As inflation and housing costs continue to strain budgets across the US, more Americans are rethinking where and how they live. Relocating to a state with a lower cost of living could be a game-changer.
This Remitly guide explores the top US states with the lowest cost of living in 2025, based on updated cost-of-living indexes and trustworthy economic data. We’ll break down what makes these states affordable and how you can determine if relocating might be right for you.
What makes a state affordable?
Understanding costs of living is essential when deciding where to live, especially if you’re looking to stretch your income, save for the future, or improve your quality of life. But what exactly does cost of living mean, how is it calculated, and which factors influence it? Let’s break it down.
What is the cost of living?
Cost of living refers to the amount of money needed to cover basic expenses in a specific location, like housing, food, healthcare, transportation, and taxes. A lower cost of living means your money stretches further, allowing you to afford a comfortable lifestyle without breaking the bank.
How cost of living is calculated
Cost-of-living calculations typically rely on an index system, the most trusted being the Cost of Living Index (COLI) by the Council for Community and Economic Research (C2ER). COLI provides the cost of living by state, setting the US national average at 100:
- A score below 100 means a place is less expensive than the national average.
- A score above 100 means it’s more expensive than average.
For example, Hawaii tops the list with an overall cost of living index of 186.9 (the highest in the US), which means it is 86.9% more expensive than the national average. Compare that to West Virginia, which has a cost of living index of 84.1, meaning that it’s 15.9% more affordable than the national average.
Factors influencing cost of living
Here’s what goes into the cost-of-living equation:
- Housing costs: Often the largest expense for most individuals and families, this category includes rent, mortgage payments, property taxes, and home insurance. In states with the lowest cost of living, housing is significantly more affordable, especially in rural and suburban areas.
- Utilities: Electricity, water, gas, trash collection, and internet services can vary widely by region. Colder climates might see higher heating bills, while warmer areas may spend more on air conditioning.
- Healthcare: Medical care costs, insurance premiums, and out-of-pocket expenses influence overall affordability. States with robust public health programs or competitive insurance markets tend to offer lower healthcare costs.
- Transportation: Includes gas prices, car insurance, public transportation, and commuting costs. In car-dependent states, longer distances and higher fuel costs can add up quickly.
- Grocery and daily goods: The cost of groceries, dining out, and household essentials reflects local supply chains and taxes. States closer to agricultural hubs or distribution centers often see lower food costs.
- Miscellaneous expenses: This final category includes education, childcare, entertainment, and other lifestyle-related expenses that vary by location and household.
Top 5 most affordable places to live in the US in 2025
Here’s a breakdown of five of the most budget-friendly states in the US, including cost-of-living factors and what to expect in terms of population, climate, diversity, and quality of life.
| State | Overall | Housing | Utilities | Healthcare | Transport | Grocery |
| West Virginia | 84.1 | 59.9 | 96.6 | 97.7 | 93.1 | 99.0 |
| Oklahoma | 85.7 | 68.6 | 95.4 | 96.6 | 90.7 | 95.4 |
| Kansas | 87.0 | 72.4 | 98.7 | 94.5 | 90.1 | 94.8 |
| Mississippi | 87.9 | 73.9 | 88.9 | 99.3 | 89.8 | 87.9 |
| Alabama | 88.0 | 69.5 | 100.0 | 87.0 | 90.8 | 88.0 |
Source: World Population Review
West Virginia
- Overall cost of living index: 84.1
- Population: 1.77 million
- Average salary: $55,212 USD
West Virginia is the most affordable place to live in the US, with the lowest cost of living in the country. If you’re looking for states with cheap housing in 2025, West Virginia is at the top of the list. The median home price is $167,250 USD, and the average rent for a 2-bedroom apartment is $1,093 USD.
People love West Virginia for its natural beauty, quiet pace of life, and outdoor recreation opportunities, such as hiking, fishing, and skiing in the Appalachian Mountains. It’s especially appealing to retirees or remote workers seeking serenity.
Drawbacks to be aware of: the state offers limited job diversity, has an aging population, and suffers from healthcare shortages.
Oklahoma
- Overall cost of living index: 85.7
- Population: 4.13 million
- Average salary: $49,890 USD
Oklahoma combines low living costs with a strong job market in energy, aerospace, and healthcare. Housing is affordable, and utility costs are below the national average (95.4).
Residents enjoy rich Native American and Western heritage, open spaces, and a tight-knit community atmosphere, especially in smaller cities.
Drawbacks to consider: Oklahoma ranks mid-tier in healthcare access and is prone to severe weather, including tornadoes. Infrastructure is improving, but can be uneven across rural areas.
Kansas
- Overall cost of living index: 87
- Population: 2.99 million
- Average salary: $50,028 USD
Kansas is known for its family-friendly communities, top-rated public schools, and central location, making it attractive for professionals and families alike. The economy is anchored by agriculture, aviation, and logistics. Kansas offers low commute times, friendly residents (ranked as the 8th-friendliest state), and a slower pace of life.
While housing is affordable and grocery prices are low, utility costs can be higher, especially in colder seasons.
What to consider: There are fewer entertainment options in rural areas, and the state suffers from unpredictable weather.
Mississippi
- Overall cost of living index: 87.9
- Population: 2.94 million
- Average salary: $47,503 USD
Mississippi offers low housing, healthcare, and grocery costs, making it ideal for cost-conscious movers. Coastal areas and river towns boast scenic views and a rich cultural heritage rooted in blues music, food, and tradition.
Mississippi’s strong community ties, mild winters, and low property taxes appeal to retirees and those looking for a slower lifestyle.
Drawbacks to be aware of: the state faces economic challenges, including higher poverty rates, limited infrastructure, and uneven healthcare access.
Alabama
- Overall cost of living index: 88
- Population: 5.07 million
- Average salary: $48,110 USD
Alabama stands out for its beautiful landscapes, from Gulf Coast beaches to Appalachian foothills. It offers a relaxed lifestyle, Southern charm, and affordable real estate, especially in suburban and rural areas.While healthcare and education quality can vary, many cities like Huntsville and Birmingham are investing in infrastructure, making them great relocation options.
What to consider: Utilities can be high, and income levels are slightly below average, but low property taxes and affordable transportation help offset costs.
How to decide if relocation is right for you
Relocating for lower cost of living can lead to long-term savings, but it’s a big decision with emotional, financial, and logistical considerations. Before you start packing boxes, it’s essential to evaluate whether moving truly aligns with your needs, goals, and lifestyle.
Consider the following to help you make an informed decision.
Evaluate your finances
Start by taking an honest look at your current financial situation. Create a monthly budget that includes all major expenses:
- Rent or mortgage
- Utilities
- Transportation
- Healthcare
- Groceries and household essentials
- Childcare or education expenses
Once you have a clear picture, compare these numbers to the cost-of-living data in potential relocation states. Tools like C2ER COLI or the NerdWallet Cost of Living Calculator can give you side-by-side comparisons to help you visualize the differences.
Ask yourself:
- Will my salary or income stretch further in a new location?
- Can I save more or reduce debt further?
- Are there hidden costs (moving, job search, new insurance) that might offset savings?
Clarify your lifestyle needs
Cost alone shouldn’t be the only driver of your decision. A low-cost area might not be the right fit if it doesn’t support your personal and professional goals. Think about the kind of lifestyle you want to lead:
- Do you prefer urban, suburban, or rural living?
- How important is access to public transportation, cultural amenities, or restaurants?
- Are you looking for strong school districts, access to outdoor recreation, or a slower pace of life?
- Will you be able to maintain social connections or build a new community easily?
Research neighborhoods like a local
Even within an affordable state, costs and lifestyles can vary significantly between cities and towns. A state might have a low overall cost of living, but certain metro areas could still be pricey.
Here are a few tips to help you dig deeper:
- Use real estate platforms like Zillow, Redfin, or Realtor.com to browse home and rental prices in specific areas.
- Check out crime rates, school rankings, and walkability scores through tools like Niche.com or GreatSchools.org.
- Watch YouTube blogs or neighborhood walkthroughs to get a sense of daily life.
- Join local Facebook groups or Reddit communities to ask questions and hear from residents.
If possible, plan a short trip or temporary stay (such as a one-month rental) to experience the area firsthand before committing to the long term.
Evaluate career and remote work flexibility
If you are a freelancer or you work remotely, relocation may be easier, but you’ll still want to consider:
- Internet speed and reliability in your new location
- Time zone differences (important for remote teams)
- State income tax implications for remote workers (some states tax based on your employer’s location)
If you plan to look for a new job, research the local job market and average wages in your industry. Affordable living is great, but not if it’s paired with limited employment options or reduced earning potential.
Involve your family or support system
If you’re moving with a partner, children, or dependents, involve them in the conversation early. Everyone’s needs, from school options to medical care, should be considered.
And if you’re relocating alone, think about how you’ll build a new support system. Does the area have a strong sense of community? Opportunities for social engagement? Proximity to family or friends?
Resources for cost-of-living comparisons
Below are some of the most trusted and user-friendly resources to help you compare costs across states and make a more informed decision.
Cost-of-living calculators
These tools allow you to compare your current city to a new location based on your income, lifestyle, and spending habits.
Government and official economic data sources
These sites offer authoritative, data-backed information that can guide your deeper research.
- US Bureau of Economic Analysis (BEA): BEA’s Regional Price Parities (RPPs) measure the difference in prices across states and metro areas, which is useful for comparing the real value of money by region.
- US Census Bureau: With demographic, economic, and housing data by state and city, the census can be used to understand population growth trends, median incomes, and homeownership rates.
- Official state & local government websites: Many states publish economic outlooks, relocation guides, and cost-of-living overviews, offering resources tailored to future residents.
Recommended sources for further research
While calculators and databases are great starting points, it’s important to look at qualitative insights too, especially when evaluating lifestyle and local community dynamics.
- Reddit: Subreddits like r/Relocation, r/PersonalFinance, or city-specific threads offer unfiltered insights from real residents. You can search past threads or post your own questions.
- Zillow or Realtor.com: Use these to check current home prices and rent estimates in specific cities or zip codes. You can often see price trends over time, giving you a sense of market stability.
- Healthcare.gov: This site helps you understand health insurance options and estimated costs in different states if you’re not covered through an employer.
No single tool gives the full picture. Combine insights from calculators, official data, and firsthand accounts to make sure you’re looking at both the numbers and the lived experience.
FAQs
What is a good cost-of-living index?
A cost-of-living index of 100 represents the national average, so anything below 100 means the area is more affordable than average. States with an index in the 80s or low 90s typically offer significant cost savings, especially in housing.
How do I know if relocating will save me money?
Use a cost-of-living calculator to compare your current expenses with your potential new location. Be sure to factor in housing, taxes, transportation, healthcare, and job opportunities. Also consider how a move could affect your income, work-life balance, and access to essential services.
Is a lower cost of living always better?
Not always. While lower costs can ease financial pressure, some areas may have fewer amenities, limited job prospects, or less access to healthcare and education. It’s important to weigh affordability with quality of life, including safety, social opportunities, and long-term career growth.