What States Are the Cheapest to Live in?


Although there are no clear-cut rules to determining the most affordable states to live in America, several factors can help in reaching a good conclusion. Some of the important considerations include the respective prices of real estate and cost of living. The U.S. Bureau of Labor Statistics uses the Consumer Price Index (CPI) to produce monthly reports on the price changes urban consumers pay for representative goods and services.

Factors Affecting Living Cost

A variety of factors influence the cost of living in individual states. One of the most important factors irrespective of the state in question is the cost of housing, both rental and owner-occupied homes. Another important factor in determining the cost of living involves taxes, which include local property taxes and state income taxes. According to the Bureau of Labor Statistics, “a cost of living index would measure changes over time in the amount that consumers need to reach a certain ‘utility level’ or ‘standard of living.’” In addition to considering the respective prices of goods and services, it also considers both environmental and governmental factors that affect the consumers’ well-being.

Purchasing Property

Closing cost is one of the factors that influences the price of real estate in a given state. According to a study Bankrate conducted in 2010, Arkansas was the least expensive state in terms of closing costs. The other four cheapest states were North Carolina, Iowa, Montana and Wisconsin. The study showed a complete change from the previous year. Other places with relatively low home prices include Texas and North Dakota.


States use different types of taxes to raise revenue, including estate taxes, property taxes, excise taxes, income taxes, sales taxes, license taxes, inheritance taxes and intangible taxes. Some states collect just a few of the taxes while others collect almost all of them. The only states that do not collect sales taxes are Oregon, New Hampshire, Montana, Delaware and Alaska. States that do not tax personal income include Wyoming, Washington, Texas, South Dakota, Nevada, Florida and Alaska.

Cost of Living

According to studies conduced in the fourth quarter of 2010, the least expensive states are those found in the southern and Midwestern parts of the country. The states forming the Midwest include Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wisconsin. Some of the southern states include Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia. However, considering the cost of living for an entire state can be misleading because a variety of factors come into play.

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