Cost of Living By State [2025 Ranking Comparison]

Thinking about making a move? When deciding where you are going to live, the cost of living will play a huge role in your financial stability and overall quality of life. Housing, rent, utilities, groceries, and taxes can vary significantly from state to state, ultimately impacting how far your money will go.

In this 2025 cost of living by state comparison, we break down the most and least expensive states based on the average home prices, rent, and key affordability factors. So, whether you’re looking for a budget-friendly place to settle down or maybe are starting to consider the financial impact of living in a high-cost state, this guide will help you make an informed decision.

Top 10 States With the Lowest Cost of Living

1. Mississippi

• Average Home Price: $177,500
• Average Rent: $1,495/month
• Key Factors: Mississippi offers the lowest home prices and rent in the nation, making it the most affordable state to live in. The cost of living is low, though utility costs can be a concern in some areas due to extreme weather.
• Why It’s Affordable: A smaller population and lower demand for housing contribute to its affordability, making it an ideal option for budget-conscious individuals and families.

2. Arkansas

• Average Home Price: $209,000
• Average Rent: $1,400/month
• Key Factors: Arkansas provides affordable housing throughout the state, especially in rural areas. While job opportunities may be limited in certain regions, the low cost of living makes it an appealing choice for many.
• Why It’s Affordable: With some of the lowest home prices in the country, affordable utilities, and groceries, Arkansas remains a highly budget-friendly state.

3. Alabama

• Average Home Price: $190,000
• Average Rent: $1,400/month
• Key Factors: Alabama is known for its affordable housing market and overall low cost of living. While housing prices have increased slightly in urban areas, they remain far below the national average.
• Why It’s Affordable: With low housing costs, low property taxes, and affordable healthcare, Alabama offers a cost-effective lifestyle, especially for retirees.

4. West Virginia

• Average Home Price: $163,000
• Average Rent: $1,100/month
• Key Factors: West Virginia remains one of the most affordable states in terms of housing and rent. However, employment opportunities may be more limited in some rural areas.
• Why It’s Affordable: Extremely low home prices, affordable rent, and overall living costs make West Virginia an attractive option for those on a tight budget.

5. South Dakota

• Average Home Price: $301,000
• Average Rent: $1,150/month
• Key Factors: South Dakota is known for its low taxes, including no state income tax. Housing prices are affordable, especially in rural areas, though cities like Sioux Falls have seen slight price increases.
• Why It’s Affordable: The absence of a state income tax and affordable housing make South Dakota a desirable location for budget-conscious individuals.

6. Iowa

• Average Home Price: $215,000
• Average Rent: $1,095/month
• Key Factors: Iowa offers affordable housing and a stable housing market with low property taxes. Cities like Des Moines remain more affordable compared to larger urban areas.
• Why It’s Affordable: Affordable homes, low rent, and a manageable cost of living make Iowa an appealing choice for those seeking budget-friendly options.

7. North Dakota

• Average Home Price: $265,000
• Average Rent: $1,000/month
• Key Factors: North Dakota boasts affordable housing and low taxes. While rural areas have low home prices, cities like Fargo offer affordable living options as well.
• Why It’s Affordable: Low taxes, affordable housing, and a growing economy make North Dakota a strong choice for individuals seeking a budget-friendly lifestyle.

8. Oklahoma

• Average Home Price: $205,000
• Average Rent: $1,100/month
• Key Factors: Oklahoma is known for its affordable housing market and low cost of living. The state benefits from low taxes and an overall inexpensive lifestyle.
• Why It’s Affordable: Low housing costs and low taxes contribute to Oklahoma's affordable living. The state is a great option for remote workers or those with flexible employment options.

9. Kentucky

• Average Home Price: $210,000
• Average Rent: $1,300/month
• Key Factors: Kentucky offers affordable housing across the state, particularly in rural areas. The overall cost of living is low, though wages may be lower than in some other states.
• Why It’s Affordable: Low home prices, affordable rent, and an overall lower cost of living make Kentucky an attractive option for those on a budget.

10. Nebraska

• Average Home Price: $256,000
• Average Rent: $1,350/month
• Key Factors: Nebraska offers affordable housing, with lower prices outside major cities like Omaha and Lincoln. The state has a stable economy and low unemployment, but wages may be lower than in some larger states.
• Why It’s Affordable: Low housing costs and reasonable rent, combined with a lower cost of living overall, make Nebraska an appealing choice for those looking to stretch their budgets.

Top 10 States With the Highest Cost of Living

1. Hawaii

• Average Home Price: $831,000
• Average Rent: $3,000/month
• Key Factors: Hawaii's housing market is one of the most expensive in the U.S., with high demand for both homes and rentals, driven by its desirable location and tourism. Limited land availability and high construction costs contribute to high housing prices.
• Why It’s Expensive: The state's natural beauty, combined with its isolated location, makes it a popular destination, driving up both real estate prices and rent. Additionally, the cost of living is high due to imported goods and services, along with a robust tourist economy.

2. New York

• Average Home Price: $860,000
• Average Rent: $3,300/month
• Key Factors: New York has some of the highest housing costs in the country, especially in Manhattan and Brooklyn. While upstate areas offer more affordable living options, the state's overall high cost of living is driven by demand in major metropolitan areas, high property taxes, and pricey real estate. The state also has a high state income tax that can contribute to higher living expenses.
• Why It’s Expensive: The cost of living in New York is pushed up by demand in major cities, especially New York City, where rent and housing prices are sky-high. While upstate areas are more affordable, the state's overall living expenses remain elevated due to taxes, utilities, and the cost of goods and services.

3. California

• Average Home Price: $780,000
• Average Rent: $2,800/month
• Key Factors: California is known for its high cost of living, especially in major cities like Los Angeles, San Francisco, and San Diego. Housing prices and rent are significantly higher than the national average, with limited affordable options in coastal areas.
• Why It’s Expensive: The high demand for housing, coupled with a strong job market and desirable climate, drive up costs. While there are more affordable options in inland areas, the overall cost of living remains high due to expensive real estate and high wages.

4. Washington

• Average Home Price: $590,000
• Average Rent: $2,000/month
• Key Factors: Washington offers a diverse housing market, with affordable options in rural areas and more expensive prices in urban centers like Seattle. The state's strong tech industry and desirable location on the West Coast have driven up housing demand, especially around metropolitan areas.
• Why It’s Expensive: High demand in cities like Seattle, coupled with a strong economy and limited housing inventory, has led to high real estate prices. Additionally, the overall cost of living in urban areas is above the national average due to demand-driven price hikes.

5. Massachusetts

• Average Home Price: $620,000
• Average Rent: $3,200/month
• Key Factors: Massachusetts is known for its strong economy, top-tier educational institutions, and high demand for housing, especially in areas like Boston. The state’s housing market remains competitive, with significant price increases driven by demand in urban centers and proximity to major job markets.
• Why It’s Expensive: High home prices in cities like Boston, coupled with a high cost of living, make Massachusetts one of the more expensive states. The demand for housing is driven by the state's strong job market, especially in tech, healthcare, and education sectors.
  

6. New Jersey

• Average Home Price: $540,000
• Average Rent: $2,500/month
• Key Factors: New Jersey is known for its high housing costs, particularly near major metropolitan areas like New York City and Philadelphia. While there are more affordable options in rural areas, the state’s overall housing market is competitive due to its proximity to major job markets and access to public transportation.
• Why It’s Expensive: High property taxes, demand for housing near major urban centers, and limited land for development all contribute to New Jersey’s high housing costs. The state’s strong economy and educational institutions also attract many residents, driving prices up.

7. New Hampshire

• Average Home Price: $476,000
• Average Rent: $2,000/month
• Key Factors: New Hampshire offers a relatively high quality of life, with beautiful natural landscapes and a low crime rate. However, housing prices have been rising, especially in popular areas like Manchester and Portsmouth. The state does not have a state income tax, which can offset some of the higher living costs.
• Why It’s Expensive: The lack of a state income tax and the state’s proximity to both the Boston metro area and the White Mountains make it an attractive place to live, but demand for housing drives prices higher. Housing near major cities or tourist spots can be particularly costly.

8. Oregon

• Average Home Price: $490,000
• Average Rent: $1,800/month
• Key Factors: Oregon offers diverse living environments, from the urban areas of Portland to the rural and coastal regions. While housing in Portland has become expensive, rural areas offer more affordable options. Oregon has no sales tax, which can help offset higher property taxes and other costs. However, the state's housing prices have been rising due to increased demand and the tech boom, especially in Portland.
• Why It’s Expensive: Housing prices are driven up by Portland's popularity, which attracts both residents and businesses. While rural areas remain affordable, the overall demand for living in the state, combined with rising property values, makes it a more expensive state to live in.

9. Connecticut

• Average Home Price: $405,000
• Average Rent: $2,000/month
• Key Factors: Connecticut is known for its wealthy coastal areas, but you'll find more affordable housing in smaller towns and rural regions. Cities like Stamford and Hartford, however, come with higher housing costs. The state offers excellent schools, healthcare, and public services, but keep in mind that property taxes and living expenses tend to be higher than in many other states.
• Why It’s Expensive: Connecticut’s proximity to major cities like New York and Boston, along with its desirable coastal regions, contributes to its higher housing costs. High property taxes and a generally higher cost of living further push up expenses for residents.

10. Maryland

• Average Home Price: $420,000
• Average Rent: $1,950/month
• Key Factors: Maryland’s housing market is driven by its proximity to Washington, D.C., with high home prices and rents in areas like Bethesda and Silver Spring. The state has a strong job market, particularly in government, healthcare, and tech, but living costs are high.
• Why It’s Expensive: Maryland’s close access to D.C. jobs, high property taxes, and strong demand for housing contribute to its above-average costs, particularly in urban and suburban areas.

How Are Cost of Living Rankings Determined?

The rankings for the cost of living by state take several factors into account:

1. Housing Costs: This includes average home prices, property taxes, and rental prices. Housing is often the largest monthly expense.
2. Utilities: These include electricity, water, and gas bills, which can vary greatly depending on the climate.
3. Transportation: Gas prices, public transportation costs, and car insurance rates impact this factor.
4. Healthcare: The cost of insurance premiums, medical visits, and prescriptions can vary by state and region.
5. Groceries & Everyday Expenses: This covers food, clothing, and other necessities, which also fluctuate depending on location.

What Else Affects Cost of Living by State?

While housing and utilities are major factors, other things can also influence how much you pay to live in a certain state. For example:

• State Income Tax: States like Texas and Florida benefit from not having a state income tax, which can significantly reduce your overall expenses.
• Job Opportunities: States with strong economies and low unemployment rates may offer higher salaries, which can offset higher living costs in those areas.
• Quality of Life: Higher living costs in places like California or New York may be offset by better healthcare, education, and access to cultural activities.

How to Reduce Your Cost of Living

Lowering your cost of living can free up more money for savings, travel, or other financial goals. Here are some practical ways to cut expenses:

• Housing: Consider downsizing, moving to a more affordable area, or finding a roommate to share costs. Refinancing your mortgage or negotiating rent can also help.
• Utilities: Reduce energy bills by using energy-efficient appliances, sealing drafts, and being mindful of water and electricity use.
• Food: Save on groceries by meal planning, buying in bulk, and using coupons or cashback apps. Cooking at home instead of dining out also significantly reduces expenses.
• Transportation: Use public transit, carpool, or consider a fuel-efficient or used car instead of a new one. Biking or walking when possible saves money and improves health.
• Debt & Subscriptions: Pay off high-interest debt to reduce monthly payments. Cancel unused subscriptions or negotiate lower rates on necessary services like internet and insurance.
• Entertainment & Shopping: Look for free or low-cost entertainment options, buy secondhand, and take advantage of discounts and rewards programs.

Even small changes can add up to big savings over time, helping you stretch your budget further.

Final Thoughts: Cost of Living Across the United States

Understanding the cost of living by state in 2025 is crucial for making financial decisions, especially with skyrocketing inflation.

Whether you are looking to move, buy a home, or are just comparing costs out of curiosity, knowing which states offer the best affordability can help you plan your next steps accordingly. States like Mississippi, Arkansas, and Oklahoma continue to offer lower living costs, while places like Hawaii, New York, and California may have higher costs, but also higher wages and amenities.

When making your decision, consider your priorities—whether it's affordable housing, no state income tax, or better job opportunities. Then, use this information to find the best state for your lifestyle and budget.

FAQs About Cost of Living by State

1. What is the average cost of living in 2025?

The cost of living will vary based on your location, but overall, it has risen by 2.5% due to inflation, higher housing prices, and transportation costs. On average, the cost of living in the U.S. is higher in urban areas and coastal states.

2. What state has the lowest cost of living in 2025?

Mississippi remains the most affordable state in 2025, with low housing costs, utilities, and everyday expenses.

3. How does the cost of living compare between major cities and rural areas?

Major cities tend to have higher costs for housing, utilities, and transportation. However, rural areas may have lower costs for housing and groceries, but fewer job opportunities and higher transportation costs.

4. Is living in a state with no income tax worth it?

Living in a state with no income tax can save you money, but the overall cost of living (including sales taxes and property taxes) may offset those savings. Consider all expenses when evaluating the impact.

5. How can I calculate the cost of living in a specific state?

Use online calculators or state comparison websites, like those from the U.S. Bureau of Economic Analysis or cost-of-living databases, to get detailed insights into the cost of living in each state.