a new car in 2023 was about $0.81 per mile assuming 15,000 miles driven per year. This equates to roughly $12,000 in annual auto expenses for the average new vehicle priced around $34,900. If you drive more miles, the per-mile cost goes down slightly (since many costs are fixed); at 20,000 miles/year the average cost was about $0.69 per mile, whereas at only 10,000 miles/year it shot up to around $1.05 per mile. This illustrates how spreading fixed costs over more miles lowers the DPM, while low-mileage drivers actually pay more per mile. For context, the U.S. Internal Revenue Service’s standard mileage rate (often used for business reimbursement) was 65.5¢ per mile for 2023 - a useful benchmark, though it may undercount actual costs for new cars in today’s high-inflation environment. In fact, recent inflation has driven car ownership costs upward: auto insurance jumped over 20% in 2023 on average, gas prices hit record highs in 2022, and vehicle prices and interest rates have climbed, all of which increase the total cost of driving.

Breakdown of Car Ownership Costs: Fixed vs. Variable

To calculate a true dollar-per-mile figure, we must account for all components of owning and operating a car. These costs fall into two categories: fixed costs (largely independent of how much you drive) and variable costs (which rise with mileage). Below is a breakdown of the key cost factors:

Depreciation (Vehicle Price & Resale Value): This is the loss of your car’s value over time. It’s usually the single largest cost of ownership. New cars lose value each year (and each mile) - the difference between your purchase price and the car’s future resale/trade-in value is true economic cost. Depreciation often accounts for hundreds of dollars per month in value loss. AAA calculates that for a typical new car, depreciation is about $4,538 per year (over 5 years). This equates to roughly 30¢ per mile at 15,000 miles/year. Used cars depreciate more slowly in percentage terms, but you should still include an estimate of how much value your vehicle loses each year in your TCO. (If you keep a car until it’s nearly worthless, you’re essentially spreading its purchase cost over all the miles you’ll drive it.)
Finance Charges: If you took out an auto loan, the interest expense is another cost. For example, a 5-year loan with 10% down at average interest rates adds about $1,253 per year in financing cost on the average new car. Think of this as a fixed cost of borrowing money to own the car. If you paid cash, you can consider the “opportunity cost” of that money as well. Financing costs don’t vary with miles driven - they’re a fixed monthly expense during the loan term.
Insurance: Auto insurance is typically billed per year (or month), and for most drivers it doesn’t depend directly on mileage (unless you use a pay-per-mile insurer). This is a fixed cost to include in your annual total. Insurance costs vary widely based on your location, driving record, vehicle type, and coverage. On average nationwide, full coverage insurance runs around $1,700-$1,900 per year for a typical driver. But this ranges from under $1,200 in low-cost states to well over $2,000 in high-cost states. For example, the average premium is only $1,175/year in Maine (the cheapest state), versus about $2,883/year in Louisiana (the most expensive state). That difference of $1,700 annually would add about 17¢ per mile (assuming 10,000 miles/year) for a Louisiana driver compared to a Maine driver! It’s clear that insurance is a major component of TCO - often $0.10-$0.15 per mile by itself - so shopping for better rates and factoring in where you live is important.
Registration, Taxes, and Fees: Every state charges fees to title and register your vehicle each year, and these are largely fixed annual costs. They include your license plate/tag renewal, state or local registration fees, and often a one-time title fee when you purchase the car. These costs are highly state-dependent. Many states have fairly low flat fees (on the order of $20-$50 per year for registration). For example, Georgia charges about $20/year to register a passenger car, and Arizona has one of the lowest base registration fees at $8 per year (though Arizona adds a separate vehicle license tax and $32 public safety fee). On the other hand, some states have much higher charges: Oregon has the highest registration fees in the U.S. - about $268 to $636 (good for two years) for new vehicles, depending on fuel efficiency. Florida hits new car buyers with a $225 one-time fee for initial registration (on top of $14.50-$32.50 annual fees). In addition, most states also levy sales tax when you buy a car (anywhere from a few percent up to 8%+ in some states). That one-time tax can add thousands to the purchase price (e.g. 6.25% in Texas or 7%+ in New Jersey), so it should be amortized over your ownership period in your cost calculations. Some states (like Alaska, Delaware, New Hampshire, Oregon, and Montana) have no sales tax on cars, which lowers the upfront cost of ownership in those places.
Personal Property Taxes: Beyond registration, about half of U.S. states levy an annual property tax or excise tax on vehicles. This is essentially a tax based on the current value of your car, often paid with your registration. States like Virginia, Connecticut, and Missouri charge yearly personal property taxes that can amount to a few hundred dollars (or more for expensive vehicles) each year. For example, Connecticut’s vehicle property tax can add around $400+ per year on average. Meanwhile, other states (like California) incorporate an “auto license” or value-based fee into the registration cost (CA’s vehicle license fee is 0.65% of value annually, included in the registration figure). If you live in a state with these taxes, be sure to include them as a fixed yearly cost of ownership. In states without them, you’ll save a chunk of money annually on your car - one reason why owning a car is cheaper in some states than others.
Fuel (Gas or Electricity): Fuel is a classic variable cost - the more miles you drive, the more you spend on gas (or charging for an EV). Fuel expense is usually expressed per mile by dividing the price per unit of fuel by your vehicle’s fuel economy. For a gasoline car, if gas costs $X per gallon and your car gets Y miles per gallon, then fuel costs add X/Y dollars per mile. For instance, with gas at $3.50/gal and a car that gets 30 mpg, fuel costs ~$0.12 per mile. With a less efficient vehicle (say 15 mpg truck at $3.50/gal), it’s ~$0.23 per mile. Fuel prices fluctuate frequently and also vary by state/region. In mid-2025, average regular gas prices ranged from about $2.65/gal in Mississippi up to $4.65/gal in California. Western states (CA, HI, WA) generally pay the most for fuel (due to taxes and transport costs), while Southern states pay the least. Over a year, those regional price gaps can have a big impact: for a 12,000-mile year at 25 mpg, a California driver (at ~$4.60/gal) spends ~$2,200 on gas, whereas a Mississippi driver (at ~$2.70/gal) spends only ~$1,300 on gas - a difference of ~$900/year (~7.5¢ per mile). Electric vehicles (EVs) have “fuel” costs too - electricity isn’t free. EV efficiency is measured in kWh per mile; depending on electricity rates, EVs typically cost anywhere from $0.03-$0.08 per mile to charge. AAA assumed an average 15.8¢/kWh electric rate in 2023, which worked out to roughly 5¢ per mile for EV charging in their study. (Electricity rates also vary widely by region - e.g. about $0.10/kWh in Washington state versus $0.25-$0.30 in parts of California/New England - so an EV’s energy cost per mile can be lower than a gas car’s or, in high-rate areas, closer to equal.)
Maintenance & Repairs: Maintenance includes routine service (oil changes, filters, fluid flushes, etc.), wear-and-tear items (tires, brakes, wipers), and repairs for things that break. These costs tend to increase with mileage and vehicle age, but you can estimate an average per mile maintenance cost. AAA’s analysis of new cars in 2023 put maintenance, repairs, and tires at about 9.83¢ per mile on average. That assumes following manufacturer maintenance schedules and replacing tires once in 5 years. Some vehicle types cost more: for instance, a large pickup or European luxury car might have higher tire prices and maintenance bills, whereas an economical Japanese sedan might be cheaper. Maintenance also depends on usage (city driving may wear brakes/tires faster, for example). Older used cars generally have higher repair costs as things start to wear out; even if you avoid car payments, you might set aside a few cents per mile for eventual repairs (e.g. suspension components, engine or transmission issues in high-mileage cars). It’s wise to budget something like $0.05-$0.10 per mile for maintenance, depending on the car. EVs have an advantage here: EVs typically have lower maintenance costs since they don’t need oil changes, have fewer moving parts, and brakes last longer (thanks to regenerative braking). In AAA’s study, the EV category had the lowest maintenance/repair/tire costs of all vehicle types. Still, remember that EV tires and other wear items do need replacement, and after many years an EV might need an expensive battery replacement (a rare, long-term cost to consider).
Insurance Extras & Miscellaneous: In some cases, there are other costs to consider. If you have add-ons like roadside assistance memberships (AAA, etc.), annual vehicle inspections that cost money, or registration add-ons like emissions testing fees, those should be included. For instance, certain areas require annual smog or safety inspections that might cost $20-$50 each time. Additionally, if you subscribe to telematics services (OnStar, etc.) or have annual fees related to your car (parking permits, garage fees at your residence), those would contribute to your cost of owning the vehicle. These may be small individually, but they do add up over a year. Generally, such costs are fixed per year.

In summary, fixed costs (depreciation, insurance, registration/taxes, financing) hit your wallet regardless of mileage, while variable costs (fuel, maintenance) scale with usage. When you sum it all up, the total annual cost of owning a car = Fixed annual costs + (Variable cost per mile × annual miles). To get dollars per mile, simply divide that total by your annual mileage. If you drive double the miles, your fuel and maintenance roughly double, but your fixed costs stay the same - so your per-mile cost goes down. Conversely, a low-mileage driver still pays all the fixed expenses, making their per-mile figure quite high.

State-by-State Differences in TCO

It’s important to note that where you live can greatly impact many of these cost components. We’ve already highlighted differences in insurance premiums and fuel prices by state; let’s look a bit more systematically at how state (or regional) factors alter the TCO:

Insurance Premiums: Location is one of the biggest factors in insurance pricing. High-density urban areas and certain states have much higher average premiums due to accident rates, insurance regulations, litigation, weather, and healthcare costs. For instance, the average full-coverage policy in Florida was about $2,694 in 2023, whereas in New Hampshire it was only $1,265. States like Florida, Louisiana, Michigan, New York, and California tend to be expensive for insurance (often $2k+ per year) due to factors like higher accident claims, uninsured drivers, and state insurance requirements. In contrast, states such as Maine, Vermont, Idaho, and Ohio are among the cheapest (around $1.2k-$1.4k per year on average). When calculating your cost per mile, use your own insurance cost. But if you’re looking at national averages, be aware this can swing the DPM by several cents per mile depending on state - it’s a major cost. (Tip: If you’re moving to a new state or have a choice of locations, compare typical insurance costs; the difference can be dramatic.)
Fuel Prices: Fuel costs are influenced by regional tax policies and supply logistics. Western states and the Northeast often have higher gasoline prices (due to higher state fuel taxes and stricter formulations), while Gulf Coast and Midwestern states enjoy cheaper gas. As of May 2025, the highest average gas prices were around $4.65/gal in California (and not far behind in Hawaii and Washington), whereas the cheapest states like Mississippi were around $2.69/gal. These differences of $1-$2 per gallon mean that, for the same car, a driver in CA might spend 70% more on fuel per mile than a driver in MS. Over a year of driving, that could be hundreds of dollars difference. (Diesel fuel shows similar regional differences; electricity rates for EV charging also vary by state as mentioned.) States also have differing policies on fuel taxes - some have not raised gas taxes in years, others index them to inflation or have additional carbon fees. For example, Pennsylvania historically had one of the highest gas taxes, contributing to higher pump prices, while Alaska and Missouri have some of the lowest gas taxes. When planning road trips or relocation, it’s useful to know that fueling up will be pricier in some states than others - and adjust your cost per mile assumptions accordingly.
Taxes, Registration, and DMV Fees: The annual cost to keep your vehicle street-legal can be very different depending on state and local fees. We touched on extremes like Oregon’s high registration and the prevalence of personal property taxes. Another example: New York has relatively moderate registration fees ($26-$70 per year depending on weight) but charges sales tax around 4% plus local taxes on purchase; New Jersey has modest registration fees but high insurance and also recently raised its minimum insurance requirements which may raise costs. Some states nickel-and-dime vehicle owners with multiple small fees - e.g. in Kansas, there’s a modest registration fee ($30) plus a yearly property tax (the “motor vehicle tax”) that can be $100-$300 depending on vehicle value, plus sales tax at purchase, etc.. Meanwhile Alabama might charge a flat ~$23 fee and minimal local add-ons. Because of all these factors, the “fixed cost” of simply owning a car each year (before you even drive it) can range from only a few hundred dollars in some states to well over a thousand in others. For instance, in California the annual license & registration averaged about $762/year (nationally one of the highest) once you include its value-based license fees, while in a state like Montana you might pay under $100 a year for registration on a standard car. If you’re making a state-by-state comparison, be sure to include: yearly registration or plate fees, any ad valorem property taxes, mandatory inspection fees, and typical one-time fees at purchase (title, initial registration, emissions certificates, etc.). We could create an entire table of these by state - and indeed, you’ll find such data in Appendix or source materials - but as a rule of thumb, the states with higher costs of living (and higher government fees) tend to have greater annual charges on vehicles. States in the Northeast and West Coast often fall in this category, whereas many Southern and Plains states keep vehicle fees low.
Electric Vehicle Fees & Incentives: One growing aspect of state policy is special fees for electric or hybrid vehicles. Because EVs don’t pay gasoline tax (which funds road maintenance), over 30 states now levy an annual fee on EV owners to make up for lost revenue. These fees range roughly from $50 to $200 per year. For example, West Virginia charges $200/year for fully electric vehicles (and $100 for plug-in hybrids), Illinois has a $251/year EV fee, and Tennessee adds $100/year for EVs. On the other hand, some states offer incentives that reduce TCO for EV owners, like purchase rebates, no sales tax on EVs (e.g. New Jersey waives sales tax on electric vehicle purchases), or HOV lane access (time savings). If you’re considering an EV, include any state EV fee in your annual costs, but also factor in incentives like the federal $7,500 EV tax credit (which effectively lowers the purchase cost if you qualify) and lower “fuel” cost per mile. Over time, the fuel savings of EV vs. gas can be substantial - but how quickly an EV pays off will depend on local electricity rates and those extra fees. For example, an EV driver in Louisiana (with cheap electricity and no extra EV fee) will have a much bigger cost advantage over a gasoline car than an EV driver in Illinois (where electricity is pricier and a big EV fee applies annually).
Maintenance & Repair Costs by Region: While maintenance largely depends on the vehicle and how it’s driven, there are some regional cost differences. Labor rates at auto repair shops vary across the country. Coastal and big-city dealerships might charge $150-$200 per hour for labor, whereas a rural independent mechanic might charge $80-$100/hr. These differences mean that if you need a 5-hour repair job, it could cost hundreds more in a high-cost city than in a small town. Additionally, climate and road conditions can affect maintenance: for instance, northern states that salt their roads may see cars rust out faster (body repairs), and mountain or rural areas with rough roads might lead to more suspension and tire wear. Urban stop-and-go driving wears brakes and tires faster than open highway driving. All these factors are hard to quantify in a general cost-per-mile, but they remind us that your actual costs can deviate from the national average. If you live in an expensive metro area, maybe bump your maintenance budget up a bit; if you do mostly gentle highway driving, you might come in below average on maintenance costs.

Bottom line: The cost-per-mile for owning a car can easily vary by $0.20 or more between a low-cost state and a high-cost state. For example, consider a typical sedan: in a low-cost scenario (say, Alabama or Idaho), you might have cheap insurance ($1,300/yr), low fees ($100/yr), and gas at $3.00/gal - perhaps around $0.50-$0.60 per mile. In a high-cost scenario (say, California or New Jersey), with insurance $2,000+, high fees/taxes, and $4+ gas, that same car could be $0.80+ per mile. It pays to know your local costs and not rely solely on national averages. (Refer to the Appendix for a detailed state-by-state cost factor comparison, including average insurance premiums, gas prices, and fees in each state in recent years.)

Vehicle Type and Usage: How They Affect Cost

Every car is different - so beyond your location and habits, the type of vehicle you own is a major determinant of cost per mile. Here we’ll compare how sedans vs. SUVs vs. trucks vs. hybrids/EVs stack up, and also discuss new vs. used cars.

Size/Class of Vehicle: Generally, larger vehicles cost more to own and operate than smaller ones. They usually have higher purchase prices, lower fuel economy, and sometimes higher maintenance costs (e.g. more expensive tires). For example, AAA’s 2023 study found that a small sedan had the lowest cost of ownership at about 59.6¢ per mile (approximately $8,939 per year), while a half-ton pickup truck was the highest at around $1.06 per mile (over $15,000 per year). Midsize SUVs and trucks often have higher insurance premiums as well, since they can incur more damage in accidents and are costlier to repair. On the other hand, smaller vehicles (compact cars, subcompact SUVs) tend to depreciate less in absolute dollars and sip less fuel. Note that luxury brands or high-performance vehicles can also drive up costs - their parts and labor are expensive, and they often demand premium fuel and higher insurance. When comparing vehicle types, consider: Fuel economy (mpg), tire replacement cost (big trucks have big, costly tires), maintenance needs (does a turbocharged luxury car require pricey synthetic oil changes? does a 4×4 truck have extra differential fluids to service?), and depreciation rates (some vehicle segments hold value better than others).
- Sedans: Typically the most cost-effective. Small and midsize sedans are relatively cheap to buy and fuel, and their insurance is often moderate. AAA found a midsize sedan around 74¢/mile and a small sedan ~60¢/mile, making them good value choices.
- SUVs: Crossover and SUV costs vary - a compact SUV was about 67¢/mile (only slightly more than a sedan), but a medium SUV was about 80¢/mile. SUVs can have higher insurance (seen as family vehicles, sometimes higher liability coverage needs) but hold their value well due to high demand.
- Pickup Trucks: Trucks had some of the highest costs: a midsize pickup ~82¢/mile, and a full-size half-ton pickup was the costliest at $1.06 per mile. The big factors are poor fuel economy (some trucks get 15-20 mpg) and high depreciation (full-size trucks often have $50k+ price tags new). If you truly need a truck, the utility might justify it - but be aware it’ll cost significantly more per mile than an economy car.
- Minivans: Not highlighted in the AAA snippet, but historically minivans have had moderate ownership costs - similar to midsize SUVs in fuel and maintenance, often a bit cheaper on insurance (families, safe drivers) but they do depreciate somewhat fast because demand on used market isn’t as strong. If considering one, expect somewhere in the middle of the pack for cost per mile.
Hybrid and Electric Vehicles: These offer interesting trade-offs. Hybrids (like a Toyota Prius or hybrid sedan) tend to cost a bit more up front than their non-hybrid counterparts but save on fuel. AAA’s data showed hybrids had one of the lowest costs: roughly 64.3¢ per mile, second only to small sedans. This is because their gasoline usage is low (often 40-50+ mpg), dramatically cutting fuel cost per mile. Their maintenance costs are also low (regenerative braking extends brake life, and Toyota/Lexus hybrids, for example, have proven very reliable). Insurance on hybrids is usually similar to the base model of the car, perhaps only slightly higher due to the value of the hybrid components. Overall, a hybrid can be an excellent way to reduce per-mile costs if gas prices are high and you drive enough miles to benefit from the fuel savings.

Electric vehicles (EVs) present a different cost profile. They typically have a higher purchase price (larger depreciation hit) but much lower running costs for fuel and maintenance. AAA found the average electric car came out to about 67.4¢ per mile - notably higher than hybrids, interestingly, and only slightly lower than a comparable gas compact SUV. Why? In their methodology, they included popular EV models (which tend to be fairly expensive) so the depreciation was the highest of any category - EVs lost more value per mile than any other vehicle type. On the other hand, EVs were the cheapest in terms of fuel and routine maintenance. In practice, this means if you buy an expensive EV (like a Tesla Model Y or Ford Lightning), your cost per mile can still be moderate-to-high because of the steep upfront cost. However, this is rapidly changing: prices of EVs are coming down, and if you factor in incentives (e.g. federal tax credit) the effective cost drops. Also, if you keep an EV for a long time (well past the initial depreciation hit) and have low electricity rates, the lifetime cost per mile can beat almost any gasoline car. For instance, an EV charged at home for 5¢/mile in electricity with minimal maintenance could have variable costs under $500/year even at 10k miles - far less than a gas car’s fuel+maintenance. The key is balancing that against purchase price. Use-case matters: If you drive a lot of miles annually, an EV’s fuel savings are amplified, making it very cost-effective per mile (assuming charging infrastructure is accessible and electricity prices aren’t exorbitant). Many ride share drivers favor EVs for this reason. But if you drive very little, you might not recoup the higher purchase cost before the car depreciates.

Finally, consider EV-specific costs: as mentioned, check your state for any EV registration surcharges (e.g. that $100-$200/year fee will add a fixed ~$0.01-$0.02 per mile at 10k miles/yr). Also, factor in the cost of installing a home charging station if you get one (a one-time $500-$1,500 expense typically, which you could amortize over the years you’ll use it). On the flip side, EVs may get perks like free charging (some employers or public stations offer this) or toll discounts, which can offset costs. All things considered, EVs can be cheaper or more expensive than gas cars on a per-mile basis depending on these variables - so it’s crucial to do a case-by-case calculation.
New vs. Used Cars: A big factor in cost per mile is whether you’re driving a brand new vehicle or an older, used one. New cars have heavy depreciation in the first few years - you lose value quickly - but they typically have lower maintenance costs (often under warranty, fewer repairs) and you get the latest fuel-efficient technology which can lower running costs. Used cars (especially 5+ years old) have much less depreciation (someone else already took the big hit), and often much lower insurance costs (because the car’s value is lower). This means the fixed costs for an older car can be dramatically less. For example, a 7-year-old sedan that’s worth $10,000 might only depreciate $1,000 per year going forward (if that), and insurance for an older car might be, say, $800/year instead of $1,500. That could put fixed costs under $2k. Even if maintenance is higher - let’s say you spend $1,000/year on repairs and upkeep for an older car - the total could still be under $3k/year. If you drive 10k miles, that’s $0.30/mile, or $0.20/mile at 15k miles - extremely cheap compared to a new car. This is why many frugal consumers keep their cars well past the loan payoff: once a car is paid off, if it remains reliable, the cost per mile can drop significantly. However, there’s a trade-off: older cars can have unpredictable repair costs (e.g. a transmission failure might cost $2,500 one year, skewing that year’s cost) and may be less safe or less fuel-efficient. So there’s a bit more volatility in the cost, and some folks budget a higher cents-per-mile for old cars to account for the occasional big repair. One strategy is to calculate a “sinking fund” for repairs - e.g. put $50 aside for every 1,000 miles driven, to cover future repairs; whatever isn’t used is your savings.

If comparing a new vs used vehicle’s TCO, do a 5-year total cost projection including purchase price minus eventual resale, plus all operating costs. Often, buying a lightly used car (2-3 years old) gives a lower cost per mile than buying new, because you avoid the steep initial depreciation while still getting a fairly efficient and reliable vehicle. Each situation can differ, but the general rule: new cars = higher fixed costs (depreciation/finance/insurance) but lower variable costs (fuel/repairs) initially, while older cars = lower fixed costs but potentially higher variable costs. Depending on mileage and reliability, either can end up cheaper per mile. Many cost-per-mile calculators allow you to input used car data as well; it’s worth running the numbers for, say, a new $35k car at 15k miles/yr vs. a used $15k car at 15k miles/yr - the used one will almost certainly be far cheaper per mile.

Formulating a “Dollar-Per-Mile” Calculator

Bringing all the above together, we can outline a formula or step-by-step method to compute your own vehicle’s cost per mile. Here’s a straightforward approach:

Determine your annual fixed costs: Add up those expenses you pay per year regardless of mileage. This typically includes:
- Insurance premiums (e.g. $ per year).
- Registration, license, and mandatory taxes (annualized). Don’t forget to include any yearly vehicle property tax or special fees (e.g. EV fee) here.
- Loan interest or lease payments (if you finance or lease, include the portion that is finance charge; for a lease, include the full lease payment as it’s essentially an expense, minus any usage-based fees).
- Depreciation (annual). This one can be tricky but important: a simple method is to take (Purchase price - expected resale value after N years) ÷ N. For example, if you bought a car for $30,000 and plan to keep it 5 years and maybe sell it for $15,000, then you’re losing $15,000 over 5 years = $3,000 per year in depreciation. (If you keep the car “forever,” you could divide by a longer horizon or use an estimate of when it might be scrapped.) Depreciation can also be converted to per mile if you prefer - some people say “each mile driven takes X cents off the car’s value” - but annual is fine as long as you’ll divide by miles later.
- Any other fixed costs: e.g. an extended warranty cost (amortize its price over the years of coverage), a parking permit, etc. If you bought a $2,000 extended warranty for 5 years, that’s $400/yr fixed cost (though one could argue it’s pre-paid repairs).
Sum these up to get your Total Fixed Costs per Year.
Calculate your per-mile (variable) costs: This requires estimating how much you spend because you drive:
- Fuel per mile: Take the current or average fuel price you pay and divide by your vehicle’s fuel economy. For example, $3.80/gal ÷ 25 mpg = $0.152 per mile on fuel. If you have an EV, take your electricity rate (e.g. $0.13/kWh) and multiply by how many kWh per mile your car uses. If your EV gets 3.5 miles/kWh, that’s roughly 0.286 kWh/mi, times $0.13 = ~$0.037/mi.
- Maintenance & tires per mile: You can use an estimate from data or your own experience. AAA’s overall average is about $0.10/mi for maintenance/tire. If your car is under warranty or you have maintenance included, maybe it’s lower for now. If your car is older, you might anticipate higher costs - perhaps $0.10-$0.15/mi to be safe. Another way: look at what you spent on maintenance/repairs in the past year and divide by your miles that year. Include things like oil changes, tire rotations, new tires every ~40k miles (e.g. $600 every 40k = $0.015/mi for tires), brake pads, and any repairs. Some years will be higher, some lower, so you might average over a few years.
- Other per-mile costs: If you pay tolls or parking on a per-mile or per-trip basis regularly, you might factor that in separately. (Though not typically included in TCO, commuting tolls could be significant.)
Add up the per-mile costs to get a Total Variable Cost per Mile figure. For example, you might get something like $0.15/mi (fuel) + $0.05/mi (maintenance) = $0.20/mi variable.
Multiply your variable cost by your annual mileage: Suppose you drive 12,000 miles a year and you estimated ~$0.20 per mile variable. That comes out to $2,400 per year in fuel+maintenance, etc. This is your annual usage-dependent expense.
Add the fixed and variable totals: Take your Total Fixed Costs (from step 1) and add the (Variable cost × miles) result (from step 3). This sum represents your Total Annual Cost of Ownership for the car.
Divide by annual miles: Finally, divide the total annual cost by the number of miles you drive in a year. The result is your cost per mile.

Example: Imagine you have a paid-off car, worth about $10,000 now. You drive it 10,000 miles/year. You pay $1,200/year for insurance, $200/year for registration and property tax, and let’s say it depreciates $1,000 per year in value. Those fixed costs sum to $2,400/year. Now add variable: suppose gas is $3.50/gal and you get 30 mpg (so ~$0.12/mi fuel), and you budget $0.05/mi for maintenance. That’s $0.17/mi variable. Over 10,000 miles, that’s $1,700/year. Total annual cost = $2,400 + $1,700 = $4,100. Divide by 10,000 miles and you get $0.41 per mile. That would be your personal cost per mile in this scenario. If you drove 20,000 miles, note the fixed part stays $2,400 but variable doubles to $3,400, total $5,800, divided by 20k = $0.29 per mile. If you only drove 5,000 miles, total would be $2,400 + $850 = $3,250, and cost per mile would shoot up to $0.65 per mile. This illustrates the mileage effect.

If this math seems cumbersome, don’t worry - many tools can help. AAA offers an online “Your Driving Costs” calculator where you can input your state, vehicle, and mileage, and it will compute an estimated cost per mile for you. There are also other TCO calculators (Edmunds, NerdWallet, etc.) that let you compare vehicles. The key is to use realistic inputs that match your situation.

Post-COVID Trends and The Latest Data

As a final note, be aware that cost per mile is not static - it changes over time with economic conditions. In the past few years (2020-2023), we’ve seen unusual fluctuations:

Vehicle prices: During 2021-2022, new and used car prices spiked significantly due to supply shortages. If you bought a car during that period, you might have paid a premium, affecting your depreciation cost. Conversely, used car values increased at one point, which briefly meant some low-mileage owners saw little depreciation or even appreciation - a very abnormal situation. By 2023-2024, supply improved and used car prices began to normalize, but new cars are still historically expensive (average new car transaction prices are around $45k in 2023, up from about $35k in 2018). High purchase prices mean higher depreciation in dollar terms (even if percentage resale values stayed strong).
Fuel prices: Gasoline hit record highs in mid-2022 (over $5/gal nationally, and over $7 in parts of California) due to the rebound in demand and global supply issues. It has since come down; 2023 saw averages in the $3.50-$3.80 range and early 2025 around $3.19/gal nationally. Such volatility can swing your fuel cost per mile dramatically from one year to the next. It’s wise to run scenarios (e.g. “what if gas goes back to $4+?”) especially if you drive a lot or are considering a less efficient vehicle. Electricity prices have also risen in many areas, though not as sharply as gasoline on a per-mile basis.
Insurance rates: Insurance has been skyrocketing. Industry data and BLS reports showed ~12% increase in auto insurance costs in 2021, another ~14% in 2022, then over 20% in 2023 on average. Some states saw even bigger jumps - for example, Pennsylvania’s average premium jumped 49% from 2022 to 2023 (from $1,256 to $1,872), and South Dakota rose 47%. These increases are due to more accidents (miles driven rebounded post-lockdowns), higher claim costs (inflation in car parts and medical bills), and insurer financial losses. If your insurance hasn’t been quoted recently, don’t be surprised if it’s much higher now - which will increase your cost per mile. Shop around for better rates or consider raising deductibles if appropriate to manage this cost.
Maintenance costs: Supply chain issues made car parts more expensive and sometimes hard to get. Tire prices, for example, were up in the past couple years. Auto repair labor rates have also crept up with inflation and labor shortages. All told, maintenance per mile might be a cent or two higher now than a few years ago. If you used old reference data (say from 2018, when AAA’s average cost per mile was around 60¢ for sedans), make sure to update with current figures - 2023’s overall average was ~81¢ as noted. Part of that jump is fuel, but part is also higher maintenance/insurance.

The good news is that being aware of these trends means you can adapt: maybe you’ll drive a bit less when fuel is pricey, or you’ll keep that reliable used car a bit longer to avoid overpaying in a tight new car market. The cost per mile number is a useful summary, but always think about what’s driving it - is it mainly depreciation? fuel? insurance? That can guide where to focus to save money (e.g. drive a fuel-efficient car if gas is the big factor, or choose a cheaper-to-insure model if insurance is killing your budget).

Conclusion: Using DPM to Make Smart Decisions

Ultimately, calculating the dollar-per-mile cost of your car gives you a powerful perspective. When you know, for example, that your car costs $0.75 per mile all-in, you might rethink that “cheap” $10 ride share for a 5-mile trip - actually, $10 for 5 miles is $2.00 per mile, far above your own cost, so driving yourself is still cheaper (not even counting the convenience factor). On the other hand, if your commute is 40 miles round-trip (and thus costs you maybe $30 a day in ownership costs), you could compare that to other transport options or the value of working from home some days. People often underestimate how much their car really costs because fuel might only be $5 or $10 a day - but when you factor in the ~$15+ in depreciation/insurance/etc. that day, the total is eye-opening.

By being informed, you can:

Budget better for car expenses (no more surprises - you’ll set aside money for insurance renewals, registration, and maintenance knowing roughly what they amount to per mile or per month).
Make better buy vs. sell decisions: If your car’s cost per mile is very high and you don’t need such a vehicle, maybe it’s time to switch to something more efficient or economical. Conversely, if a new car would significantly lower your variable costs but comes with a big fixed cost, you can calculate how long it would take to break even.
Plan trips and usage: For example, if a quick run to a store is 10 miles each way (20 miles total) and your car is $0.60/mile, that’s $12 cost - perhaps you’ll batch errands together to make the most of each mile, or consider delivery fees in a new light. In the draft example from earlier: a 15-mile one-way commute (30 miles round trip) at ~$0.76/mile costs about $22.80 per day in a typical car - that’s like a premium coffee every day just to drive to work. Knowing that, carpooling even once or twice a week or taking a $15 train ride starts to look attractive if available.

Remember, the goal isn’t necessarily to minimize every penny (after all, cars provide comfort and freedom that have their own non-monetary value), but rather to be conscious of the true costs. With the comprehensive formula and data we’ve discussed, you can plug in your own numbers and get your cost per mile. From there, you’re equipped to make decisions that fit your budget and lifestyle - whether it’s choosing the right car, negotiating insurance, driving more gently to save on fuel, or even deciding not to drive when it’s not worth it.

In summary, cost-per-mile (DPM) is a handy metric that encapsulates your car’s total cost of ownership in one figure. By accounting for fixed costs (purchase, insurance, fees, etc.) and variable costs (fuel, maintenance) - and understanding how these vary by state, vehicle type, and usage - you’ll have a deep insight into the economics of your personal transportation. This empowers you as a consumer to get the most value out of every mile you drive.

Appendix: State-by-State Cost Factors (Indicative Averages, Latest Data)

State	Avg. Annual Insurance (Full Coverage)	Avg. Gas Price ($/gal, May 2025)	Annual Registration (Est.*)	Notable Factors
Alabama	~$1,860	$2.74	~$50 (weight-based)	Low insurance; low gas tax; no property tax on cars.
Alaska	~$1,676	$3.90	~$100 + local fees	Higher gas transport cost; no state sales tax.
Arizona	~$1,812	$3.80	$8 + $32 fee + value tax	Lowest reg. fee but adds vehicle license tax; hot climate (tire wear).
California	~$2,416	$4.83	$250-$300 (value-based)	Very high insurance & gas; annual “license” value tax ~0.65%; no credit score in insurance rates.
Florida	~$2,694	$3.01	$14-$32 + $225 new car	High insurance (weather, fraud); no property tax; moderate gas.
Georgia	~$1,970	$2.91	$20	One-time title tax ~7% instead of property tax; moderate insurance.
Illinois	~$1,532	$3.95	~$151 (2-year) + $251 EV fee	Avg insurance; has local sales taxes; EV fee.
Louisiana	~$2,883	$2.71	~$20-$40	Highest insurance in US; low gas price; state sales tax ~4.5%.
Maine	~$1,175	$3.50	~$35	Lowest insurance; excise tax based on MSRP (declines yearly).
Michigan	~$2,266	$3.60	Value-based ( ~$150 avg ) + $135+ EV fee	No-fault insurance (expensive); sales tax 6%; high EV fees.
New York	~$1,870	$3.90	~$26-$70 + local taxes	High insurance (esp. NYC); moderate gas; sales tax ~4% + local.
Pennsylvania	~$1,872	$3.33	~$39 + $39 title	Insurance up sharply (nearly 50% in 2023); high gas tax; 6% sales tax.
Texas	~$2,043	$2.75	~~$51 base + local (~~$10-$20)	No property tax; 6.25% sales tax; new residents pay $90 fee.
Washington	~$1,608	$4.40	~$30-$50 + weight fees	No income tax but has high car registration with transportation benefit charges; high gas prices; EV fee $150.
Highest 🡑	(Louisiana $2.88k; Florida $2.69k)	(California $4.83; Hawaii $4.48)	(Oregon up to $636/2-yr; FL $225 new)	-
Lowest 🡓	(Maine $1.18k; New Hampshire $1.27k)	(Mississippi $2.65; Texas $2.75)	(AZ $8 + fee; many states ~$20-$40)	-

Est. registration fees: Many states have complex formulas (by weight, age, value). Figures here indicate typical passenger car costs. “+” denotes additional local or special fees.

This table gives a flavor of how costs differ. For full details, you would consult each state’s DMV and insurance commissioner data. But as shown, factors like insurance and fuel can easily vary by a factor of two between states, and certain fees or taxes can add significantly to annual costs in some places. Use this info as a guideline, and adjust your cost-per-mile calculation to your local conditions for the most accurate result.