The lowest cost of living in the U.S.: A city-by-city guide

Lowest cost of living in US: group of friends sitting on a bench

The thought of living in the U.S. may bring to mind well-known American cities like New York or Los Angeles. But life in these major metropolitan areas doesn’t come cheap. In fact, the cost of living in New York City is one of the highest in the world, mostly due to its high monthly rent and real estate prices.

Fortunately, there are plenty of other American cities where the average cost of living is lower and residents can still maintain a high quality of life. These include mid-sized cities in Southern and Midwestern states such as Texas, Indiana, and Mississippi.

Let’s take a look at how living costs are calculated as well as the top ten cities with the lowest cost of living in the U.S.

How is the cost of living in the U.S. calculated?

In the United States., there isn’t a single agency or organization that calculates living costs. The U.S. Census Bureau is responsible for estimating the population of each state, and they may collect other data too, such as the median household income.

Other groups compile data from multiple sources to put together their own lists of the most affordable cities with the lowest cost of living in the U.S.

For our article, we’ve relied on the latest statistics from the U.S. Census Bureau and the Council for Community and Economic Research, which maintains a well-known Cost of Living Index they update quarterly. The most recent data comes from the first three months of 2022.

Their index is based on six key factors:

  • Housing
  • Utilities
  • Grocery items
  • Transportation
  • Health care
  • Miscellaneous goods and services

Since every household is different, you may want to do additional research to find out which would be the most affordable state for you based on your expected income and expenses.

The most important factors to consider include:

  • Income taxes: Anyone living and working in the U.S. is required to pay federal income tax, and you may also have to pay state income tax depending on where you live. But not all states tax their residents’ income; Texas, Tennessee, and Florida are three states that don’t. However, there are other taxes to consider, such as sales and property taxes, so a state without an income tax isn’t necessarily the cheapest state to live in.
  • Affordable housing: Housing costs can be a big portion of your living expenses, so it’s important to consider the affordability of your housing options. States with a low cost of living typically have housing prices that are below the national average. Depending on whether you plan to buy or rent, you’ll want to compare the average rent or average home price in each area before deciding where to live.
  • Average household income: As of this writing, the federal minimum wage in the U.S. is $7.25 per hour, but it can be as low as $2.13 for tipped labor. States are free to set their own minimum wage as long as it isn’t lower than the federal minimum wage. States with a higher cost of living, such as Washington and California, sometimes have higher minimum wages. Be sure to consider the minimum wage and unemployment rate in each state to find out whether your expected income will provide the quality of life you’re looking for.
  • Transportation costs: Urban areas tend to have higher housing costs, but they may have lower transportation costs due to more extensive public transit networks that eliminate the need for a car. On the other hand, residents of smaller towns and cities may have a shorter average travel time to work. Gas prices and car insurance costs vary from state to state, so these can impact the overall cost of living in a city.

10 cities with the lowest cost of living in the U.S.

Woman with a backpack looking at a view of a city

Based on the factors listed above, which cities have the lowest cost of living in the U.S.? According to the Council for Community and Economic Research, the most affordable cities score less than 85 on the Cost of Living Index.

Compare that benchmark to the scores of places like Honolulu, Hawaii (185.6) or New York City (239.3), and you can see why these are some of the most affordable cities in the U.S.

As the economic landscape of the country changes, these numbers may change. For the most up-to-date information about housing prices and median rent, check local real estate and rental listings in your area of interest.

1. Kalamazoo, Michigan (76.5)

With a median home listing price of less than $200,000, according to Realtor.com, Kalamazoo, Michigan, is one of the most affordable cities to buy a home in the U.S.

Although the city is small, with a population of 73,257, Kalamazoo is a major university town and just a three-hour drive from Chicago.

2. McAllen, Texas (77.0)

McAllen sits at the very southern end of the state in the Rio Grande Valley, so expect hot summers, with an average high temperature of 97.5 degrees.

According to the most recent census data available, from 2020, the city has a median household income of $49,259 and a relatively high poverty rate of 22%.

3. Harlingen, Texas (79.0)

Harlingen, Texas, is in the same region as McAllen, so expect a similar climate and travel time to work. Housing costs are a bit lower, with a median listing home price of less than $300,000 at the time of this writing.

4. Muskogee, Oklahoma (79.6)

Muskogee, Oklahoma, has a median home listing price of less than $150,000 at the time of this writing. Just a one-hour drive from Tulsa and a two-hour drive from Oklahoma City, Muskogee itself has a population of just over 66,000 people.

5. Tupelo, Mississippi (81.2)

Tupelo, Mississippi, is known for being the birthplace of Elvis Presley, and it continues to be a cultural center in the region. With a median home listing price of less than $250,000, it ranks fifth on the list of cities with the lowest cost of living in the U.S.

6. Amarillo, Texas (81.5)

Amarillo is the third Texas city on the list, located in the northern panhandle area of Texas, giving it a colder winter climate. With a population of 201,234, Amarillo is a medium-sized city with generally low home values and cost of living. It’s also home to higher education institutions and a strong regional culture.

7. Anniston-Calhoun County, Alabama (82.2)

Anniston, Alabama, is close to Birmingham and has an economy centered around an army depot and the Alabama Regional Medical Center. According to the most recent census data in 2020, it had a median income of $50,128.

8. Richmond, Indiana (82.3)

The first Midwestern city on the list is Richmond, Indiana, on the border of Ohio. Known for its role in jazz history, Richmond has a population of 35,720 and a median household income of $40,871 in 2020.

9. Pittsburg, Kansas (83.0)

Not to be confused with Pittsburgh, Pennsylvania, this city is a two-hour drive south of Kansas City, Missouri. It has a population of 20,734 and, in 2020, a median household income of $34,353, lower than other cities on this list.

10. Jackson, Mississippi (83.1)

Jackson, Mississippi, is the only state capital on our list, with a median home listing of less than $200,000. The city of Jackson has a population of 149,761, making it a mid-sized metro area, and in 2020, had a median household income of $40,064.

How to choose the right city for you

Man talking on the phone while walking his dog

Most of the cities with the lowest cost of living in the U.S. are in the South or Midwest. Other states with a low cost of living that didn’t make the top ten include Missouri, Georgia, and North Carolina.

Cost of living isn’t the only thing to consider when deciding where to live in the U.S. It may be just as important to you to choose an immigrant-friendly city, for instance. Moreover, wages may be lower in areas with a lower cost of living, depending on your industry.

It’s also worth considering how the exchange rate will impact your cost of living if you’ve just arrived from another country.

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