What is the Cheapest State to Live In?

A dollar you spend in one state may have more purchasing power in another. That begs the question: where is the cheapest state to live in America?

To find out, we compared the states where the overall cost of living is lowest. We found the states with the lowest-priced grocery items, income tax that’s almost non-existent, and affordable rent or property prices.

Let’s get started!

West Virginia

Population: 1.8 million

Median Household Income (Before Tax): $53,706

Income Tax: 6.50%

Housing: $866 median monthly rent; $119,600 median purchase price

Unemployment Rate: 5.3% (5.5% national average)

Cost of Living: 6.9% lower than the national average

If you’re planning to cut costs on rent or would like to purchase affordable property, West Virginia is a state to consider. It currently has the cheapest housing options in the United States, where you can rent a two-bedroom apartment for as low as $729 per month. Additionally, the unemployment rate is also lower than the national average. Nursing is the most common occupation in West Virginia, but education and mining are also among the state’s top industries. The wages are lower than in most other states, especially compared to California or New York.

West Virginia is a mountainous state with a lot of trees, forests, and rocks. That’s good news for nature lovers. You can experience the true essence of all four seasons here. It can also serve as a great escape from noisy large towns, as the state’s population density is relatively low, and there is a unique ambiance about the small towns. The cities with the lowest cost of living in West Virginia are Weirton, Grafton, Clarksburg, and Bluefield.

Missouri

Population: 6.2 million

Median Household Income (Before Tax): $60,597

Income Tax: 5.40%

Housing: $945 median monthly rent; $157,200 median purchase price

Unemployment Rate: 4.3%

Cost of Living: 9.6% lower than the national average

Located in Midwest America, Missouri is yet another state where you can find almost anything at much lower prices than in other parts of the country. Utilities, healthcare, and transportation all come at below-average prices. In fact, despite some fluctuations in prices in other states, Missouri is the only state that has remained in the top ten for the lowest cost of living in the past four years. An average family of four would approximately need $79,000 annually to maintain a standard quality of life in St. Louis. In other smaller towns, this estimate is even lower. Bonne Terre, Park Hills, and St. Ann are among the most affordable small towns in the state.

Missouri is abundant in job opportunities in areas such as biotechnology, retail, and healthcare. In addition, the state has a much lower unemployment rate than the U.S. average, and the local authorities promote a healthy business environment. Missouri is also home to widely known Kansas City barbecues. You can find restaurants that serve some of the best barbecues in town and have a full meal for $13.

New Mexico

Population: 2.1 million

Median Household Income (Before Tax): $53,113

Income Tax: 5.90%

Housing: $1,169 median monthly rent; $171,400 median purchase price

Unemployment Rate: 7.9%

Cost of Living: 9.1% lower than the national average

When it comes to diversity, New Mexico is one of a kind. With multiple cultures and wildlife, this state is another strong contender for the cheapest state to live in. For those seeking sunny and dry weather and a relatively low cost of living, New Mexico could be a possible option. Transportation, healthcare, and utility costs are among the lowest in Lovington, Truth or Consequences, and Hobbs.

People like to call New Mexico “the State of Enchantment.” It is full of history and a blossoming art community and can be a more affordable choice for people living in other deserted areas of the country. Being closer to Mexico and Texas, New Mexico’s top employment industry is energy, especially oil and gas. The state also has cheaper education than the national average, with the median in-state public university fees around $4,400.

Alabama

Population: 5 million

Median Household Income (Before Tax): $56,200

Income Tax: 5.00%

Housing: $989 median monthly rent; $142,700 median purchase price

Unemployment Rate: 3.3%

Cost of Living: 11.9% lower than the national average

Keep your eyes on Alabama, as it has one of the fastest-growing economies in America. Also considered the Heart of Dixie, it is one of the cheapest states to live in. Even while working at minimum wage, it is possible to live a relatively decent life. Renting an apartment costs less than in most other states, and the state also has the second-lowest property tax in the United States. If you’re looking to settle down in a larger city, Birmingham is the place where you can find cheap home prices. Additionally, smaller towns like Roanoke, Tuscumbia, and Attalla are home to some of the lowest-priced goods and services in the whole state of Alabama.

Alabama is known for its music, food, sports, and deep Southern spirit. The unemployment rate in Alabama is quite low, and the government invests heavily in many top employment industries. Aerospace and automation, as well as the automotive industries, offer lots of career opportunities and contribute significantly to the rapid development of the state. Some major companies, such as Continental Motors and Mercedes-Benz, have plants and offices in Alabama. This is also where the famous University of Auburn is located.

Oklahoma

Population: 4 million

Median Household Income (Before Tax): $59,397

Income Tax: 5.00%

Housing: $894 median monthly rent; $136,800 median purchase price

Unemployment Rate: 3.7%

Cost of Living: 12.1% lower than the national average

Also known as the Sooner State and where the famous musical takes place, Oklahoma has some of the cheapest housing options in the entire country. The average renting and purchasing prices are a striking 21% lower than the national average. Utilities and groceries will also amaze you with their exceptionally low prices, especially in small towns like Alva, Holdenville, and Perry. One of the hidden bonuses is that traffic jams are rare in this state, even in urban areas.

With a booming job market for both skilled and unskilled labor, Oklahoma has shown a steady decline in the unemployment rate during the past couple of years. Additionally, biotechnology, energy, and meteorology industries employ most of the population, with other areas also showing continuous growth. And wherever you decide to live, you will never be far away from nature. From mountains to lakes, you can find almost any type of natural landscape only a couple of minutes away from you.

Arkansas

Population: 3 million

Median Household Income (Before Tax): $54,539

Income Tax: 5.90%

Housing: $875 median monthly rent; $127,800 median purchase price

Unemployment Rate: 4.4%

Cost of Living: 11.2% lower than the national average

With a nickname of “The Natural State,” Arkansas lives up to it. This state is a perfect choice for those who enjoy the natural beauty and steady temperatures all year round. Compared to the national average, housing is relatively cheap in Arkansas. Additionally, salaries are also comparatively low in the state.

One thing worth mentioning about Arkansas is the affordability of healthy food here. Local people grow different organic crops, which you can acquire for reasonable prices without worrying about budgeting. The state has many rural areas and small towns, but big cities are also vibrant, with many college students and education opportunities. Some of the cheapest places in Arkansas are in De Queens, Pocahontas, and Greenwood.

Mississippi

Population: 3 million

Median Household Income (Before Tax): $44,787

Income Tax: 5.00%

Housing: $986 median monthly rent; $119,000 median purchase price

Unemployment Rate: 6.2%

Cost of Living: 15.4% lower than the national average

Homonymous to the famous river, Mississippi also takes a spot on this list of cheapest states to live in. Groceries, housing, and transportation are among some of the lowest in the country. Extremely low prices also extend to insurance, healthcare, and education. Additionally, you can find some of the country’s lowest tuition fees at universities such as Mississippi State University. The state is also known to have the lowest childcare fees in all of America.

Deep southern hospitality follows you everywhere, whether in large cities like Hattiesburg or Jackson or smaller towns like Clarksdale and Aberdeen. People here mainly specialize in agriculture and aerospace, which keep expanding in Mississippi. It is also one of the few states on this list that is adjacent to the sea. On top of beautiful natural landmarks, you can drive off to gorgeous beaches on the Gulf of Mexico. You can even consider moving to one of the coastline towns, such as Ocean Springs, if you’re a fan of water.

Iowa

Population: 3.2 million

Median Household Income (Before Tax): $66,054

Income Tax: 8.53%

Housing: $941 median monthly rent; $147,800 median purchase price

Unemployment Rate: 4%

Cost of Living: 9.6% lower than the national average

Iowa’s median household income is relatively high compared to other states on this list. Also, if you feel like you’re spending too much money on transportation, Iowa ranks among the highest for having lower costs of vehicle ownership and maintenance fees. Expect to pay around 8% less on transportation costs in general. The capital city of Des Moines has one of the country’s best median home values to median income ratios. Smaller cheap towns are Iowa Falls, Cherokee, and Maquoketa.

Regarded as one of the safest states in America, Iowa has a relatively low crime rate and high education rankings. The area gets quite chilly and snowy during wintertime, appealing to people who dream of living in a winter wonderland. With higher household income, Iowa doesn’t lag in the low unemployment rate. Of course, agriculture, food processing, and machinery production are thriving industries here. But the state also has increasing job opportunities in the service and renewable energy sectors.

Tennessee

Population: 6.9 million

Median Household Income (Before Tax): $56,627

Income Tax: 0.00%

Housing: $1,190 median monthly rent; $167,200 median purchase price

Unemployment Rate: 4.9%

Cost of Living: 11.5% lower than the national average

Being the birthplace of Dolly Parton, Aretha Franklin, and Tina Turner, it is difficult to mention Tennessee without referring to its rich musical heritage. The “Birthplace of the Blues” is Memphis, and “The Country Music Capital of the World” is Nashville, both very affordable big towns with low food and housing prices. Lexington and Manchester are the cheapest spots when it comes to smaller cities. Tennessee is also one of the nine states in America that has no personal income tax. The state used tax interest and dividends from investments, but the good news is that this “Hall income tax” has recently been phased out!

The Volunteer State is one of the hotspots for the entertainment industry, after California and New York. Live shows and festivals are just regular occurrences here all year round. On top of that, there are many opportunities for farming and recreation, which are some of the popular employment industries. Tennessee also offers the Great Smoky Mountains and Cherokee National Forest, which are great places for fishing, whitewater rafting, and hiking for people who love to be close to nature.

Texas

Population: 29.2 million

Median Household Income (Before Tax): $67,444

Income Tax: 0.00%

Housing: $1,359 median monthly rent; $172,500 median purchase price

Unemployment Rate: 6.5%

Cost of Living: 7.3% lower than the national average

Yes, the second largest state in America by area and population is also one of the cheapest states to live in. As a result, millions of people are moving to Texas, with 2019 being the summit year, when about 500,000 people relocated from other parts of the country. Here are a couple of reasons why.

Texas sees a lot of sunny days in the year. The economy is strong, and job opportunities are bountiful. The state is so large that you can find many different lifestyles, from small towns in the deserts to dazzling large cities such as Houston and Dallas. With a few exceptions, though, anywhere you decide to live will surprise you with how low the cost of living is. Grocery products and rent are much cheaper than in other large and well-known states. In some places, you can purchase a house for as low as $138,000. It’s also the second state on this list with absolutely no personal income taxes!

Some of the value-added benefits of living in Texas are quality education and progressive energy options. Schools here are nationally recognized to have some of the best teachers in the country. And Houston has emerged to be the world energy capital. When they say that everything is bigger and better in Texas, whoever they are, they’ve certainly got the point.

Sum Up

After diving into these ten potential candidates, can we pinpoint the cheapest state to live in the USA? We can look at the answer from different perspectives. For the lowest cost of living, it is Mississippi. For cheapest housing, the answer would be West Virginia. If you’re specifically interested in lower taxes and a combined lower cost of living, your choices would be Tennessee or Texas. You need to sit down and arrange your priorities to make the most favorable decision for your wallet.

Well, we’ve done our best to provide you with the most valuable information about ten generally affordable states, with their similarities and differences. Also, be sure to check out our tips for renting an apartment. Now, the ball is in your court.