Cheapest States to Live In 2025

The cost of living in the United States varies between states. The cost of living is the amount of money needed to sustain a certain standard of living. The cost of living includes housing, food, taxes, and healthcare. There is a strong correlation between a state’s cost of living and per capita personal income. The cost of living differs between states depending on how far the dollar goes in that state. This can be seen in housing costs, especially. According to 24.7 Wall St., a dollar spent on rent in Arkansas is worth $1.58 in value, while a dollar spent on rent in Hawaii is worth $0.61.

The United States is the world’s 26th most expensive country to live in. However, the cost of everyday expenses varies widely from state to state.

The cost of living, which includes all expenses that cover a person’s needs, such as food, housing, healthcare, and transportation, is much higher in some states than others. Housing is the most significant driver behind the cost of living, as costs related to housing account for the largest portion of the average household’s income. Proximity to urban areas impacts the cost of living significantly, with the highest costs of living found in major metropolitan areas where housing costs tend to be the highest. Other factors that influence the cost of living include proximity to resources, taxes, and transportation options.

Researchers, employers, and policymakers use the cost of living index to determine which states have the lowest cost of living. The cost of living index is a tool that compares the prices of basic needs in different regions. The first step in creating the index is determining the average cost of living in the country. This baseline, set at 100, is then used to compare costs across the country. Any index below 100 represents a cost of living cheaper than the national average. The lower the index, the further a dollar goes.

The states with the lowest cost of living tend to be in the Southern and Midwestern regions. The most expensive regions to live in are the Northeast, Pacific Coast, and the non-contiguous states.

The Cost of Living in the United States

To better understand the relative cost of living in the cheapest states, it’s helpful to have a better picture of the baseline. The average American household spends $61,334 a year to cover their expenses. The largest expense for most households is housing, on which Americans spend an average of $1,784 a month, nearly 35% of their income. The median cost of a single-family home in the United States is $273,992. Nationwide, the average rent for a two-bedroom apartment is $1,164 a month.

The average American household spends another $9,826 on transportation annually, accounting for 16% of expenses. Healthcare costs average $5,177 a year. Food, including groceries and eating out, costs the average household $7,317 a year or $609.75 a month. The average monthly cost for utilities in the US is $370.16.

The median household income in the United States is $67,521 a year. For single-occupant households, the median income is $40,464. The living wage, defined as the amount required to cover all necessities, including healthcare and childcare, is $68,808 a year for a family of four.

The Cheapest States to Live

Mississippi

• Cost of Living Index: 83.3
• Groceries: 92.2
• Housing: 66.3
• Utilities: 90.4
• Transportation: 86.7
• Health: 94.7
• Miscellaneous: 90.9

Mississippi is the cheapest state to live in in the United States. Overall, costs in the state are 17% lower than the national average. Housing costs in Mississippi are the lowest in the nation. The median price for a single-family home in Mississippi is $157,828, and the average rent for a two-bedroom apartment is $991. Mississippi also has the lowest transportation costs in the nation.

However, despite the low cost of living, Mississippi has the highest poverty rate in the United States, with nearly a fifth of residents living at or below the poverty line. Mississippi is also consistently ranked one of the worst states to live in, primarily due to economic and education concerns. A family of four requires an annual income of $75,462.40 to meet their needs. Meanwhile, the median income for a family is $44,966.

Kansas

• Cost of Living Index: 86.5
• Groceries: 91.7
• Housing: 72.6
• Utilities: 100.2
• Transportation: 97.3
• Health: 100.4
• Miscellaneous: 88.4

Kansas offers the second-cheapest cost of living in the nation. Housing costs in Kansas are 28% lower than the national average, the third-lowest in the country. The average single-family home in Kansas costs $198,199. Rents for a two-bedroom apartment average $995 a month. Groceries and transportation costs are also lower than the national average.

The living wage in Kansas is $76,252.80 a year for a family of four. The median income for a family of four is $72,815. Kansas has a poverty rate slightly lower than the national average and one of the lowest unemployment rates in the country, at 2.5%.

Alabama

• Cost of Living Index: 87.9
• Groceries: 98.2
• Housing: 70.1
• Utilities: 100.7
• Transportation: 92.7
• Health: 91.2
• Miscellaneous: 94.3

Alabama is the third cheapest state in the United States, with a cost of living index of 87.9. Housing in the state is relatively inexpensive. The average single-family home in Alabama sells for $194,695. Rent for a two-bedroom apartment averages $1,005 across the state. While utilities and groceries are closer to the national average, Alabama’s health and transportation costs are among the lowest in the nation.

A family of four in Alabama requires an annual income of $77,064 to cover their expenses. The median income for a family of four is $54,393 a year. Alabama has one of the highest poverty rates in the country, with 15.6% of residents living at or below the poverty line.

Oklahoma

• Cost of Living Index: 87.9
• Groceries: 94.5
• Housing: 74.7
• Utilities: 95.1
• Transportation: 94.8
• Health: 94.5
• Miscellaneous: 92.6

Oklahoma has a cost of living index of 87.9 and is the fourth cheapest state in the United States. Oklahoma’s housing prices are 25% lower than the national average and the fourth cheapest in the country. The median home costs $171,057. Rents average $999 a month. Costs for groceries and healthcare are also some of the cheapest in the nation.

The median income for a family of four in Oklahoma is $52,341 a year. However, the living wage for a family of four is $77,126.40. This disparity is likely responsible for Oklahoma having one of the highest levels of poverty in the country. Fifteen percent of residents live at or below the poverty line. For children, the poverty rate is nearly 20%. Oklahoma also consistently ranks as one of the worst states to live in.

Georgia

• Cost of Living Index: 88.8
• Groceries: 95.9
• Housing: 74.4
• Utilities: 90.5
• Transportation: 92.6
• Health: 96.7
• Miscellaneous: 97.1

Georgia is the fifth cheapest state in the United States. Georgia’s housing expenses are the fourth lowest in the country, with costs 25% lower than the national average. Housing affordability is among the highest in the nation, with over 40% of residents able to afford a new home. Transportation costs in Georgia are also among the lowest in the country. Utility costs average $367.63 a month.

Despite having the nation’s lowest minimum wage, at $5.15 an hour, salaries are generally enough to cover the costs of living in the state. The median income for a family of four in Georgia is $58,952 a year while the cost of living is $79,955.20.

Tennessee

• Cost of Living Index: 89.0
• Groceries: 94.7
• Housing: 79.3
• Utilities: 92.5
• Transportation: 88.8
• Health: 91.2
• Miscellaneous: 94.2

Tennessee is the sixth-cheapest state in the United States. Tennessee’s overall cost of living is 11% lower than the national average. Housing in the state is 21% lower than the national average, with a typical single-family home costing $276,963 and an average two-bedroom apartment renting for $1,138 a month. Tennessee also has the nation’s second-lowest cost of transportation and fifth-lowest cost of healthcare. Utilities cost a typical household $256.83 a month.

The living wage for a family of four in Tennessee is $74,692.80 a year. The median income for the same family is $54,665. The unemployment rate in the state is 3.4%, while the poverty rate is 13.8%.

Missouri

• Cost of Living Index: 89.8
• Groceries: 95.0
• Housing: 80.3
• Utilities: 95.4
• Transportation: 92.4
• Health: 94.6
• Miscellaneous: 93.3

Missouri is the seventh-cheapest state in the United States, with a cost of living index of 89.8. Housing in Missouri is 20% lower than the national average. A typical single-family home in the state costs $218,208, and monthly rents are $963 on average for a two-bedroom apartment. Utilities cost an average of $363.80 a month. Missouri’s cost of living index is below the national average on all metrics, with especially low costs associated with health and transportation.

The living wage for a family of four in Missouri is $77,792 a year, while the median income is $61,901. The minimum wage in Missouri is $11.15 an hour, one of the highest in the country.

Iowa

• Cost of Living Index: 89.9
• Groceries: 98.4
• Housing: 76.0
• Utilities: 94.9
• Transportation: 97.7
• Health: 94.6
• Miscellaneous: 93.3

Iowa is the eighth-cheapest state to live in the United States. Costs in Iowa are lower than the national average across all metrics. Iowa’s housing is especially cheap, with an index of 76, the sixth-lowest in the nation. A typical single-family home costs an average of $183,418, while rents for a two-bedroom apartment are $895 on average. Utilities run an average household of $336.24 a month.

The median income in Iowa is $68,469 for a family of four, lower than the $76,440 required to cover the same family’s needs for a year. Iowa’s poverty rate is 9.1%, which is lower than the national average.

West Virginia

• Cost of Living Index: 90.5
• Groceries: 96.5
• Housing: 78.6
• Utilities: 89.4
• Transportation: 92.2
• Health: 88.1
• Miscellaneous: 99.7

West Virginia is the ninth-cheapest state in the United States. Costs across all metrics are lower than the national average. Housing in West Virginia is the ninth-lowest in the country, and housing affordability is one of the highest in the nation, with 43.5% of residents able to afford a house. The typical single-family home costs $129,103. Rents cost an average of $732 a month. Transportation and healthcare costs are also among the lowest in the nation. However, West Virginia is ranked one of the worst states to live in due to poor economic opportunities, low educational outcomes, and infrastructure in need of repair.

The median income in West Virginia is $51,615 for a family of four. However, the living wage for a family of four in West Virginia is $76,273.60 a year. West Virginia has the nation’s fourth-highest poverty rate, with 16% of its residents living at or below the poverty line.

Indiana

• Cost of Living Index: 90.6
• Groceries: 92.7
• Housing: 78.3
• Utilities: 99.0
• Transportation: 98.3
• Health: 94.6
• Miscellaneous: 96.8

Indiana is the tenth-cheapest state to live in the United States. Average costs are 10% lower than the national average, and costs in all categories are below the national average. Housing in Indiana is the eighth cheapest in the United States. Single-family homes cost an average of $210,166, while rents run $1,016 a month for a two-bedroom unit. Utilities are just below the national average. Healthcare and transportation costs are among the lowest in the nation.

The median income for a family of four is $66,360, while the living wage for a family in Indiana is $76,398.40.