State with the Lowest Cost of Living (And the 5 Runners-Up)

While the cost of living has skyrocketed in major urban centers like New York and Washington, DC, some areas of the country have remained quite affordable. So where in the US will your dollar go furthest? We’ve looked at metrics like taxes, grocery prices, and real estate to single out the state with the lowest cost of living – wait until you see their housing costs. We’ve also compiled a list of the five runners-up, states with average living expenses well below the national mean.

1. Mississippi

Mississippi tops virtually every list of states with the lowest living expenses. Its overall cost of living index is more than 16 percent lower than the national average, and all of its individual metrics are significantly below the US mean as well. Groceries in Mississippi, including beer, are about eight percent less than average, with certain items such as chicken and pizza running up to 13 percent less than in the rest of the nation.  Healthcare costs overall are about 10 percent less than the national average – some specialists, such as optometrists, cost 23 percent below mean. Gas and electricity are about 15 percent cheaper than in the rest of the nation.

Housing costs are where you’ll see the biggest savings by moving to Mississippi. The average state housing cost is nearly 40 percent below that of the rest of the country. To put that in perspective, Mississippi’s median real estate cost is about $63 per square foot, while the US average is $117 per square foot – in California, it’s $216. The typical $100,000 home in Mississippi is around 1,300 square feet, with three beds and two baths. A home in the Gulfport-Biloxi metropolitan area is a median $125,000.

Of course, this rock-bottom cost of living is a trade-off. Mississippi also has the nation’s lowest median household income, at about $37,000. They also have the second-highest poverty rate in the country, just behind the District of Columbia, with 20 percent of residents living at or below the poverty line.

And the 5 Runners-Up?

2. Tennessee

The Volunteer State has the second-lowest living cost across the board, at about 13 percent below the national average. Grocery costs are slightly below the US mean, while healthcare, utilities, and transportation costs are six to eight percent lower than average. Housing costs are 30 percent below that of the rest of the country. Even in metropolitan Memphis, the median home price is just $141,000. Tennessee’s tax rates are some of the lowest in the nation as well. There is no state property tax, and sales tax is five to seven percent depending on goods. The only income tax in the state is on dividends and interest. Tennessee’s median household income is about $42,000, and the state has a 15 percent poverty rate.

3. Oklahoma

Living in Oklahoma will cost you about 16 percent less than the national average. Grocery and transportation costs are close to the US mean, while housing is 27 percent lower. In fact, home prices have dropped by about three percent in the last year. The median list price for a home in Tulsa is about $145,000, while the average house in Oklahoma City is around $148,000. The state has a poverty rate of just under 16 percent, with a median household income of $43,000.

4. Indiana

The Hoosier State is quite affordable, with a cost of living index about 14 percent less than the national average. State sales tax is seven percent, exempting food and prescription drugs. Health and transportation costs are just below the US mean, groceries are an average of eight percent lower, and utilities are 11 percent under average, while housing is about 32 percent below the national figure. The South Bend-Mishawaka area has the lowest housing costs of the state’s metropolitan centers, with a median of $108,000. At the high end, the median for Indianapolis is just under $150,000. The state has a median income of about $46,000.

5. Kentucky

The land of horse racing and mint juleps is surprisingly affordable in most areas. Overall, the cost of living is about 12 percent below average. Transportation and health costs are closest to the national average, while groceries and utilities are about seven percent lower. Housing costs about 26 percent less compared to the US mean. Among the state’s metropolitan areas, home prices are lowest in the Lexington-Fayette and Bowling Green areas at about $147,000, while they are highest in Louisville at a still very reasonable $153,000 median. Fifteen percent of residents live below the poverty line, compared with 16 percent for the nation, and the state has a median household income of $43,000.

6. Kansas

Moving to Kansas will save you about 11 percent in total living costs compared with the national average. Utilities run 12 percent below average, while groceries and healthcare are about eight percent cheaper. The state sales tax is 6.5 percent. Housing costs are nearly a quarter below the US average, with Topeka representing the most affordable urban area at a $124,000 median list price. Wichita is only slightly higher at $128,000. The median household income of $48,000 is not too far below the national median of $54,000, and the poverty rate of 12.5 percent is markedly better than the national average.

2 Point Highlight

To put that in perspective, Mississippi’s median real estate cost is about $63 per square foot, while the US average is $117 per square foot – in California, it’s $216.

Tennessee’s tax rates are some of the lowest in the nation as well.