10 Cheapest States to Live in 2026
Cost of living indexes compare the price of a standard basket of goods and services against the national average of 100. A state with an index of 85 means everyday expenses run about 15% below the national average. Here are the ten states where your dollar goes furthest in 2026.
Rankings: Cheapest States by Cost of Living Index
| Rank | State | COL Index | Median home price | Best for |
|---|---|---|---|---|
| 1 | Mississippi | 84 | ~$165,000 | Retirees, remote workers seeking low housing costs |
| 2 | Oklahoma | 86 | ~$185,000 | Families, energy sector workers |
| 3 | Kansas | 87 | ~$195,000 | Agriculture workers, Midwest commuters |
| 4 | Arkansas | 87 | ~$170,000 | Outdoor enthusiasts, low-tax seekers |
| 5 | Alabama | 88 | ~$180,000 | Remote workers, retirees, manufacturing workers |
| 6 | Iowa | 89 | ~$200,000 | Families, healthcare workers |
| 7 | Missouri | 89 | ~$215,000 | Midwest location, moderate urban options |
| 8 | Tennessee | 90 | ~$280,000 | No income tax, growing job market |
| 9 | Indiana | 90 | ~$225,000 | Manufacturing, affordable suburbs |
| 10 | West Virginia | 91 | ~$140,000 | Lowest home prices in the country |
Index values are based on MERIC (Missouri Economic Research and Information Center) composite data updated through 2025-2026. Index of 100 equals national average. Median home prices are approximate 2026 figures.
What Makes These States Cheap
Housing is the primary driver
In Mississippi, Oklahoma, and Arkansas, housing costs are 30% to 50% below the national average. A $200,000 home budget buys a 3-bedroom house in these states that would cost $350,000 to $500,000 in a mid-range market like Colorado or Virginia. Housing alone accounts for 35% to 40% of the typical household budget, making it the dominant cost-of-living factor.
Groceries and utilities follow housing
Grocery prices in Mississippi, Iowa, and Kansas run 5% to 12% below the national average. Utility costs vary more by climate than region, but many of these states benefit from lower-cost electricity (hydropower in Tennessee and the South, coal and wind in the Plains states) that keeps monthly utility bills below $150 for most households.
Tennessee and Texas: no income tax as a multiplier
Tennessee has no state income tax on wages and salaries (only a tax on investment income that was fully phased out by 2021). This effectively increases take-home pay by 4% to 8% compared to high-tax states like California or New York. Combined with below-average housing costs in most of the state (Nashville and Knoxville are exceptions), Tennessee offers a strong value proposition for workers relocating from expensive coastal markets.
Trade-offs to Consider
Low cost of living does not mean universally lower expenses. Some categories may cost more in affordable states.
Healthcare costs vary
Healthcare access and costs in rural Mississippi or Arkansas can be higher than in states with more competition between providers. Health insurance costs also vary significantly by state marketplace.
Transportation costs
Most affordable states have limited public transit. Car ownership is essentially required, adding $500 to $1,000 per month in car payments, insurance, and fuel compared to car-free urban living.
Income levels differ
Average wages in Mississippi and West Virginia are among the lowest in the country. A low cost of living matters less if the local job market pays correspondingly less. Remote workers and retirees with location-independent income benefit most.
Property taxes
Low property prices often come with above-average property tax rates. Indiana and Iowa have effective property tax rates of 0.8% to 1.1% of assessed value, which is moderate nationally. Calculate the annual tax bill alongside the purchase price.