The 10 Cheapest States to Live in 2025 (Full Cost-of-Living Index with Housing, Utilities & Food Breakdown)

Introduction

If you’re looking to stretch your dollars further, choosing the right state matters more than ever. Even in 2025, Americans face steep costs in housing, utilities, food, and healthcare—but there are parts of the country where those costs stay well below the national average.

This article digs into the cheapest states to live in 2025, backed by reliable, up-to-date data. You’ll get:

A Top 10 list of states with the lowest cost of living
A full ranking (or at least contextual placement)
A breakdown of housing, utilities, food/groceries, transportation, and healthcare costs
Tips and caveats to help you decide whether relocating is truly worth it

Let’s dive in.

What Determines Cost of Living?

Before we jump into rankings, it helps to understand what goes into a “cost of living index.” Typically, these indices aggregate costs (or price levels) across the following categories:

Housing (rent, home prices, property taxes)
Utilities (electricity, gas, water, sewer, Internet)
Groceries / Food (food at home, some include eating out)
Transportation (fuel, vehicle maintenance, public transit)
Healthcare (insurance, medical services)
Miscellaneous / Other goods & services (clothing, entertainment, taxes)

A baseline national average (index = 100) is often used; states below 100 are cheaper than average, and above are more expensive.

One good reference is the Missouri Economic Research & Information Center (MERIC) cost-of-living data, which provides quarterly indices per state, broken into categories like housing, utilities, transportation, etc.

Also, aggregators such as World Population Review publish cost-of-living index by state for 2025.

With those in hand, here’s how the states compare.

Top 10 Cheapest States to Live in (2025)

Below is a commonly accepted Top 10 list based on multiple sources (especially MERIC and affordability analyses). Exact ranks may vary slightly by source.

Rank	State	Cost-of-Living Index*	Why It’s Affordable (Key Strengths)
1	Oklahoma	~85.5	Very low housing index; utilities and transportation also cheap
2	Mississippi	~87.3	One of the lowest housing costs; modest tax burden
3	Alabama	~87.6	Low home prices, especially in smaller cities; reasonable utilities
4	Missouri	~88.0	Balanced across categories, lower grocery & housing costs
5	West Virginia	~88.3	Very inexpensive housing and utilities
6	Iowa	~89.6	Stable cost structure, affordable housing in many areas
7	Kansas	~89.7	Relatively low housing and no state income tax in parts
8	Michigan	~89.8	Moderate housing, lower costs outside major metro areas
9	Tennessee	~90.0	No state income tax, lower costs in non-metro regions
10	Arkansas	~90.5	Very low home prices and tax burden

*Index values approximate; sources may round or adjust.

Note: Some sources place Arkansas first in affordability rankings (based on cost + housing + taxation) rather than strictly cost index.

So, if you see Arkansas topping some lists, it’s because those rankings factor in additional variables (e.g. housing affordability, income, taxes) beyond just “cost index.”

Full State Ranking & Context

While we can’t list all 50 states here, here’s how the extremes and regional trends shake out:

Most expensive states typically include: Hawaii, Massachusetts, California, Alaska, New York. (These often show indices well above 120 or more.)
In general, the Midwest and the South dominate the bottom (cheapest) half of rankings.
States in the West (e.g. California, Oregon, Washington) and Northeast tend to have higher overall indices, mainly driven by housing and taxes.

If you like, I can generate a full 50-state table sorted by cost index (2025) for you to embed on your site.

Breakdown: Housing, Utilities, & Food

To understand the “cheapest states,” we need to see how major cost categories compare. Below is a breakdown and comparative insight.

1. Housing (Rent / Home Prices)

Housing is usually the largest expense and the biggest differentiator across states.

In many of the cheapest states, the housing index is well below the national average. For example, Oklahoma’s housing index is reported around 70.7, meaning housing costs are ~30% below the U.S. average.
In Mississippi, housing is one of the lowest among states.
By contrast, expensive states might have housing indices 150+ or more (i.e. 50%+ above average).
As of 2025, median home prices in the cheapest states often fall in the $200,000–$300,000 range — far below national medians in pricier states.
Keep in mind: within a state, metro areas vs rural differ widely. Living in a rural county in Alabama is far cheaper than living in Birmingham, for example.

2. Utilities

Utilities (electricity, gas, water, internet) also show meaningful variation, especially in climates with heating or cooling needs.

In many low-cost states, utility indices hover slightly under or near the national average.
For instance, Oklahoma’s utility index is roughly 95.4, meaning about 4.6% below average.
States with extreme weather (very hot or cold) tend to push utilities up, especially in high-demand seasons (e.g. heating in Minnesota, air conditioning in Arizona).
Nationally, average utility costs (electricity, gas, water, Internet) in 2025 are commonly reported in the range of $370–$400/month, depending on region and usage.

3. Food / Groceries

Food is less variable state to state than housing, but inflation, supply chains, and local wages can shift costs.

In 2025, overall food prices are rising faster than other inflation: food is expected to increase around 3.0% year over year.
Grocery (food-at-home) inflation alone is projected at ~2.4%.
So, cheaper states will still benefit somewhat, but food costs often remain closer across states compared with housing.
Some states in remote or low-density areas may have higher grocery costs due to transportation and delivery overhead.

4. Transportation & Healthcare & Miscellaneous

While narrower, differences in gas taxes, insurance rates, public transit availability, and local wages for services can shift total cost.

Transportation indices differ less dramatically but will matter if you commute far or own a car in high-tax states.
Healthcare is tricky — states vary in insurance regulation, Medicaid support, and provider availability.
Miscellaneous costs (sales taxes, license fees, entertainment) also add up.

Why These States Are So Cheap (Key Patterns)

Looking at the Top 10, several patterns emerge:

Housing affordability is the lynchpin — if housing is expensive, even a low utility cost can’t make a state “cheap.”
Lower population density and less urbanization help keep wages lower (and thus some service costs lower), but also reduce overhead in infrastructure.
Fewer regulatory burdens or lower taxes in many of these states make it cheaper to build, maintain utilities, and deliver services.
Climate moderation or absence of extreme seasons helps keep utility bills manageable (though this is less important than housing).
Regional proximity — southern and midwestern states benefit from being closer to supply chains and having lower logistics costs for goods.

Caveats & Things to Watch Out For

Even though a state looks “cheap” on a list, your real cost will depend heavily on:

City vs rural: Living in a small town or rural county is usually far cheaper than in a metropolitan area within the same state.
Job market & income: In very low-cost states, wages may also be much lower, which can offset affordability.
Quality of schools, healthcare, amenities: Sometimes you pay in reduced options or travel time.
Taxes & fees: Some states may have higher property taxes, sales taxes, or other local fees that change the picture.
Climate extremes: Hot summers or cold winters can raise utility usage (A/C or heating).
Future inflation & growth: States that are becoming popular can see real estate inflation over time, eroding advantages.

Bottom Line & Recommendations

If your priority is maximizing affordability, the Top 10 list above is a strong starting point.
Oklahoma, Mississippi, Alabama, Missouri, West Virginia consistently appear among the cheapest across multiple sources.
But don’t pick a state based solely on index. Always run a localized budget (for the specific city or county you’re considering) accounting for job prospects, commute, taxes, and lifestyle.