The cost of living is critical when deciding where to live, work, and do business. When housing, food, transportation, health care, clothing, and entertainment are more expensive, people need to earn more to maintain the standard of living they expect.
Over the last three decades, rising prices for many life essentials have made it harder for Americans to get by, according to the White House.
Stacker used data from the Council for Community and Economic Research to determine which states had the lowest cost of living in 2022.
Each state's cost of living index was calculated using data from a voluntary survey to find the average index of metro areas and cities measured in each state. Data was rounded to the nearest tenth of a percent.
The Cost of Living Index is calculated based on the price of more than 60 goods and services. Each state's index is a percentage of the U.S. average, set at 100. For example, a state with an index score of 90 has a cost of living 10% lower than the national average
STACKER found that in 2022, most of the least expensive states were in the South and Midwest.
Read More: What Are the 25 Least Expensive States to Live In?
#1. Mississippi
Average Cost of Living Index: 85.0
Mississippi has the lowest cost of living in the nation, with housing costs 32% lower than the national average. While the cost of living may be lower, according to the Census Bureau, almost 20% of the state lives in poverty. Mississippi consistently ranks as one of the worst states for public education, and nearly 15% of people under 65 have no health insurance.
#2. Oklahoma
Average Cost of Living Index: 85.8
Oklahoma's utility costs are 9% less than the national average. The state is one of the nation's top natural gas and crude oil producers, according to the Energy Information Administration. That's likely one reason AAA says the state has some of the lowest gas prices in the country. Oklahoma housing prices are almost 30% below the national average, making this state the second-lowest in the country for cost of living.
#3. Kansas
Average Cost of Living Index: 87.5
Housing costs in Kansas are almost 30% lower than the national average. According to the Census Bureau, the average rent in Kansas is $912, and the average home value is $164,800. Kansas also has some of the lowest food costs nationwide, according to a 2021 study by Move.org, which looked at grocery costs in each state's most populous city.
#4. Alabama
Average Cost of Living Index: 88.1
Alabama has some of the lowest gas prices in the nation, according to AAA. Paying less at the pump is partly due to Alabama's proximity to oil refineries. While housing prices in Alabama are 30% lower than the national average, the education system consistently ranks as one of the worst in the country.
#5. Georgia
Average Cost of Living Index: 88.6
Housing costs in Georgia are incredibly affordable and, on average, 24% lower than the national average. In 2022, the median home value was $206,700, according to the Census Bureau. The National Association of Realtors named Atlanta as the top housing market to watch in 2023. According to AAA, gas prices in Georgia are also lower than the national average.
#6. Missouri
Average Cost of Living Index: 89.1
Missouri boasts low unemployment rates, diverse career opportunities, and housing costs 20% below the national average. Transportation costs are 7% lower than the national average, and the average commute time is only 23 minutes, according to the Census Bureau.
#7. Iowa
Average Cost of Living Index: 89.2
Iowa is one of the nation's more affordable states, with residents paying 28% less in housing than the national average and a median home value of only $160,700. Iowa also has a high percentage of homeownership: at least 7 in 10 residents own their homes, according to the Census Bureau.
#8. Indiana
Average Cost of Living Index: 89.9
Indiana's housing market is not very competitive. But even with housing costs 22% lower than the national average, the ratio between income and housing costs is the worst in the Midwest for low-income residents, according to a 2022 Prosperity Indiana report. The state's reliance on coal rather than clean energy put its average utility costs almost 4% higher than the national average.
#9. West Virginia
Average Cost of Living Index: 90.0
West Virginia has the lowest housing costs of any U.S. state besides Mississippi—less than 30% of the national average, according to the 2022 Council for Community and Economic Research report. However, that's in part due to the fact that West Virginia's average income is low, and 16.8% of the population lives in poverty, according to the Census Bureau.
#10. Tennessee
Average Cost of Living Index: 90.2
Tennessee has no personal income tax, keeping household expenses slightly lower than elsewhere. The state also has a low unemployment rate, at 3.5% at the end of 2022, according to the Bureau of Labor Statistics. More good news for Tennesseeans: The average effective property tax rate in 2022 in the state was only 0.56%.
#11. Arkansas
Average Cost of Living Index: 90.6
It's easy to find affordable housing in Arkansas, where housing costs are 22% less than the national average. Arkansas' transportation costs are 9% lower than the national average and about two-fifths of the U.S. population lives within 550 miles of the state's borders, according to the Arkansas Economic Development Commission.
#12. Ohio
Average Cost of Living Index: 91.9
Ohio residents can thank affordable housing for their low cost of living, with housing costs almost 25% lower than the national average, according to a 2022 report by the Council for Community and Economic Research. Ohio's two largest cities, Columbus and Cleveland, offer a city feel without the high cost of living of other Midwestern cities like Chicago.
#13. Nebraska
Average Cost of Living Index: 91.9
According to the Nebraska Department of Environment and Energy, Nebraska is the only state to generate electricity solely from publicly-owned power systems. As a result, electricity in Nebraska costs 25.6% less than the national average. As food costs rise across the United States, Nebraska's reliance on locally grown food has kept prices more stable than in other parts of the country.
#14. Michigan
Average Cost of Living Index: 92.2
Housing costs are almost 20% cheaper in Michigan than the national average. In 2022, two Michigan cities—Detroit and Grand Rapids—ranked in the top 20 affordable housing markets internationally, according to a report by the Urban Reform Institute and the Frontier Centre for Public Policy.
#15. Texas
Average Cost of Living Index: 92.5
As housing costs continue to rise across much of the U.S., the average housing costs in Texas remain 15% lower than the national average. Texas does not have a state income tax, giving residents more disposable income.
#16. Wyoming
Average Cost of Living Index: 92.5
Wyoming has no personal or corporate income tax, leaving residents with more disposable income. Wyoming's tax system is ranked #1 overall by the Tax Foundation, which says its taxes are the most business-friendly in the nation. Wyoming produces both coal and renewable energy, making utility costs almost 20% lower than the national average.
#17. Illinois
Average Cost of Living Index: 92.6
More than 1 in 5 Illinois residents live in or near Chicago, the third most populous city in the United States. The farther away someone lives from the Windy City, the lower the cost of living, including home prices, an average of 20% less than the national average.
#18. Louisiana
Average Cost of Living Index: 93.6
On average, Louisiana housing costs are 13% lower than the national average, according to the Council for Community and Economic Research. But living in New Orleans costs as much as 20% more than anywhere else in the state. Louisiana has a lot of oil refining, so gas doesn't need to travel as far to be sold, making fuel prices lower than the national average. When crude oil doesn't need to travel long distances, the markup for gas is much lower.
#19. New Mexico
Average Cost of Living Index: 94.0
New Mexico residents pay the lowest monthly energy bills out of all 50 states and are beaten only by the District of Columbia, according to WalletHub. The cost of food in New Mexico was 5.4% below the national average in 2021. Lower food and utility expenses help keep New Mexico's overall cost of living down.
#20. South Carolina
Average Cost of Living Index: 94.3
The average home price in South Carolina in 2022 was $239,500, according to a Rocket Homes analysis. That's about half the national average of $449,300 calculated by the Federal Reserve Bank of St. Louis. In addition to lower home prices, South Carolina also collects fewer tax dollars per resident than all but seven states, according to a Tax Foundation analysis of state tax revenues. Lower taxes and home prices mean more money in residents' pockets, lowering the overall cost of living.
#21. South Dakota
Average Cost of Living Index: 94.5
South Dakota does not have an individual or corporate income tax, which keeps more money in residents' and business owners' pockets. Natural gas and electricity prices for residents and businesses are much lower in South Dakota than the national average, according to the Energy Information Administration.
#22. Kentucky
Average Cost of Living Index: 94.9
According to AAA's national gas prices index, Kentucky's gas prices are consistently lower than the national average. Kentucky has some of the lowest electricity prices east of the Mississippi River, according to the Energy Information Administration. Low gas and utilities costs are key factors in the overall cost of living.
#23. Wisconsin
Average Cost of Living Index: 95.5
Wisconsin has a conservative fiscal policy and experienced the lowest state and local tax burden in 50 years in 2022, according to a report by the Wisconsin Policy Forum. Lower taxes keep the state more affordable for residents and businesses. According to the Energy Information Administration, Wisconsin is one of the nation's top fuel ethanol producers. Since Wisconsin is not as heavily dependent on imported energy sources as many other states, its gas prices tend to stay lower than elsewhere.
#24. North Carolina
Average Cost of Living Index: 95.7
Despite its low cost of living, North Carolina has some of the top health care facilities in the country, an extensive education system, and easy transportation, including four international airports, according to the North Carolina Department of Commerce. North Carolina boasts a diverse technology, finance, and aerospace job market. The state has the country's lowest corporate income tax rate, according to the nonprofit Tax Foundation. That helps keep prices low and the state more affordable.
#25. North Dakota
Average Cost of Living Index: 97.1
North Dakota's booming economy, high median wages, and low state income taxes made this Midwestern state an affordable place to live in 2022. North Dakota's unemployment rate was among the lowest in the U.S., according to the Bureau of Labor Statistics.
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