2023 State-by-State Cost of Living Report: The Ultimate Guide to Affordable Living

We’ve crunched the numbers and done the analysis to look at where you can find the cheapest places to live in the USA in 2023

Updated February 2024
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Fact checked by Cathy Gresham

Map of USA with dollar showing

We indexed and ranked all 50 states, from most expensive to least expensive, based on the latest data

This dataset for Personal Finance Guru provides a comprehensive ranking of all the US states and how cheap they would be to live in. It includes factors such as the average wage, the average monthly rent, the average amount spent on groceries, the average amount spent on utilities, and more.

Methodology: how we built the rankings

We gathered data on a variety of factors to create an overall score and index score that can be used to determine the most and least affordable states to live in. The following variables were taken into consideration when collecting data:

  • Average annual wage
  • Average monthly rent
  • Average monthly cost of groceries
  • Average monthly cost of utilities
  • Average state tax rate

We then created an index score for each state and consolidated all these data points into a singular index score. We also calculated the gross amount of money people could expect to be left with on a state-by-state basis by taking their average annual wage and subtracting average yearly rent, groceries, utilities, and state tax. It’s important to mention that this final number, which represents to average annual remaining net income per person, excludes federal taxes.

Who is this information most useful for?

This data set is most helpful for people who are considering moving. It might be particularly useful for people whose jobs/careers/side hustles let them easily work from where they would like.

Prices affect us all, and sometimes life in a state gets too expensive to be viable anymore. If you are thinking about moving to a more affordable state, you will be interested in the information we will share with you today.

The cheapest states to live in (2023)

According to the data, the top 5 Cheapest States to Live in are these states:

  1. South Dakota – Overall Score: 2.99, Overall Score Index: 1.00
  2. Tennessee – Overall Score: 2.94, Overall Score Index: 0.98
  3. Nevada – Overall Score: 2.87, Overall Score Index: 0.96
  4. Wyoming – Overall Score: 2.82, Overall Score Index: 0.94
  5. Texas – Overall Score: 2.75, Overall Score Index: 0.92

Most expensive states to live in (2023)

According to the data, the top 5 Most Expensive States to Live in are as follows:

  1. Hawaii – Overall Score: 1.02, Overall Score Index: 0.34
  2. New Jersey – Overall Score: 1.76, Overall Score Index: 0.59
  3. Minnesota – Overall Score: 1.79, Overall Score Index: 0.60
  4. California – Overall Score: 1.79, Overall Score Index: 0.60
  5. New York – Overall Score: 1.81, Overall Score Index: 0.61
List of the cheapest states to live in, in 2023
List of the most expensive states to live in, in 2023

Comparing Prices Between States

Just how much does the cost of living in these states differ from one another? Would it be worth moving to a different state based on one or two factors alone?

We compare and contrast some of the largest cost drivers you are going to want to take into consideration.

Average Cost of Groceries

Everyone needs to get groceries – whether they are weekly, monthly, or anything in-between. However, the cost of groceries varies substantially from state to state. The average monthly cost in Hawaii is an incredible $508, while in Indiana it’s only $274 – a difference of $234! Whoa!

The second-most expensive state for groceries is Alaska, at $421, then California at $333. New York is the fourth most expensive state for groceries, costing around $328. We weren’t shocked to see Alaska topping the list, after all, we figure most of their food has to be shipped in and that adds a lot to the cost. We were surprised, however, to see California so high up on the list, since it’s a major food producer itself and also a major shipping hub for food coming from Asia and South America.

On the other side of things, the most affordable states for groceries, Indiana topped the monthly cost list ($274), with Arkansas ($276), Oklahoma ($277), and Kentucky ($278) not far behind. 

Average Cost of Rent

Similar to the cost of groceries, rent varies greatly from one state to another. The highest rent is in Hawaii, at an average monthly cost of $1,566. California is in second place with $1,429, then Massachusetts at $1,321. For those curious, New York is the fifth most expensive state for average rent, at $1,295 per month.

The top five most affordable states to rent in are Arkansas ($787), West Virginia ($768), Mississippi ($786), Oklahoma ($803), and Alabama ($816). From the most to least expensive, that is a difference of $779!

The average income for Arkansas is $48,952, whereas Hawaii’s is $82,366. As such, you can argue that these differences in rent roughly match up with the salaries people get – for the most part.

Median State Tax Rate

Hawaii has the highest median state tax rate, at 7.90%. Nine states have a 0% tax rate. These include South Dakota, Tennessee, Wyoming, Texas, Nevada, Florida, New Hampshire, Alaska, and Washington.

North Dakota has the lowest state tax rate of 2.00%, then Ohio at 2.40%.

It’s important to note that our analysis in this article excludes the effects of federal taxes. You may also want to consider that many states that have a low or zero state tax rate still earn their tax revenue in a different way. For example, while Texas is one of the states with no income tax, it has the seventh-highest average property tax rate at 1.6%. This makes sense when you realize that state and local governments still need to find ways to tax their citizens to fund their operations. 

Average Cost of Utilities

When it comes to the average cost of utilities, we can once again see large differences between the most affordable and most expensive states. In terms of affordability, Utah, New Mexico, Idaho, Colorado, and Nevada take the top spots, with average utility costs between $345 and $376.

The most expensive states for utilities include Alaska, Hawaii, Connecticut, West Virginia, and Georgia. These average prices range from $474 to $569. We were a bit surprised to see West Virginia here, since they’re known as a major energy producer, we’re not sure what’s going on there. We were also surprised to see Georgia so high up the list, perhaps it’s people running their A/Cs non-stop during those hot Georgia summers running up the average! 

The Cost of Living Index

The cost of living index is a theoretical price index. It measures the relative cost of living across various regions and takes into account the cost of everything. This includes transportation, shelter, energy, food, and more. The baseline for the US is 100, so let’s see which states have the best cost of living, and which have the worst.

The unsurprising high scorers are, once again, Hawaii (192.9), California (151.7), and New York (139.1). On the other end, the most affordable states to live in based on the cost of living index are Mississippi (86.1), Oklahoma (86.8), and Arkansas (86.9).

Ok the indexing is great … but what about the raw numbers? 

If you’re curious about some of the actual numbers involved in our analysis check out the graph below. 

It shows, for each state, the average annual income per person (that’s the green number on the right) in thousands of dollars ($, 000s). The graph then subtracts all of the “mandatory” costs someone might face from living in that state. That’s things like annual rent, groceries, utilities, and state taxes.

That then leaves you with the number on the right, in red, which is the amount you’ll have left to pay federal taxes, live your life and spend on discretionary things like entertainment, and invest. 

What did we learn through this study?

South Dakota, Tennessee, and Nevada are the most affordable or cheapest states to live in, while Hawaii, New Jersey, and Minnesota are the most expensive.

While some states might have lower costs for particular things like groceries or utilities, it is important to take into account all costs. That way, you can better understand which states are truly more affordable, and which are not.

Editor's Note:

At Personal Finance Guru, we want to help you maximize your lifestyle through personal finance. You can trust the integrity of our independent financial advice. Our opinions are our own and have not been provided, reviewed, approved, or endorsed by any advertiser or financial product provider. To support and grow the site, however, we may receive compensation from the issuers of some products.

Author bio:

Cody Beecham

Cody Beecham

Founder/Owner/Editor/Author

Cody is the founder and owner of Personal Finance Guru. His day job is as a management consultant at one of the Top 3 firms (think Mckinsey, Bain), where he advises Fortune 500 C-suite clients on their most important and pressing business problems. He completed his business education at Harvard Business School. 

After seeing the lack of personal finance education for regular people, Cody started the website with the mission to provide everyone access to information that will help them achieve their financial goals.

Cody approaches personal finance from a maximalist perspective, shunning typical advice around simply not buying a cup of coffee instead of more effective methods like investing in yourself to quickly grow your income. 

He believes in saving money and investing for the future, but he also knows that you need to enjoy life today. That’s why Cody approaches money with a sense of humor and a positive attitude. He knows that if you’re not having fun while you’re growing your wealth, then what’s the point?

Cody approaches life with the same gusto that he brings to personal finance. He loves to travel and experience new cultures, and he is an avid reader and learner. He also enjoys playing sports (especially tennis) and spending time with his family and friends.