Cheapest U.S. States to Live In 2026

In today's economic climate, where housing costs have skyrocketed and inflation continues to impact everyday expenses, finding a place where your dollar stretches further has become more critical than ever. With residential real estate prices up 60% from 2019 to 2025 and mortgage rates holding steady around 6.18% in early 2026, many Americans are rethinking their location strategy.

The rise of remote work has opened unprecedented opportunities to live in more affordable states without sacrificing career prospects. But choosing the cheapest state isn't just about low rent: it's about understanding the complete financial picture, including taxes, healthcare costs, utility expenses, and quality of life trade-offs.

The Cost of Living Index measures the average cost of living in various states relative to the national average, which is set at 100. States with a Cost of Living Index below 100 are more affordable than the national average, making them attractive options for those looking to maximize their purchasing power.

This index takes into account essential expenses like housing, food, utilities, transportation, healthcare, and taxes. However, it's crucial to understand that a low cost of living doesn't automatically translate to a better quality of life - there are often trade-offs to consider.

Here are the top 5 cheapest states to live in the U.S. based on comprehensive affordability metrics for a household of 4 people with 2 working adults. The monthly rent reflects the average for a two-bedroom apartment.

1. Mississippi

Mississippi consistently ranks as America's most affordable state, but it comes with significant trade-offs. While housing costs are incredibly low and the state offers full tax exemptions for retirement income, Mississippi also has the highest poverty rate at 14.3% and ranks among the bottom states for public school quality.

The state offers over 50 colleges and universities and maintains a strong sense of community. For retirees on fixed incomes, Mississippi's combination of low costs and tax-friendly policies makes it particularly attractive. However, broadband access can be limited in rural areas, which remote workers should carefully consider.

2. Oklahoma

Oklahoma offers a mild climate and beautiful green scenery year-round. The state has a relatively strong economy with diverse industries including energy, agriculture, and aerospace. Cities like Oklahoma City and Tulsa provide vibrant college town atmospheres with big-city amenities at small-town prices.

The state's unemployment rate remains below 3%, indicating a healthy job market. However, Oklahoma does experience severe weather, including tornadoes, which potential residents should factor into their decision. The state has decent broadband infrastructure in urban areas, making it more suitable for remote workers than some other cheap states.

3. Kansas

Kansas boasts thriving agriculture and aerospace industries, plus one of the lowest unemployment rates in the nation at under 3%. The state offers four distinct seasons and a variety of climates, from hot summers to cold winters.

Kansas provides excellent value for families, with decent schools and safe communities. The state's central location makes it ideal for those who travel frequently for work, with major cities easily accessible by car or plane. Kansas has invested significantly in broadband infrastructure, making it increasingly attractive to remote workers.

4. Alabama

Alabama combines warm weather, rich cultural heritage, and extremely low housing costs. The state has one of the lowest unemployment rates in the U.S. at 2.7% and hosts prestigious universities like the University of Alabama and Auburn University.

Alabama offers beautiful natural scenery, from Gulf Coast beaches to Appalachian foothills. The state also has the second-lowest property tax rate in the nation at just 0.38%, which significantly benefits homeowners. However, families should research specific cities carefully, as safety and school quality can vary significantly by region.

5. West Virginia

West Virginia offers the lowest rent in America at just $658 monthly for a two-bedroom apartment, making it incredibly accessible for renters. The state provides stunning mountain scenery and outdoor recreation opportunities that rival expensive destinations like Colorado.

However, West Virginia faces economic challenges with limited job diversity and an aging population. The state also has the highest utility costs in the nation at $734 monthly, which can significantly impact your budget. West Virginia works best for retirees, remote workers with reliable internet access, or those in specific industries like healthcare or education.

While these states offer low costs on paper, the current housing market presents unique challenges. Over 81% of mortgage borrowers are locked into rates 100+ basis points below current rates, creating a supply shortage even in affordable states.

First-time homebuyers now represent just 21% of the market compared to the historical average of 40%. With mortgage rates averaging 6.18% in early 2026, even "cheap" homes may be unaffordable for many buyers.

Key Housing Facts:

• National median home price: $357,275
• Average rent (two-bedroom): $1,901/month
• Mortgage rates expected: 6.0-6.3% through 2026
• Home price growth forecast: 1-4% annually

State taxes can dramatically impact your actual cost of living, often more than rent differences. Here's how tax policies affect affordability:

Property Tax Variations:

• New Jersey: 2.23% (highest)
• Hawaii: 0.27% (lowest)
• Alabama: 0.38%
• Mississippi: 0.61%

On a $200,000 home, you'd pay $4,460 annually in New Jersey versus just $760 in Alabama - a $3,700 difference that significantly impacts affordability.

Consider this: A remote worker earning $80,000 living in Tennessee (no income tax) versus California (9.3% rate) saves $7,440 annually in state taxes alone. That's equivalent to getting a $620/month rent discount just by choosing the right state.

Beyond rent and taxes, several expenses can make or break your budget in cheap states:

Utility Costs Vary Dramatically:

• West Virginia: $734/month (highest in nation)
• Wisconsin: $427/month (lowest)
• Missouri: $679/month
• National average: $401/month

Grocery Inflation Differs by State:

• Pennsylvania: 8.2% price increase (12-month)
• Vermont: 7.0% increase
• Colorado: 2.9% increase (lowest)
• Rural areas average 7.6% inflation vs. 5.6% in large cities

Childcare Costs:

• Mississippi: $6,001/year for infant care
• California: $16,945/year
• Alabama: $6,001/year
• National average: $11,582/year

These "hidden" costs can easily add $200-500 monthly to your budget, potentially eliminating the savings from lower rent.

For remote workers, internet quality is non-negotiable. Here's how cheap states stack up for broadband access:

States Meeting FCC Standards (100 Mbps/20 Mbps):

• Connecticut: 65.8% of residents
• North Dakota: 65.5%
• Delaware: 63.3%
• Maryland: 63.7%

Cheap States with Broadband Challenges:

• Alaska: Under 40% meeting standards
• Montana: Under 40%
• Wyoming: Under 40%
• Rural areas in Mississippi and West Virginia often lack reliable high-speed internet

Best Cheap States for Remote Work:

• Kansas: Good broadband infrastructure in cities
• Oklahoma: Decent coverage in Tulsa and Oklahoma City
• Alabama: Improving rapidly, especially in Huntsville and Birmingham

Before relocating for remote work, verify internet speeds in your specific area - rural broadband can be unreliable even in states with good overall coverage.

Cheap doesn't always mean better. Here are important considerations beyond cost:

Safety Rankings:

• Maine: #1 safest state
• New Hampshire: #2 safest
• New Mexico: Highest violent crime rate
• Louisiana: High murder rate (14.5 per 100k)
• Alabama: 10.3 murders per 100k

Education Quality:

• Massachusetts: #1 public schools
• Mississippi: Bottom 10 for education
• Alabama: Bottom 15 for education
• Kansas: Middle-tier performance

Healthcare Access:

• Average Healthcare.gov premium 2026: $50/month (after tax credits)
• Uninsured rates vary significantly by state
• Rural areas in cheap states often have limited healthcare facilities
• Some cheap states didn't expand Medicaid, affecting low-income healthcare access

Different states work better for different situations:

For Young Professionals: Texas, North Carolina, Tennessee - balanced job markets, reasonable costs, no/low income tax, good broadband infrastructure

For Families: Kansas, Iowa, Alabama - good schools in certain districts, safe communities, moderate costs, reasonable childcare expenses

For Retirees: Mississippi, Tennessee, Alabama - no tax on retirement income (Mississippi), low property taxes, affordable healthcare options

For Remote Workers: Texas, Tennessee, Oklahoma - no income tax, growing tech communities, reliable broadband, affordable housing outside major metros

For First-Time Homebuyers: Alabama, Mississippi, West Virginia - lowest median home prices, FHA/VA loan friendly markets, reasonable down payment requirements

Several federal programs make cheap states even more accessible for homebuyers:

FHA Loans:

• Down payment as low as 3.5%
• Credit scores as low as 580 accepted
• Particularly valuable in cheap states where loan limits still cover most homes

VA Loans (for veterans):

• Zero down payment required
• No private mortgage insurance
• Competitive rates even in current market

USDA Rural Loans:

• Zero down payment for eligible rural areas
• Many areas in Mississippi, Alabama, Kansas, and West Virginia qualify
• Income limits apply but are generous in low-cost areas

State Down Payment Assistance:

• Most cheap states offer first-time buyer programs
• Can provide $3,000-15,000 in down payment help
• Often combined with federal programs for maximum benefit

These programs can make homeownership possible even with median incomes in affordable states.

To put state costs in perspective, here's what the average American household spends annually:

• Total household expenses: $61,334
• Housing costs: $21,408 (34.9% of budget)
• Transportation: $9,826 (16%)
• Healthcare: $5,177
• Food and dining: $7,317
• Utilities: $4,812 (varies dramatically by state)

The median home price nationally is $357,275, while average rent for a two-bedroom apartment is $1,901 monthly. Median household income varies from $44,966 in Mississippi to over $86,000 in Maryland.

The living wage for a family of four ranges from $40,415 in West Virginia to over $121,000 in Massachusetts, highlighting how dramatically location affects financial requirements.

Remote work has reshaped migration patterns, with clear winners and losers:

States Gaining Population (Domestic Migration):

• South Carolina: Leading gains
• Idaho: Fastest housing unit growth
• North Carolina: Consistent growth
• Delaware: Surprising new winner
• Tennessee: Steady migration

States Losing Population:

• New York: Highest outbound migration
• Hawaii: Significant losses
• Alaska: Continued decline
• California: Net outbound migration continues
• Massachusetts: Losing residents to cheaper states

The Midwest Reversal: For the first time this decade, every Midwest state gained population in 2024-2025. This represents a major shift as affordable Midwest cities become attractive alternatives to expensive coastal markets.

Migration Slowdown: Net international migration dropped 53.8% between 2024-2025, meaning domestic migration between states is now the primary driver of population changes.

The 2026 Social Security Cost of Living Adjustment (COLA) of 2.8% provides an average monthly benefit of $2,071 for retired workers. For retirees considering cheap states, tax treatment of retirement income becomes crucial:

States That Don't Tax Retirement Income:

• Mississippi: Full exemption for all retirement income
• Tennessee: No tax on retirement income
• Alabama: Partial exemptions available
• Texas: No state income tax at all

Property Tax Benefits for Seniors:

• Alabama: 0.38% effective rate (second-lowest nationally)
• Mississippi: 0.61% rate
• Many states offer senior property tax exemptions

Medicare Supplement Costs: While Medicare is federal, supplement insurance costs vary by state. Rural areas in cheap states may have limited provider networks, potentially affecting healthcare access and costs.

Before relocating to a cheaper state, consider these factors:

Climate and Natural Disasters: Southern states face increasing climate risks, including hurricanes, tornadoes, and extreme heat. Oklahoma and Kansas are in "Tornado Alley," while Alabama faces hurricane risks along the Gulf Coast.

Job Market Stability: While remote work provides flexibility, consider local job markets for career backup. Unemployment rates in cheap states range from 2.7% (Alabama) to 4.4% (national average), but job diversity can be limited.

Family Considerations: Childcare costs vary dramatically - from $6,001 annually in Mississippi and Alabama to over $16,000 in higher-cost states. However, some expensive states offer better childcare tax credits and subsidies.

Healthcare Access: Rural areas in cheap states often have limited healthcare facilities. Consider proximity to major medical centers, especially if you have ongoing health needs or are planning to age in place.

Transportation Costs: Cheap states often require more driving due to limited public transportation. Factor in vehicle costs, insurance, and gas when calculating total living expenses.

Finding the right place to live comes down to balancing what you can afford with how you want to live. More affordable states can save you real money, especially if you work remotely, are retired, or want to buy your first home.

Where you land within a state makes a huge difference. A nice suburb might check all your boxes for safety and convenience, while a rural area 50 miles away could leave you far from doctors, jobs, or even reliable internet service.

We recommend doing your homework before you move. Visit the places you're considering, test internet speeds if you work remotely, research local school districts if you have children, and calculate what you'll actually spend on property taxes, utilities, healthcare, and transportation. Factor in hidden costs like higher utility bills in West Virginia or limited broadband in rural areas.

When you find that right combination of affordability and lifestyle fit, the financial breathing room can open up new opportunities - whether that's starting a business, paying off debt faster, or simply having more money for the things that matter most to you and your family.