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In 2025, as living expenses soar in major metro areas, many Americans are searching for financial relief in more affordable parts of the country. Whether you’re retiring, starting a family, or simply craving a simpler lifestyle, relocating to a state with the lowest cost of living in the US can be a smart move. These states provide an opportunity to live well without draining your bank account.

Cost of Living

The cost of living per state represents how much you’ll pay for essential expenses such as housing, utilities, food, healthcare, taxes, and transportation. This index is commonly compared to the national average of 100. Any state scoring below 100 is considered more affordable.

When exploring what state has the lowest cost of living, keep in mind it’s not just about home prices. Low grocery bills, cheaper car insurance, reasonable energy rates, and even the absence of income tax can tip the scale in favor of one state over another.

Top States With the Lowest Cost of Living in the U.S.

Mississippi

Mississippi continues to lead the pack with the lowest cost of living in the US, sitting at a cost-of-living index of around 85. Housing is extremely affordable—median home prices are $157,828, and two-bedroom apartments average just $991 a month. 

Mississippi also has some of the lowest healthcare and transportation costs in the country. For retirees or young families trying to save, it’s an attractive choice. Plus, the slower pace of life adds to its appeal.

Kansas

Kansas boasts a cost-of-living index of 86.5, making it one of the lowest cost of living states in the Midwest. A single-family home in Kansas averages just $176,898, while rent for a modest two-bedroom apartment hovers around $995.Food, utilities, and medical care also come in well below national averages, and the state’s central location makes cross-country travel or family visits more manageable.

Oklahoma

With an index of 85.8, Oklahoma remains a favorite for affordability. Home prices here average $204,861, and you can rent a two-bedroom apartment for just under $1,000.But it’s not just about housing. Oklahoma ranks low in groceries and healthcare too, giving families breathing room when it comes to monthly budgeting. For those considering a relocation, this state is worth a serious look.

Alabama

Alabama’s index of 87.9 places it high on the list of lowest cost of living states. The average home price is around $170,184, and average rent comes in at about $1,005.Utilities, gas, and health services are all affordable, and with no shortage of Southern charm and beautiful landscapes, Alabama delivers both value and quality of life.

Missouri

Missouri has a cost-of-living index of 88.7, with housing costs around 20% lower than the national average. The median home price is $218,208, while rent for a two-bedroom apartment costs roughly $963.Additionally, residents enjoy lower utility bills and healthcare costs. Missouri offers the perfect balance between urban access (think St. Louis or Kansas City) and small-town affordability.

Arkansas

Arkansas ties with Missouri at 88.7 on the index. The average home here is valued at $195,700, and a two-bedroom apartment rents for around $1,101.Grocery and healthcare expenses also come in below the U.S. average. With an abundance of natural beauty, from mountains to rivers, Arkansas delivers more than just savings—it delivers lifestyle.

Georgia

While Atlanta can be pricey, the rest of Georgia offers great deals. The state has a cost-of-living index of 88.6. Housing is 25% cheaper than the national average, making it ideal for first-time homeowners. Whether you’re interested in a coastal town, a rural area, or a historic small city, Georgia combines low living costs with culture and climate.

Tennessee

With an index of 90.4, Tennessee keeps costs lower than most states. A typical home sells for around $276,963, and rent for a two-bedroom apartment averages $1,138.Tennessee also benefits from no state income tax and relatively cheap gas and utility costs. From the Smoky Mountains to the lively streets of Nashville, it’s a budget-friendly option that doesn’t skimp on amenities.

Indiana

Indiana scores 89.9 on the cost-of-living index. Homes here are priced at an average of $210,166, and rent is around $1,016 per month .The state offers strong job growth and a stable economy, making it a smart pick for young professionals and families looking for economic opportunity combined with affordable living.

Iowa

Iowa’s index stands at 89.2. Median home prices are about $183,418, and rents for two-bedroom apartments are as low as $895.Utility bills and health insurance premiums are also notably low. Its excellent public schools and low crime rates also add appeal, especially for families planning long-term stays.

Factors Contributing to the Lowest Cost of Living in the U.S.

What makes some states more affordable than others? The answer lies in a mix of structural, economic, and environmental factors that work together to keep everyday expenses manageable. When we look at the lowest cost of living in the US, several key elements consistently emerge in these states. Here’s what sets them apart:

Affordable Housing

One of the biggest drivers of a low cost of living is cheap housing. In the most affordable states, median home prices are well below the national average—sometimes by over 30%. This is often due to:

• Low population density: With less demand and more available land, there’s less pressure on housing markets.

• Cheaper construction: Materials and labor cost less, especially in rural or suburban zones.

• Fewer building restrictions: Some states have relaxed zoning laws and minimal red tape for builders, which allows for quicker development and more inventory.

• More square footage for your dollar: In states like Mississippi and Kansas, homebuyers can enjoy spacious yards, multi-bedroom homes, and even land ownership without breaking the bank.

Favorable Tax Laws

Taxes play a huge role in shaping the cost of living per state. Some of the states with the lowest cost of living also have the most taxpayer-friendly policies:

• No state income tax: States like Tennessee, Texas, and Florida allow residents to keep more of their paycheck. This especially benefits remote workers and retirees.

• Lower property taxes: Compared to states like New Jersey or Illinois, places like Alabama or Arkansas offer much lower annual property tax bills—even for larger homes.

• Modest sales tax: While some states do have sales tax, many keep it below the national average or exclude essentials like groceries and medicine.

Final Thoughts: Why It Matters

In today’s economic landscape, knowing what state has the lowest cost of living is more than trivia, it’s a strategy. With inflation affecting everything from groceries to rent, relocating to a more affordable state could significantly improve your quality of life and financial future.

If you’re considering making the move, you’ll want a stress-free transition. Hiring experienced long distance movers can help you organize everything from packing to transportation. They can also guide you through any regional logistics and help protect your belongings during a cross-state move.