Cheapest U.S. States to Live In 2025

In today's economic climate, where housing costs have skyrocketed and inflation continues to impact everyday expenses, finding a place where your dollar stretches further has become more critical than ever. With residential real estate prices up 60% from 2019 to 2025 and mortgage rates between 2021 and 2024 around 144%, many Americans are rethinking their location strategy.

The rise of remote work has opened unprecedented opportunities to live in more affordable states without sacrificing career prospects. But choosing the cheapest state isn't just about low rent: it's about understanding the complete financial picture, including taxes, healthcare costs, and quality of life trade-offs.

The Cost of Living Index measures the average cost of living in various states relative to the national average, which is set at 100. States with a Cost of Living Index below 100 are more affordable than the national average, making them attractive options for those looking to maximize their purchasing power.

This index takes into account essential expenses like housing, food, utilities, transportation, healthcare, and taxes. However, it's crucial to understand that a low cost of living doesn't automatically translate to a better quality of life - there are often trade-offs to consider.

Here are the top 5 cheapest states to live in the U.S. based on comprehensive affordability metrics for a household of 4 people with 2 working adults. The monthly rent reflects the average for a two-bedroom apartment.

1. Mississippi

Mississippi consistently ranks as America's most affordable state, but it comes with significant trade-offs. While housing costs are incredibly low and the state offers full tax exemptions for retirement income, Mississippi also has the highest poverty rate at 18.8% and ranks 39th in public school quality.

The state offers over 50 colleges and universities and maintains a strong sense of community. For retirees on fixed incomes, Mississippi's combination of low costs and tax-friendly policies makes it particularly attractive.

2. Oklahoma

Oklahoma offers a mild climate and beautiful green scenery year-round. The state has a relatively strong economy with diverse industries including energy, agriculture, and aerospace. Cities like Oklahoma City and Tulsa provide vibrant college town atmospheres with big-city amenities at small-town prices.

The state's unemployment rate remains below 3%, indicating a healthy job market. However, Oklahoma does experience severe weather, including tornadoes, which potential residents should factor into their decision.

3. Kansas

Kansas boasts thriving agriculture and aerospace industries, plus one of the lowest unemployment rates in the nation at under 3%. The state offers four distinct seasons and a variety of climates, from hot summers to cold winters.

Kansas provides excellent value for families, with decent schools and safe communities. The state's central location makes it ideal for those who travel frequently for work, with major cities easily accessible by car or plane.

4. Alabama

Alabama combines warm weather, rich cultural heritage, and extremely low housing costs. The state has one of the lowest unemployment rates in the U.S. at 2.8% and hosts prestigious universities like the University of Alabama and Auburn University.

Alabama offers beautiful natural scenery, from Gulf Coast beaches to Appalachian foothills. However, the state ranks in the bottom 10 for safety, which families should carefully consider when choosing specific cities or regions.

5. West Virginia

West Virginia offers the lowest median home price in America at $146,578, making homeownership incredibly accessible. The state provides stunning mountain scenery and outdoor recreation opportunities that rival expensive destinations like Colorado.

However, West Virginia faces economic challenges with limited job diversity and an aging population. The state works best for retirees, remote workers, or those in specific industries like healthcare or education.

While these states offer low costs on paper, the current housing market presents unique challenges. Over 81% of mortgage borrowers are locked into rates 100+ basis points below current rates, creating a supply shortage even in affordable states.

First-time homebuyers now represent just 21% of the market compared to the historical average of 40%. With mortgage rates averaging 6.3% in 2025, even "cheap" homes may be unaffordable for many buyers.

Key Housing Facts:

• National median home price: $419,200
• Average rent (two-bedroom): $1,889/month
• Mortgage rates expected: 6.0-6.3% in 2026
• Home price growth forecast: 1-4% annually

State taxes can dramatically impact your actual cost of living, often more than rent differences. Here's how tax policies affect affordability:

Property Tax Variations:

• New Jersey: 2.23% (highest)
• Hawaii: 0.27% (lowest)
• Alabama: 0.41%
• Mississippi: 0.61%

On a $200,000 home, you'd pay $4,460 annually in New Jersey versus just $820 in Alabama - a $3,640 difference that significantly impacts affordability.

Consider this: A remote worker earning $80,000 living in Tennessee (no income tax) versus California (9.3% rate) saves $7,440 annually in state taxes alone. That's equivalent to getting a $620/month rent discount just by choosing the right state.

Cheap doesn't always mean better. Here are important considerations beyond cost:

Safety Rankings:

• Vermont: #1 safest state
• Massachusetts: #2 safest
• Mississippi: 51st (second-least safe)
• Louisiana: 52nd (least safe)

Education Quality:

• Massachusetts: #1 public schools
• Mississippi: #39 public schools
• Alabama: #46 public schools

Healthcare Affordability: Unsurprisingly, expensive states often provide better healthcare value:

• Hawaii: #1 for healthcare affordability
• Massachusetts: #2 for healthcare affordability
• Texas: Least affordable healthcare (21.7% uninsured rate)

Different states work better for different situations:

For Young Professionals: Texas, North Carolina, Tennessee - balanced job markets, reasonable costs, no/low income tax

For Families: Utah, Iowa, Kansas - good schools, safe communities, moderate costs

For Retirees: Florida, Nevada, Mississippi - no tax on retirement income, low property taxes

For Remote Workers: Texas, Tennessee, Wyoming - no income tax, growing tech communities, affordable housing outside major metros

For First-Time Homebuyers: South Carolina, Iowa, Indiana - highest housing affordability grades, reasonable home prices

To put state costs in perspective, here's what the average American household spends annually:

• Total household expenses: $61,334
• Housing costs: $21,408 (34.9% of budget)
• Transportation: $9,826 (16%)
• Healthcare: $5,177
• Food and dining: $7,317

The median home price nationally is $419,200, while average rent for a two-bedroom apartment is $1,889 monthly. Personal income averages $35,805 individually, with median household income at $67,521.

The living wage for a family of four is $68,808 annually, but this varies dramatically by state - from $40,415 in West Virginia to $121,414 in Massachusetts.

Remote work has reshaped migration patterns, with clear winners and losers:

States Gaining Population:

• Texas: Projected to gain 8.6 million residents over 25 years
• Southeast states (Alabama, Arkansas, North Carolina, Tennessee)
• Idaho: Fastest housing unit growth at 2.2% annually

States Losing Population:

• California, Illinois, New York showing net outbound migration
• Louisiana has highest outbound migration rate

This migration is gradually increasing costs in previously cheap states, as remote workers bring higher salaries to lower-cost areas.

Before relocating to a cheaper state, consider these factors:

Climate and Natural Disasters: Southern states face increasing climate risks, including hurricanes, tornadoes, and extreme heat. Vermont and New Hampshire rank as safest from climate change impacts.

Job Market Stability: While remote work provides flexibility, consider local job markets for career backup. Massachusetts ranks #1 for jobs, while several cheap states have limited employment diversity.

Family Considerations: Childcare costs vary dramatically - from $5,436 annually in Mississippi to $16,087 in Minnesota. Factor in school quality if you have children.

Healthcare Access: Rural areas in cheap states often have limited healthcare facilities. Texas has the highest uninsured rate at 21.7%, while states like Hawaii and Massachusetts provide better healthcare affordability.

Finding the right place to live comes down to balancing what you can afford with how you want to live. More affordable states can save you real money, especially if you work remotely, are retired, or want to buy your first home.

Where you land within a state makes a huge difference. A nice suburb might check all your boxes for safety and convenience, while a rural area 50 miles away could leave you far from doctors, jobs, or even grocery stores.

We recommend doing your homework before you move. Visit the places you're considering, look into the job market, and calculate what you'll actually spend on property taxes, healthcare, and transportation. When you find that right combination of affordability and lifestyle, the financial breathing room can open up new opportunities that make you and your family happier than ever before.