U.S. states with the lowest cost of living
We all dream of a life where we can live comfortably, enjoy what matters most, and still save for the future. Whether you’re a young professional starting out, a family looking for more space, or someone hoping to retire without worrying about rising costs, finding the right place to live can make all the difference.
Some states offer just that: affordable living, lower taxes, and the freedom to live your life without constant financial stress.
North Dakota
North Dakota leads the pack in affordability. With the lowest overall cost of living, residents enjoy affordable housing and utility costs, spending only 13.6% of their budget on these essentials.
This state also benefits from cheap gasoline prices, thanks to its booming oil industry. Gas prices hover around $3.27 per gallon, making it one of the most affordable states for drivers. Plus, taxes here are among the lowest in the nation.
South Dakota
South Dakota stands out not just for its low cost of living but also for its impressive purchasing power. The state ranks 3rd nationally in purchasing power, meaning residents get more for their money.
Affordable housing and gas prices also help keep costs down. However, healthcare is a concern, as a significant portion of the budget is spent on medical care, even though gas prices are nearly 50 cents lower than the national average.
Missouri
Missouri combines affordable living with urban perks. With a median two-bedroom rent of $988, it’s one of the best places for budget-conscious renters.
On top of that, the state’s tax burden is relatively low. The downside is higher gas expenses, but the overall value of living in Missouri is tough to beat for those seeking both affordability and access to city life.
Oklahoma
Oklahoma’s affordability comes from its strong purchasing power, making it easier for residents to afford more. The state also enjoys a low tax burden, ranked 4th lowest in the country.
Housing is affordable, with median prices around $260,700. However, the downside is the state’s higher healthcare costs, with many adults forgoing medical care due to the expense.
Arkansas
When it comes to purchasing power, Arkansas is number one. Residents enjoy some of the cheapest two-bedroom rents in the nation at $873, allowing them to keep more of their earnings.
Despite these savings, gas prices can be higher than expected, and the state’s infrastructure for electric vehicles (EVs) is limited. Even so, Arkansas remains an affordable option for many.
West Virginia
West Virginia offers some of the lowest housing costs in the country, with a median two-bedroom rent of $869. The state’s second-lowest tax burden is another plus for residents.
However, grocery costs are a different story, as West Virginia ranks 47th in terms of grocery spending. Additionally, the state faces some of the highest healthcare costs in the nation, with a significant share of income spent on medical needs.
Alabama
Alabama is attractive due to its low tax burden, which ranks among the lowest in the nation. Rent is also affordable, with the median two-bedroom rent sitting at $913, which is much lower than the national average.
On the downside, healthcare costs can be high, and a significant portion of adults in the state forgo medical care due to cost. Despite these challenges, the overall affordability makes it a popular choice.
Tennessee
Tennessee is another affordable option, with one of the lowest tax burdens in the U.S. The state also has a relatively low percentage of its budget spent on groceries.
However, Tennessee residents face high healthcare costs, including some of the highest family health insurance premiums in the country. Despite these challenges, its overall affordability makes it appealing to those who prioritize taxes and cost-effective living.
Kentucky
Kentucky boasts affordable housing, with a median two-bedroom rent of $931, significantly below the national average. The state’s property taxes are also low, which helps keep overall costs down.
However, grocery spending is high, and residents are paying more for food than the national average. Even with this, Kentucky remains one of the more affordable states in the country.
Indiana
Indiana rounds out the top 10 with a low share of income spent on housing, at just 17.5%. With a median two-bedroom rent of $1,030, it’s more affordable than many other states.
The catch here is the state’s higher-than-average spending on gas, with about 3.3% of residents’ budgets going toward fuel. Despite this, Indiana remains one of the most affordable states overall.
Ohio
Ohio offers a solid balance of affordable housing and low taxes. The state ranks 12th in housing affordability, with reasonable rent and utility costs, which makes it a great place for families.
However, grocery prices and healthcare costs in Ohio are slightly higher than the national average, making it less ideal for those with tight budgets. Still, the overall cost of living remains low.
Michigan
Michigan is another state that combines affordable housing with low grocery costs. The state ranks 19th in terms of housing affordability, and its grocery prices are among the best in the nation.
However, Michigan residents pay higher healthcare costs, which is something to consider if you have significant medical expenses. Despite this, the overall affordability makes it an appealing choice for many.
Alaska
Alaska offers a mix of high costs for housing and gas, but its natural beauty and lower grocery prices make it unique. Despite its natural resources, Alaska’s remote location drives gas prices above the national average.
The cost of living in Alaska may be higher, but for those who value the environment and outdoor activities, it can be worth the tradeoff.
Nebraska
Nebraska’s affordable housing and low tax burden make it one of the top states for budget-conscious individuals. Rent and utility costs are reasonable, helping to keep living expenses manageable.
However, groceries can be more expensive here than in other states, which may offset some of the savings. Despite this, Nebraska’s overall affordability makes it a solid option for many.
Wyoming
Wyoming is known for its affordable housing and low taxes, making it attractive for residents looking to save money. Housing costs are reasonable, and taxes are among the lowest in the country.
However, residents face higher grocery costs, and while gas prices are affordable, healthcare can be costly. Despite these drawbacks, Wyoming remains an affordable place to live for many.
Affordability and happiness go hand in hand. Discover the happiest state in the U.S. to live in 2025 and find the perfect balance for your life.
Pennsylvania
Pennsylvania stands out with its affordable housing and relatively low tax burden. The state’s tax rates are some of the lowest in the nation, making it a good choice for those looking to save on taxes.
However, grocery and healthcare costs in Pennsylvania are higher than in many other states, making it a less favorable choice for those with limited budgets. Still, its overall affordability remains a draw. Next, check out the best liberal places to live in America in 2025, according to new data.
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