Between the cost of living increase and high mortgage rates, Americans are feeling the brunt of the economy. Whether you’re renting or buying a home, it pays to know the most affordable states.
To determine which states are the most affordable, the research team at USA TODAY Homefront looked at the cost of living by state. Utah came out on top as the most affordable state, thanks to manageable health care costs. On the other hand, the high homeownership costs landed New York as the least affordable state.
We analyzed median incomes and five basic expenses: homeownership costs, groceries, health care, income tax and gasoline. We defined affordability by looking at expenses as a percentage of the respective state’s median income.
While some states have lower living expenses when looking at dollar amounts, the overall cost of living can outweigh the apparent affordability, as these expenses can consume a larger proportion of residents’ income compared with other states with seemingly higher costs. When looking at dollar amounts only, Mississippi was the cheapest state, and New York was the most expensive.
As prices vary from state to state, navigating the expenses — current or as a result of a relocation — demands careful attention to budgeting. From weighing the costs of best interstate moving companies to calculating new living expenditures, you have many factors to consider beyond the price of purchasing a new home, particularly when crossing state lines.
See how we rank budget-friendly states and examine how all 50 states stack up in terms of living expenses.
Key findings
The most affordable state is Utah, where residents spend the least percentage of their income on necessities (63.3%) and have the most annual income left over ($32,732).
New York is the least affordable state, where residents will spend 78.7% of their income on basics and have $16,913 of their median annual income left over.
The typical homeowner will pay more than $20,000 a year toward housing costs, which amounts to 28.5% of their income.
The most affordable housing can be found in Indiana, where homeowner costs take up only 23.0% of median incomes.
What is the cost of living in the U.S.?
To analyze “affordability,” we calculate living expenses in relation to each state’s median income. We examine federal and state income tax as applied to the state’s median income, median homeowner costs, reported grocery spending, health care spending and gasoline spending.
Our findings reveal a striking snapshot: With a national median annual income of $74,755, the typical American spends 28.5% on homeowner expenses (mortgage, debts, taxes, insurance and utilities). When factoring in other essentials such as groceries and health care, the total annual expenditure climbs to $49,139, gobbling up a hefty 65.7% of income.
Before state income taxes, the typical American has a disposable annual income of $25,616.
What is the most affordable state in the U.S.?
Our study found that Utah is the most affordable state with one of the lowest costs of living, boasting the lowest percentage of income spent (63.3%) and the highest disposable income per capita ($32,732). Contributing to Utah’s affordability is its median income of $89,168, coupled with the nation’s lowest health care spending at $6,213.
In contrast, New York stands out as the least affordable state, with residents spending 78.7% of their income on living expenses, leaving them with only $16,913 in disposable income. Homeowner costs in New York are notably burdensome, consuming 35.5% of the median income, the highest proportion among all states surveyed.
States that spend the most and least on homeownership
New Yorkers pay the highest percentage of income toward homeowner costs at 35.5%, or $28,260, a year.
Indiana residents spend the least amount of their income on homeowner costs (23.0%), and have the fourth lowest median cost ($15,372) overall.
The situation contrasts sharply in Mississippi. Although homeowner costs are slightly lower than in Indiana at $15,204 per year, they represent 28.8% of the median income, indicating a lesser degree of affordability compared with Indiana. This is an example of cheaper not always translating to more affordable.
Homeowner costs include monthly mortgage and insurance payments, as well as any other costs associated with homeownership such as homeowners association fees, taxes and utilities including energy and deregulated energy markets such as the competitive energy rates in Texas.
States that spend the most and least on groceries per individual
Grocery bills are a weekly reminder of how we use our finances. Large families may prioritize moving to a state where groceries are more affordable. Despite being a more affordable state in terms of home prices, Mississippi has the highest relative grocery bill per individual. Mississippi residents spend 6.6% of their income on groceries, which amounts to $3,488 a year. That’s 9.1% more than what residents in the most expensive state overall, New York, spend on groceries per year ($3,197).
New Hampshire, on the other hand, has the lowest relative grocery bill, 3.2% ($2,872). That’s 14.0% less than what residents in the most affordable state, Utah, spend on groceries per year ($3,341).
States that spend the most and least on health care
West Virginia faces significant challenges in terms of health care affordability. West Virginians spend 18.5% of their income ($10,030) on health care costs, the highest in the study. That’s 20.4% more than the typical American spends on health care from their income annually (11.1%).
In contrast, Utah spends the least in both absolute dollar amounts ($6,213) and as a percentage of income (7.0%), indicating a relatively efficient and affordable health care system.
Alaska, however, presents an interesting case. Although health care spending is the highest in dollars ($11,813), it accounts for a lower percentage of income (13.4%), making going to the doctor in Alaska more affordable than in West Virginia.
States that spend the most and least on income taxes
Among states with income tax, Oregon emerges with the highest effective tax rate. With a median income of $75,657, Oregonians face an estimated annual state tax burden of $5,219, constituting 6.9% of their income. In contrast, North Dakota boasts the lowest effective tax rate. With a median income of $71,970, North Dakotans bear a minimal income tax burden of 0.5%, amounting to just $379 per year.
Seven states don’t charge income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming. New Hampshire only taxes interest and dividends, and Washington only taxes capital gains income.
Despite the implied savings of living in a state that doesn’t charge income tax, states without income tax pay more in other areas. For example, Texas has no state income tax, but local property taxes can be much higher. These property taxes are included in homeowner costs, which contributes to Texas ranking No. 44 in that category.
States that spend the most and least on gasoline costs
Gasoline spending is an important figure to monitor. Iowa spends the most on gas every year ($2,186), but Arkansas spends the most on gasoline as a percentage of income, 3.6% or $1,967 per year.
Meanwhile, residents of Hawaii spend the least on gasoline, only 0.9% of income, or $814 per year. As an urbanized state, the number of car commuters is lower than the U.S. average and the number of commuters walking, biking and using public transportation is higher than average.
What to know before moving to a state with a high cost of living
Sometimes that perfect job opportunity is in a state with a high cost of living. Consider these tips for a smoother move to an expensive state:
- Research housing costs: Before relocating, thoroughly research the housing market to understand rental and real estate prices. If possible, consider living outside of major city centers. Suburbs and rural areas often offer more affordable housing options.
- Explore cheaper options: Consider downsizing before the move. Decluttering can help save money on relocation costs. Opting to rent a truck, instead of hiring professional movers, may decrease your moving budget. Choosing off-peak moving dates can help, too.
- Researching community or government services: Some organizations can assist with housing or living expenses. For example, various municipalities have affordable housing programs for both renters and home buyers that can assist with deposits, down payments and even closing costs.
- Budget wisely: Create a comprehensive budget that includes all anticipated expenses, including moving costs, housing, utilities, transportation, taxes and daily essentials. Request quotes from at least three moving companies to obtain accurate estimates and minimize financial stress during the transition.
What do experts say about affordable living?
We asked four experts to share their insights about the current state of affordable living.
Are cities in America becoming more or less affordable?
Fred H. Smith, Ph.D.
Professor of economics
“The market conditions for owner-occupied housing vary a great deal by city. Some cities are becoming less affordable over time while others are becoming more attractive from a cost-of-living standpoint.”
Robert P. Strauss, Ph.D.
Professor of economics and public policy
“The prices of places to own or rent continue to grow faster than most wages and capital investments because the nature of work has changed, and employers have largely accepted hybrid work models or just plain accept or expect remote working.
“The demand for residential space, owned or rented, has accordingly jumped. And the uncertainty about the deductibility of property taxes and mortgage interest rates will continue that relative inflation.”
Shelton Weeks, Ph.D.
Director of the Lucas Institute for Real Estate Development & Finance
“The changes in affordability are likely quite uneven across the country. As we consider this question, it is important to remember that individual market adjustments occur at very different rates.”
What factors contribute to the affordability of a region?
Mark Sherby
Instructor and department chair, real estate
“First, limited housing supply has driven up prices, leaving buyers with fewer options. Second, high interest rates make mortgages costlier, impacting affordability. Third, housing initiatives struggle to cost-effectively build new affordable housing. Finally, existing homeowners, who secured exceptionally low-interest mortgages during the pandemic, are reluctant to sell their homes, further exacerbating the situation.”
Shelton Weeks, Ph.D.
Director of the Lucas Institute for Real Estate Development & Finance
“The housing component of the affordability issue is impacted not only by increases in property values and rents but also by the rising costs of insurance and higher interest rates.
“However, we can’t just look at housing and get a full picture of affordability.You have to consider all the other costs like groceries, education, healthcare and taxes.”
Fred H. Smith, Ph.D.
Professor of economics
“Housing costs are typically the largest expenditure in a household’s budget, so the affordability of a region is driven to a great extent by the cost of housing. For example, living in Chicago is cheaper than living in New York, San Francisco or Los Angeles because it has lower housing costs than the coastal cities.
“However, depending on a household’s needs, other factors can have a major impact on how affordable a region might be. A household with small children that requires daycare services will be greatly affected by high childcare costs [in the area].”
Robert P. Strauss, Ph.D.
Professor of economics and public policy
“Relative local housing and consumption costs reflect supply and demand market conditions. Figure out the quality-adjusted price of things. There is a time cost to living in a remote suburb should one commute. Are the local public schools so lousy or controversial that one will have to pay twice for education: local school taxes and private school tuition?”
For someone relocating, what should you look at beyond just housing costs?
Robert P. Strauss, Ph.D.
Professor of economics and public policy
“Understanding local building and zoning codes can help avoid major mistakes. Talking to an insurance company about what the property insurance and personal property insurance rates will tell you a lot.
“Is insurance still available? There are horror stories all over the U.S. as the major carriers reevaluate their risk profiles. How dangerous is the neighborhood one is contemplating moving into? What are the police and fire response times? If you are moving into a retirement community, how well is it built?”
Fred H. Smith, Ph.D.
Professor of economics
“Consider issues relating to transportation costs. Do you need a car, and will that car be expensive to operate [fuel, parking and insurance costs]?
“For households with children, consider factors such as entertainment and education costs. Families with older children who might be close to college should consider the quality and price of the state’s public universities. For retirees, pay close attention to the availability and cost of health care.”
Shelton Weeks, Ph.D.
Director of the Lucas Institute for Real Estate Development & Finance
“As individuals, we are at different points in life and, as a result, our consumption of various goods and services must be taken into account.
“For example, an elderly individual with significant medical issues may be focused primarily on the costs of housing and healthcare and not be significantly impacted by the costs of education, fuel or groceries.”
Mark Sherby
Instructor and department chair, real estate
“Assess a region’s economic stability, job prospects and regional wage growth.”
Most and least affordable states in 2024 (full data)
Review our full dataset of all 50 states we evaluated and how they ranked here:
Our methodology
The research team at USA TODAY Homefront examined economic data associated with cost of living across all 50 states.
- Median household incomes from the U.S. Census Bureau 2022 American Community Survey 1–year Estimates.
- Federal income tax and FICA contributions for a single filer calculated with the National Bureau of Economic Research’s TAXSIM 35.*
- State income tax calculated with the National Bureau of Economic Research’s TAXSIM 35.
- Average reported grocery spending from the U.S. Census Week 63 Household Pulse Survey.
- Median homeowner costs for units with a mortgage from the U.S. Census Bureau 2022 American Community Survey 1–year Estimates.
- Yearly health care expenditures from the Bureau of Economic Analysis.
- Yearly gasoline expenditures from the Bureau of Economic Analysis.
*Feenberg, Daniel Richard and Elizabeth Coutts, An Introduction to the TAXSIM Model, Journal of Policy Analysis and Management vol 12 no 1, Winter 1993, pages 189-194.
Questions about our study? Please contact Homefront at [email protected].
Reference policy
We encourage journalists to share our findings on affordable states. If you choose to do so, please link back to our original story and credit USA TODAY Homefront for the research.
Frequently asked questions
How much rent can I afford?
Your rent should not exceed 30% of your monthly income according to the HUD.
What is the cheapest state to live in?
Mississippi has the lowest costs, with total annual costs at $37,949, according to the USA TODAY Homefront study. These costs include things such as homeowner costs, groceries and gasoline.
What is the best state to live in if you have low income?
South Dakota has the most affordable houses for low-income families. It has 57 affordable rentals per 100 extremely low-income renter households — the most in the nation. On the other hand, Nevada has the lowest ratio with only 14 affordable rentals per 100 households.
Is inflation going down?
The inflation rate decreased in July 2024, hitting below 3.0% for the first time since 2019.
