The cost of living is critical when deciding about relocation, employment possibilities, or personal financial planning. Making educated decisions requires understanding the differences in the cost of living between the various US areas.
In this article, we will examine the variables that affect the cost of living, look at regional variances, compare states to one another, and highlight important information on the cost of living in the US.
Mississippi and Montana have some of the lowest costs of living in the USA, whereas California and New York are among the highest.
Factors Influencing the Cost of Living
Housing
Housing costs significantly impact the cost of living. States can differ substantially regarding property ownership expenses, rental prices, and real estate market circumstances. For instance, while housing costs are famously expensive in areas like San Francisco and New York, smaller towns in the Midwest might have more affordable possibilities.
Transportation
The price of transportation is yet another crucial factor to consider. Changes in gas prices, the cost of public transportation, and the costs associated with car registration and insurance can all significantly impact the overall cost of living. Cities with robust public transit infrastructure might offer more economical options for commuting.
Food and Groceries
Expenses for food and groceries are a necessary component of daily life. The average cost of groceries and eating out might vary by location. Farmers’ markets and the availability and price of fresh vegetables differ from state to state.
Healthcare
For many people and families, healthcare costs are an essential factor. States may vary regarding healthcare facility accessibility, out-of-pocket costs, and medical insurance premiums. Due to things like specialized medical services or a higher concentration of healthcare providers, certain places may have higher healthcare prices.
Taxes
Taxes can significantly affect the general cost of living. State sales taxes, property taxes, and income taxes can all vary widely between states. Accurately estimating the cost of living requires knowledge of the tax system in a given area.
Comparison of States’ Costs of Living
Table: Cost of Living Index by State
| State | Cost of Living Index | Annual Mean Wage (All Occupations) | Average Monthly Rent | Value of $100 |
| Alabama | 89.2 | $45,950 | $960 | $112.19 |
| Alaska | 131.1 | $63,730 | $1,400 | $76.03 |
| Arizona | 96.6 | $49,990 | $1,320 | $103.53 |
| Arkansas | 87.1 | $43,040 | $840 | $114.79 |
| California | 151.7 | $63,020 | $2,627 | $89.05 |
| Colorado | 105.5 | $56,250 | $1,800 | $94.78 |
| Connecticut | 126.4 | $65,970 | $1,800 | $82.76 |
| Delaware | 101 | $54,330 | $1,485 | $99.01 |
| Florida | 97.9 | $46,420 | $1,350 | $102.21 |
| Georgia | 92.2 | $48,670 | $1,280 | $108.45 |
| Hawaii | 192.9 | $56,010 | $2,500 | $82.53 |
| Idaho | 94.8 | $45,190 | $1,250 | $105.35 |
| Illinois | 95.4 | $57,220 | $1,650 | $104.77 |
| Indiana | 88.7 | $48,510 | $1,020 | $111.67 |
| Iowa | 89.8 | $49,240 | $965 | $110.80 |
| Kansas | 89.9 | $49,850 | $1,000 | $110.65 |
| Kentucky | 90.7 | $45,940 | $950 | $109.59 |
| Louisiana | 93.9 | $47,990 | $1,070 | $106.02 |
| Maine | 102.6 | $48,690 | $1,250 | $98.39 |
| Maryland | 123 | $64,500 | $2,105 | $83.04 |
| Massachusetts | 140.1 | $68,680 | $2,300 | $90.20 |
| Michigan | 89.8 | $52,230 | $1,100 | $110.81 |
| Minnesota | 101.6 | $56,360 | $1,475 | $98.39 |
| Mississippi | 85.7 | $41,240 | $963 | $116.77 |
| Missouri | 90.9 | $49,130 | $1,000 | $109.42 |
| Montana | 92.6 | $47,230 | $1,202 | $108.18 |
| Nebraska | 91.3 | $51,620 | $1,050 | $109.41 |
| Nevada | 102.4 | $50,380 | $1,450 | $98.51 |
| New Hampshire | 113.8 | $57,250 | $1,600 | $88.04 |
| New Jersey | 124.3 | $65,550 | $2,000 | $81.39 |
| New Mexico | 92.8 | $46,080 | $950 | $107.76 |
| New York | 139.1 | $71,950 | $2,801 | $90.51 |
| North Carolina | 94.8 | $48,700 | $1,195 | $105.35 |
| North Dakota | 99.9 | $55,010 | $1,200 | $100.10 |
| Ohio | 92.3 | $50,010 | $1,050 | $108.37 |
| Oklahoma | 88.9 | $45,440 | $850 | $111.46 |
| Oregon | 128.5 | $55,240 | $1,900 | $79.02 |
| Pennsylvania | 100.5 | $55,380 | $1,250 | $99.51 |
| Rhode Island | 117.8 | $60,540 | $1,850 | $85.05 |
| South Carolina | 95.9 | $45,910 | $1,200 | $104.16 |
| South Dakota | 94.3 | $45,600 | $900 | $105.94 |
| Tennessee | 90.2 | $47,860 | $1,250 | $109.90 |
| Texas | 92.7 | $53,400 | $1,300 | $108.09 |
| Utah | 94.8 | $53,480 | $1,450 | $105.35 |
| Vermont | 118.3 | $52,740 | $1,550 | $84.62 |
| Virginia | 103.7 | $57,900 | $1,620 | $96.63 |
| Washington | 118.2 | $64,470 | $2,120 | $84.67 |
| West Virginia | 85.9 | $40,280 | $750 | $116.49 |
| Wisconsin | 96.6 | $51,070 | $1,150 | $103.53 |
| Wyoming | 92.8 | $54,500 | $1,350 | $107.76 |
Highest Cost of Living States
The Golden State, California, is frequently listed as having one of the highest living costs. The high cost of housing, particularly in major cities like San Francisco and Los Angeles, impacts the state’s rating. In addition, compared to the national average, California has higher taxes and healthcare costs.
New York is known for having a high cost of living, especially in New York City. One of the most expensive areas to live in the country is the city due to its high rent costs and real estate market. In addition, compared to the national average, New York has higher taxes, food and grocery expenses, and transportation costs.
Lowest Cost of Living States
Mississippi regularly appears on lists of the states with the lowest living costs. The state has reduced housing costs, affordable transportation, and lower healthcare costs than the national average. Mississippi is also more affordable because of its lower overall tax burden.
Compared to many other states, Montana has a lower cost of living. Reduced housing costs, reasonable transportation costs, and a favorable tax climate benefit the state. Montana is reasonably priced because of its natural resources and rural settings.
Key Facts About the Cost of Living in the United States
Average Household Expenditures
- The largest budget of a typical household goes toward housing costs. Americans spent about 33% of their income on housing-related expenses in 2020.
- Another substantial chunk of expenses is transportation, which accounts for 15% of the average household budget.
- In the average household, 13% of spending is on food and groceries.
Regional Variations in Wages
Due to variations in the cost of living, wages can vary between states. For instance, to make up for the higher living costs, states like California and New York, typically have higher incomes.
When comparing wages between locations, it’s crucial to consider the purchasing power of such wages. In a state with high costs, a higher salary may sometimes equate to a higher standard of living.
Quality of Life Considerations
When assessing a location, there are other things to consider than the cost of living. Aside from these indicators, it is also important to consider community and safety factors, educational and medical resources, leisure and cultural possibilities, and other quality-of-life indices.
Key Points
- Mississippi and Arkansas have the lowest living costs, while California and Hawaii routinely rank among the states with the highest.
- Housing costs, transportation costs, food and grocery prices, healthcare expenses, and taxes are the main factors affecting the cost of living.
- The Cost of Living Index compares the cost of living in various places, assisting people in making wise choices.
- The cost of living varies from state to state, so it’s vital to take into account the purchasing power of wages compared to regional costs.
- Housing, transportation, and food expenses each receive a sizeable share of the typical household budget, underscoring their influence on the overall cost of living.
