Cheapest States to Live In Right Now

The average American household spent $77,280 on living expenses in 2024, according to the Bureau of Labor Statistics. Where you live determines whether that number stretches or suffocates you.

How We Define "Cheap"

Cost of living indexes compare a state's average expenses, including housing, groceries, utilities, transportation, and healthcare, against a national baseline of 100. A score below 100 means it costs less than average to live there. A score above 100 means you're paying a premium.

Taxes are a second layer most affordability rankings ignore. A state with a 6% income tax and cheap rent can easily cost more than a state with slightly higher rent and zero income tax. We account for both.

The 10 Cheapest States in 2026

Here are the ten states with the lowest overall cost of living indexes right now, along with their key cost drivers:

1. Mississippi (Index: 83.3) Mississippi is the most affordable state in the country by a wide margin. Median home prices sit around $157,000. Groceries and utilities run roughly 15% below the national average.

2. Arkansas (Index: 86.9) Arkansas ranks first in affordability according to U.S. News and holds a cost of living index nearly 14 points below the national baseline. The state does levy income tax, with a top rate of 4.4% as of 2026.

3. Oklahoma (Index: 87.9) Oklahoma combines low housing costs with a relatively low income tax burden. The top marginal income tax rate is 4.75%, and the median home price hovers around $180,000.

4. Missouri (Index: 88.4) Missouri offers cheap housing in mid-sized cities like Kansas City and Springfield, with a median home price near $185,000. Property taxes are moderate, with an effective rate around 0.93%.

5. Alabama (Index: 89.3) Alabama has some of the lowest property taxes in the country. The effective property tax rate is approximately 0.41%, which is among the five lowest nationally.

6. Kansas (Index: 89.9) Kansas sits in the middle of the country and delivers middle-of-nowhere prices. Median rent in Wichita, the largest city, runs around $900 per month.

7. Tennessee (Index: 90.5) Tennessee has no state income tax on wages, which meaningfully improves take-home pay. That tax advantage stacks on top of housing costs that run 10% below the national average.

8. West Virginia (Index: 91.0) West Virginia has the cheapest median home prices in the eastern United States, around $145,000. Economic opportunity remains limited, which is the primary tradeoff.

9. Iowa (Index: 91.6) Iowa offers affordable living without extreme trade-offs in infrastructure or services. The state recently reduced its flat income tax rate, moving toward a 3.8% flat rate by 2026.

10. Georgia (Index: 91.8) Georgia anchors its affordability in the rural and mid-sized city markets. Atlanta skews costs upward, but the statewide average remains well below 100.

Where You Can Actually Live on $500 a Month

Living on $500 a month for housing in 2026 is possible, but it requires specific geography. Rural Mississippi, Arkansas, and West Virginia have the highest concentration of rentals and homes in that price range. Some counties in these states still have median rents at or below $600 for a one-bedroom unit.

The math works better when taxes stay low. Tennessee and Texas both have no state income tax, meaning a larger share of every paycheck goes toward rent. Read more about which states eliminate that burden entirely in our guide to states with no income tax in 2026.

The Hidden Tax Costs That Change the Rankings

A cheap state can become expensive fast if property taxes are high. New Jersey's effective property tax rate is 2.13%, the highest in the country. Illinois sits at 1.88%. Owning a $200,000 home in Illinois costs $3,760 per year in property taxes alone. The same home in Alabama costs around $820.

Sales tax adds another layer. Mississippi's combined state and average local sales tax rate is 7.07%, which erodes some of its housing affordability advantage. Tennessee's combined rate reaches 9.55%, the highest in the nation, which matters for everyday spending. See our full breakdown in states with the lowest property taxes.

For retirees specifically, Social Security taxation and pension exemptions shift the true affordability ranking. Use our state comparison calculator to model your specific income and see your real cost across states.

Key Takeaways

• Mississippi has the lowest cost of living index in the country at 83.3, with median home prices around $157,000.
• Cheap housing and low taxes rarely come from the same state. Tennessee offers both, with no wage income tax and a cost of living index of 90.5.
• Property tax rates vary by a factor of five across states. Alabama's 0.41% effective rate versus New Jersey's 2.13% creates a $3,440 annual difference on a $200,000 home.

Compare every state side by side on taxes, housing, and total cost of living at liveordiehere.com/calculator.