Living in the United States isn’t a one-size-fits-all experience, especially when it comes to cost. In 2025, the gap between the most and least affordable states remains wide, and it can shape everything from your mortgage to your grocery bill.
Whether you’re thinking about relocating, planning for retirement, or just curious about how your home state stacks up, the cost of living index from the Missouri Economic Research and Information Center (MERIC) offers a grounded way to compare.
Their Q1 2025 index uses a national average of 100 as a baseline. States scoring below 100 are less expensive than average, while those above 100 are more costly.
Let’s dig into what that means: housing prices, salaries, taxes, and how far your dollar really stretches.
Cheapest States to Live in 2025
The ten states with the lowest cost of living in 2025 have one thing in common: housing that doesn't break the bank. But that's just the starting point.
Utilities, groceries, healthcare, and income levels also play a role in the bigger picture of affordability.
Top 10 Cheapest States
Here are the cheapest states to live in 2025, based on the statistics provided by MERIC:
| Rank | State | Cost of Living Index | Key Factors |
|---|---|---|---|
| 1 | Oklahoma | 85.5 | Low housing costs (~$260,700 median home), cheap utilities |
| 2 | Mississippi | 87.3 | Lowest housing index (66), median home ~$262,000 |
| 3 | Alabama | 87.6 | Affordable homes, growing aerospace and auto industries |
| 4 | Missouri | 88.0 | Inexpensive groceries and housing, good city access |
| 5 | West Virginia | 88.6 | Low housing and utility bills, higher healthcare costs |
| 6 | Iowa | 89.6 | Stable agriculture economy, affordable homes |
| 7 | Kansas | 89.7 | No state income tax, low housing ($242,044 median) |
| 8 | Michigan | 89.8 | Reasonable housing, some areas with high utility costs |
| 9 | Tennessee | 90.0 | No state income tax, cheaper living outside Nashville |
| 10 | Arkansas | 90.5 | Low taxes and home prices, rising industry presence |
1. Oklahoma is the Most Affordable State to Live in 2025
With a cost-of-living index of 85.5, Oklahoma grabs the top spot. Housing is a big reason why. The median home costs $260,700 (per Redfin), and rent for a two-bedroom apartment typically falls around $1,077/month (per Apartments).
Oklahoma's economy leans on energy, agriculture, and manufacturing, which helps keep overall costs low. Even basic utilities stay affordable, which is a big deal when you factor in summer air conditioning.
2. Mississippi - Housing at Rock-Bottom Prices
Mississippi scores 87.3 on MERIC's index. It has the cheapest housing market in the country, with a housing index of just 66. Median home prices hover around $262,000 (per Zllow), and average rent for a two-bedroom is about $1,138 (per Appartments).
But low cost doesn't always mean high quality of life. The state has the highest poverty rate in the U.S., nearly 20%.
That reality affects everything from healthcare access to public services. Still, for retirees or remote workers with steady income, the savings can be substantial.
3. Alabama - Budget-Friendly with Industry Strength
Alabama comes in at 87.6, with inexpensive housing and growing sectors like aerospace and automotive. Cities like Huntsville are attracting new residents with good jobs and a manageable price tag.
Healthcare costs can vary, and in some areas they're above the national average.
But with home prices staying well below $300,000 (per Alabama Political Reporter) in most markets, many still find Alabama a financially sensible option.
4. Missouri - A Mix of Low Costs and Urban Comforts
At 88.0, Missouri offers a well-rounded mix. Housing and groceries are affordable, even in its larger cities.
St. Louis and Kansas City provide urban options, while smaller towns like Joplin boast even lower indexes; Joplin's is just 83.9.
For people who want a more metropolitan lifestyle without New York-style prices, Missouri often strikes the right balance.
5. West Virginia - Cheap Housing, but Watch Healthcare Costs
West Virginia posts an index of 88.6. Housing is inexpensive, with median prices near $253,000 (per Redfin). Utilities are among the lowest in the nation, which is helpful given the region's colder months.
Healthcare, however, tends to be expensive. According to SmartAsset, a single adult in West Virginia would need about $80,829 annually to live comfortably, more than in several nearby states.
6. Iowa - Affordable and Steady
Iowa's 89.6 score reflects a stable, low-cost lifestyle. The state's strong agricultural economy helps keep prices down, particularly for food.
Median home prices are around $258,000 (per Redfin) in some cities, but many rural areas come in much lower.
7. Kansas - No State Income Tax Helps
Kansas checks in at 89.7 and gets extra points for skipping state income tax. That alone improves take-home pay for many. Housing is also a win, with the median home price near $242,044 (per Zillow).
Its economic base includes agriculture, aviation, and healthcare, giving residents multiple job paths in a cost-effective environment.
8. Michigan - Reasonable Housing in a Diverse Economy
With an index of 89.8, Michigan remains affordable in most parts of the state. Kalamazoo, for example, offers median home prices around $240,395 (per Zillow).
There's a wide range though, some Detroit suburbs and lakefront areas are significantly higher. Utility bills can spike during the winter, but overall affordability remains solid.
The state's economy stretches across healthcare, tourism, and the enduring auto industry.
9. Tennessee - No State Income Tax and Regional Affordability
Tennessee rounds out the list at 90.0. While Nashville's home prices are high (around $445,803, as per Zillow), smaller cities and rural areas offer much more value.
The lack of a state income tax also attracts both retirees and remote workers. Strong tourism and healthcare sectors support job growth, and many find Tennessee offers a good balance of affordability and access to culture.
10. Arkansas - Low Costs and Rising Industries
At 90.5, Arkansas still ranks among the cheapest. Median home prices are about $282,900 (per Redfin). Poultry production, manufacturing, and a growing healthcare sector give the economy staying power.
Taxes stay low across the board, which can make a big difference for fixed-income households.
Priciest States to Live in 2025
High housing prices, hefty taxes, and transportation logistics drive up costs in these ten states. From Pacific island life to Northeast metro centers, the price of living well can climb quickly.
Top 10 Most Expensive States
| Rank | State | Cost of Living Index | Key Factors |
|---|---|---|---|
| 1 | Hawaii | 182.3 | Extreme housing costs, costly imports |
| 2 | Massachusetts | 145.1 | High housing in Boston, expensive healthcare |
| 3 | California | 141.6 | Costly homes, high taxes, insurance burden |
| 4 | Alaska | 127.3 | Remote access, expensive goods and fuel |
| 5 | New York | 124.7 | Manhattan's real estate and high service costs |
| 6 | Maryland | 114.9 | Pricey housing near D.C., strong job market |
| 7 | New Jersey | 114.8 | Property taxes and utilities push costs up |
| 8 | Vermont | 113.7 | Healthcare and goods expensive in rural areas |
| 9 | Connecticut | 113.5 | Fairfield County housing, state taxes |
| 10 | Maine | 113.4 | Housing and healthcare are higher than average |
1. Hawaii is the Most Expensive State to Live in America
Hawaii's index of 182.3 easily makes it the most expensive state in 2025. Median home prices in Honolulu hover around $761,755 (per Zillow).
Rent for a two-bedroom apartment runs around $2,311 per month (according to Numbeo). Even basic items like milk and eggs cost far more due to shipping.
Monthly energy bills are about $529, and a single adult needs $124,467 annually to live comfortably, according to SmartAsset. The tradeoff? Beaches, climate, and lifestyle. But it comes at a steep price.
2. Massachusetts - High Housing Meets High Earnings
Massachusetts scores 145.1, driven by housing in the Boston area, where median prices hit $1.04 million (according to Boston). Add in healthcare and education costs, and it's easy to see how expenses rise fast.
3. California - High Cost, High Demand
California's cost of living index is 141.6. In places like Orange County, median home prices reach $1,450,000 (per FRED). Property taxes and state regulations push up costs on everything from energy to insurance.
SmartAsset pegs the needed annual salary to live comfortably in California at $119,475. For many, the state's economic opportunities still justify the premium.
4. Alaska - Isolation Isn't Cheap
Alaska lands at 127.3, and a big reason is geography. Transportation costs raise the price of goods, groceries, and services. Housing runs about 27% higher than the national average.
According to Redfin, median home prices sit around $409,900, and groceries are 35% more expensive than average. For those who love the outdoors and isolation, the price is part of the package.
5. New York - Manhattan Magnifies Everything
New York's index is 124.7, but it's Manhattan that really skews things. Median home prices in the borough reach $1.2 million (per Property Shark).
Even studio apartments often cost more than entire homes elsewhere. SmartAsset reports that a single adult needs $114,691 per year to live comfortably.
High taxes and service costs don't help, although upstate New York is notably more affordable.
6. Maryland - Strong Jobs, High Prices
Maryland's 114.9 score reflects housing costs near Washington, D.C. In Bethesda, for example, the median home price is around $1,151,455 (per Zillow).
The state does have a strong job market, especially in healthcare and government. To live comfortably, SmartAsset estimates a single person needs $108,867 per year.
7. New Jersey - Property Taxes Bite Hard
New Jersey scores 114.8. High property taxes and expensive real estate near New York City weigh heavily. Utilities also tend to be above average.
A single adult needs about $108,992 annually to keep up with expenses, per statistics.
8. Vermont - Rural, But Not Cheap
At 113.7, Vermont ranks high despite its rural nature. Limited access to healthcare and goods inflates costs. Home prices and rent are above average for the region.
According to SmartAsset, the estimated salary for comfort lands around $105,000 annually. Winter heating costs can also add pressure to household budgets.
9. Connecticut - Affluent, but Expensive
Connecticut's index of 113.5 is largely shaped by Fairfield County, where proximity to New York inflates housing prices.
Taxes and healthcare expenses are also notable. Living comfortably requires about $105,165 annually for a single adult (per SmartAsset).
10. Maine - Simple Life, Rising Costs
Maine rounds out the list at 113.4. Rural areas often face higher healthcare costs and less access to goods, pushing up prices. Median home values are also above average in 2025.
Why Rankings Differ Between Sources
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While MERIC remains the gold standard for state-to-state comparisons, not all rankings agree. CNBC's 2025 data, for example, places California at the top due to its high homeowner insurance rates.
Florida ranks second by their measure because of insurance premiums that average $15,460 per year. Michigan, Iowa, and Delaware rank cheaper in CNBC's list, while MERIC highlights Oklahoma and Mississippi.
It all depends on what's being measured-insurance, taxes, wages, or broader consumer costs.
Practical Takeaways
Cost of living rankings help more than just the curious. Here's how they're being used:
- Budgeting a Move: Switching from California to Arkansas could cut your housing costs in half.
- Negotiating Salary: A $90K salary in Missouri may offer the same lifestyle as $150K in New York.
- Retirement Planning: West Virginia or Alabama can stretch a fixed income further than Oregon or Massachusetts.
- Real Estate Investment: Lower-cost states may offer better entry points with future growth potential.
- Lifestyle Fit: If culture, climate, or job markets matter more than savings, that affects how rankings apply.
Methodlogy
- We used authoritative data sources, primarily the Q1 2025 Cost of Living Index from the Missouri Economic Research and Information Center (MERIC) as the core benchmark.
- We validated all price and salary data with reputable secondary sources like Zillow, Redfin, Numbeo, SmartAsset, Apartments.com, and FRED to ensure accuracy and recency.
- We cross-checked alternate rankings (e.g., CNBC's 2025 list) to provide context on why rankings might vary depending on the metrics emphasized (insurance, taxes, wages, etc.).
- Each state profile included unique economic and lifestyle insights, not just numbers. We dug into industry strengths, utility costs, real estate trends, tax policy, and quality of life concerns.
- Median home prices and rent figures were pulled from real market data rather than general averages, with city-specific examples when relevant (e.g., Kalamazoo vs. Detroit suburbs).
- We added real-life applications for readers, such as how cost of living affects salary negotiations, retirement planning, and real estate investing.
- Comparisons were grounded in actual outcomes, like how moving from California to Arkansas can cut housing costs in half, or what income level supports comfortable living in Massachusetts vs. Alabama.
- We avoided cherry-picking stats to fit a narrative. States with low costs but high poverty (e.g., Mississippi) were presented with nuance.
- We cited limitations and discrepancies between cost-of-living indexes, explaining why rankings can differ and what readers should consider when interpreting them.
Final Thoughts
In 2025, where you live has never mattered more for your wallet. Oklahoma and Mississippi deliver serious affordability, while Hawaii and Massachusetts demand top-dollar.
Whether you're chasing better quality of life, lower bills, or a career move, having a grounded sense of what things actually cost can make all the difference.
And it's not just about numbers on a chart. It's about how far your money goes when the rent's paid, groceries are in the fridge, and you've got a little left over to breathe.
