How We Rank States by Cost of Living
The Bureau of Economic Analysis (BEA) publishes Regional Price Parities (RPPs) for every state, measuring local price levels relative to the national average of 100. A state with an RPP of 90 means goods and services cost 10% less than the national average. We use this as the primary ranking metric because it is the most comprehensive and methodologically rigorous measure available.
The 15 Cheapest States (2025)
| Rank | State | Overall RPP | Housing RPP |
|---|---|---|---|
| 1 | Mississippi | 86.1 | 62.8 |
| 2 | West Virginia | 86.8 | 64.3 |
| 3 | Arkansas | 87.4 | 66.1 |
| 4 | Alabama | 87.9 | 67.5 |
| 5 | Oklahoma | 88.3 | 68.2 |
| 6 | Kentucky | 88.7 | 68.9 |
| 7 | Missouri | 89.1 | 70.4 |
| 8 | Kansas | 89.5 | 71.2 |
| 9 | Iowa | 89.8 | 71.8 |
| 10 | Indiana | 90.2 | 72.5 |
| 11 | Tennessee | 90.5 | 74.1 |
| 12 | Ohio | 90.8 | 74.6 |
| 13 | Georgia | 91.2 | 76.3 |
| 14 | Louisiana | 91.5 | 75.8 |
| 15 | Nebraska | 91.8 | 76.9 |
What Makes These States Cheap
The pattern is clear: the cheapest states cluster in the South, Midwest, and Appalachia. The dominant factor is housing — every state on this list has housing costs 25–37% below the national average. Other costs like groceries and transportation vary much less between states, typically within 5–10% of the national average.
The Trade-Offs of Low-Cost States
Low cost of living states tend to share certain drawbacks:
- Lower wages — median household income is 15–30% below the national average in most of these states
- Fewer job opportunities in specialized fields — tech, finance, and biotech jobs are concentrated in expensive coastal metros
- Infrastructure gaps — public transit, healthcare access, and broadband coverage are often limited in rural areas
- Climate and geography preferences — not everyone wants to live in the Deep South or Great Plains
Best Value States (Low Cost + Strong Economy)
The best-value states combine affordable costs with a strong job market:
- Texas (RPP 96.5) — no state income tax, major job markets in Austin, Dallas, Houston, San Antonio
- Tennessee (RPP 90.5) — no state income tax, Nashville's booming economy, low housing costs
- Indiana (RPP 90.2) — strong manufacturing and logistics sector, Indianapolis is increasingly attracting tech companies
- Ohio (RPP 90.8) — Columbus has a growing tech scene, and overall state costs remain low
- Georgia (RPP 91.2) — Atlanta offers big-city amenities at Midwest prices
Remote Workers: The Ultimate Arbitrage
If you work remotely for a company in a high-cost market, living in a cheap state is the most powerful personal finance strategy available. A remote worker earning a San Francisco salary while living in Mississippi effectively doubles their purchasing power. Use our comparison tool to see exactly how much further your specific salary goes in any state.