Cost of Living by State (Where It's Cheapest to Live)

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Last Updated:September 02, 2023

Cost of Living by State (Where It's Cheapest to Live)

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Relocating to a new state for a new job, to be closer to family, or for a change in scenery can be exciting and scary at the same time. After all, new opportunities provide new adventures. Still, it can be difficult going into the unknown, particularly if you don’t know how expensive it is to live in a new place.

When determining how much it will cost to live in a specific state, multiple factors must be evaluated to develop a comprehensive amount. These include how much it costs for housing, groceries, utilities, and other metrics that residents must routinely pay year to year.

Not surprisingly, some states incur a higher cost of living than others. Generally speaking, Hawaii, Alaska, West Coast states, and states in the Northeast have the highest cost of living, while states in the Midwest and the South have the lowest cost of living.

Related: The Cheapest Places to Live

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Cost of Living by State

The Missouri Economic Research and Information Center (MERIC) created a cost of living index for each state by averaging the indices of participating cities and metropolitan areas to determine the cost of living by state. It also included survey information from the Council for Community and Economic Research (C2ER), in which cities from around the country voluntarily share information to help in research.

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2023 First Quarter Cost of Living

This ranking lists states from lowest to highest cost of living.

Rank	State	Index
1	Mississippi	85.3
2	Oklahoma	86.0
3	Kansas	87.7
4	Missouri	88.4
5	Alabama	88.8
6	Iowa	89.7
7	Nebraska	90.1
8	West Virginia	90.3
9	Arkansas	90.3
10	Tennessee	90.4
11	Illinois	90.8
12	Georgia	91.0
13	Indiana	91.5
14	Louisiana	92.0
15	Michigan	92.7
16	Wyoming	92.8
17	Texas	93.0
18	Kentucky	93.8
19	South Dakota	93.8
20	Ohio	94.0
21	Minnesota	94.1
22	New Mexico	94.2
23	North Dakota	94.6
24	Wisconsin	95
25	North Carolina	96.1
26	South Carolina	96.5
27	Puerto Rico	96.6
28	Pennsylvania	99.0
29	Nevada	101.03
30	Utah	101.5
31	Florida	102.3
32	Delaware	102.6
33	Virginia	103.1
34	Montana	103.7
35	Colorado	105.5
36	Idaho	106.1
37	Arizona	107.2
38	Rhode Island	110.5
39	Maine	111.5
40	Connecticut	113.1
41	New Jersey	114.1
42	Vermont	114.9
43	New Hampshire	115.0
44	Oregon	115.1
45	Washington	115.1
46	Maryland	119.5
47	Alaska	124.4
48	New York	125.1
49	California	134.5
50	Massachusetts	148.4

**The national average index is 100.0.

Source: MERIC

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Factors that affect the cost of living

Living costs involve several expenses that coalesce into how much you pay annually to live where you do. Those factors include:

Housing

Not surprisingly, how much you pay for rent or a mortgage is one of the main expenses that goes into the cost of living for an area. And with home and rent prices on the rise, the cost of living has certainly increased. Just as California and Massachusetts are the two states with the highest cost of living, they also have the highest housing costs, with a housing index of 186.5 and 219.5, respectively.

The same holds true for the state with the lowest cost of living: Mississippi has a housing index of 68.6, making it a very low-cost place to live. Oklahoma, which ranks No. 2 for cost of living, has the second lowest housing index at 68.0.

Utilities

Paying for power, water, sewer, and other utilities can add to the cost of living, particularly in areas that require more power during winter or summer. Alaska has the highest utility index at 148.1, with Puerto Rico at the second highest at 138.7.

On the other end of the spectrum, Georgia has the lowest utility index at 84.4, even though it ranks No. 12 for cost of living. Ranked No. 36 for cost of living, Idaho has the second lowest utility index at 84.6.

Transportation

Transportation costs include the price of gas, which also has been on the rise in recent months. For some, it may come as a surprise that Massachusetts has the highest transportation index at 127.5, with the second highest in California at 124.1.

Regarding the lowest transportation costs, Kansas has the lowest transportation index at 88.3, with Mississippi having the second lowest at 88.6.

Groceries

As part of the recent inflation, food prices have increased, reflected in the overall cost of living. Again, Alaska tops the most expensive list, with the highest grocery costs, with a grocery index of 127.4. California has the second-highest grocery index at 112.3.

Looking at the states with the lowest cost of living, however, there isn’t the same correlation. Although ranked No. 2 in cost of living, Oklahoma has the lowest grocery index at 93.8. North Dakota, which ranks at No. 23 in cost of living, has the second lowest grocery index at 94.6.

Health

Healthcare continues to be in high demand, and, as a result, healthcare costs remain a major expense for many people. Therefore, it plays a key role in the overall cost of living. Ranked No. 47 in cost of living, Alaska landed in the top spot for the highest health index at 149.8. New Hampshire, ranked No. 43, is the second highest with a health index of 120.6.

For the lowest health index, the cheapest state is Puerto Rico at 71, with Kentucky having the second lowest health index at 81.8.

Miscellaneous goods and services

This category includes a variety of expenses, such as childcare, clothing, and salon services. Massachusetts takes the top spot for the highest miscellaneous index at 125.8. New Hampshire has the second-highest miscellaneous index at 120.8.

Mississippi comes in with the lowest miscellaneous index at 91, with Nevada having the second-lowest miscellaneous index at 91.3.

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The bottom line

When checking the cost of living for a specific state, it’s important to review several key factors that affect how expensive it is to live there. These include the average cost of housing, groceries, transportation, health, and miscellaneous goods and services, all of which affect the overall cost of living. Although these numbers may not tell the whole story, they can provide a good idea of how much you will pay each year while calling that state home. For a more accurate estimate, you can enter some basic information, such as your household income, in the Economic Research Institute’s Cost of Living Calculator to see how your current location compares to where you may move.

Completing a thorough study of the cost of living for a destination is crucial before making any decisions to move to make sure you can afford to live in a new state. Knowing you can maintain your standard of living in a new place can provide peace of mind when starting over in a new place.

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Karon Warren is a freelance writer who has covered articles in finance, insurance and health for sites like Reviews.com, USA Today, Healthgrades, among others.

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