Cheapest States To Live In for 2022

A Credit Karma Study

Updated

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Thinking about your next big move? There are a lot of factors that go into deciding where you want to live. But if the most important thing to you is cost, then read on to see what states were the cheapest and most expensive in 2022, according to Credit Karma’s study.

Credit Karma created a methodology to identify the cheapest states in 2022 using a variety of factors, including home value, average rent, overall cost of living, taxes and a few other specific cost-of-living indexes. (Click here for the full methodology.)

Here’s a sneak peek of our rankings for the cheapest states to live in, ranked from cheapest to more expensive.

  1. Oklahoma
  2. Alabama
  3. Mississippi
  4. Missouri
  5. Arkansas

And the most expensive states are (in order of most expensive to cheaper) …

  1. Hawaii
  2. California
  3. Massachusetts
  4. New York
  5. Alaska

Read on to get more context on the study, including the factors we considered to determine the cheapest states.

Overall cheapest and most expensive states to live in for 2022

In our study, the lower the score, the cheaper the state. See the full list of how each state ranks in terms of cheapness:

Rank State Overall score Overall cost of living Median monthly housing costs Median annual real estate taxes Sales tax
1 Oklahoma 1.60 2 6 10 14
2 Alabama 1.78 4 4 1 7
3 Mississippi 1.79 1 2 6 46
4 Missouri 1.88 11 16 17 12
5 Arkansas 1.95 9 3 3 40
6 Louisiana 2.16 17 8 4 12
7 South Dakota 2.28 23 9 27 14
8 West Virginia 2.33 12 1 2 25
9 Montana 2.34 34 13 25 1
10 Iowa 2.39 5 12 30 25
11 Wyoming 2.43 19 20 11 7
12 Georgia 2.46 6 27 19 7
13 Tennessee 2.47 8 14 7 46
14 Indiana 2.47 7 11 8 46
15 Kansas 2.47 3 18 26 40
16 Kentucky 2.50 18 5 9 25
17 Michigan 2.51 10 19 31 25
18 Ohio 2.52 13 17 29 24
19 North Dakota 2.66 25 10 23 17
20 Nebraska 2.67 15 21 34 21
21 North Carolina 2.80 22 23 14 16
22 New Mexico 2.82 20 7 12 19
23 South Carolina 2.92 21 15 5 25
24 Wisconsin 3.11 24 25 39 17
25 Texas 3.20 16 29 37 36
26 Idaho 3.37 28 22 15 25
27 Delaware 3.42 35 34 13 1
28 Illinois 3.46 14 32 45 36
29 Pennsylvania 3.52 27 26 35 25
30 Minnesota 3.71 26 31 32 45
31 Colorado 3.82 29 43 22 6
32 Arizona 3.88 36 28 16 23
33 Florida 3.94 30 30 24 25
34 Virginia 3.96 31 39 28 20
35 Utah 4.11 33 36 21 35
36 Nevada 4.12 32 35 18 44
37 Maine 4.36 40 24 33 21
38 Oregon 5.04 44 37 36 1
39 Vermont 5.31 41 33 44 25
40 Maryland 5.32 45 46 40 25
41 Rhode Island 5.32 37 38 43 46
42 New Hampshire 5.47 42 41 48 1
43 Washington 5.91 39 44 41 40
44 New Jersey 5.95 38 48 50 43
45 Connecticut 6.05 43 45 49 39
46 Alaska 6.22 46 40 38 1
47 New York 6.57 49 42 47 7
48 Massachusetts 6.92 47 47 46 36
49 California 8.05 48 50 42 50
50 Hawaii 9.62 50 49 20 7

Hawaii is by far the most expensive state, coming in last in almost every category in this study. There are a few reasons for this, but the primary factor is location, location, location. Hawaii is geographically isolated, and many goods must be imported across a huge distance, which is very costly. On top of that, real estate is expensive. The islands that make up the state are small, reducing supply, and demand is high for gorgeous property.

Coastal states tended to be more expensive overall, while central and Southern states tended to be cheaper. Check out the map below:

Oklahoma came in first largely because of its relatively low cost-of-living metrics, taxes and housing costs.

States with the cheapest housing costs in 2022

Redfin’s housing market data provided the estimated median sale price for homes in May 2022, and a data set from Apartment List showed the average monthly apartment rent for June 2022.

Lowest median sale price  Highest median sale price
Ohio – $236,900 California – $843,600
Oklahoma – $242,300 Hawaii – $716,200
Michigan – $252,600 Washington – $670,300
Missouri – $253,300 Colorado – $627,300
Arkansas – $253,300 Massachusetts – $604,900

Lowest average monthly rent Highest average monthly rent
West Virginia – $732 Hawaii – $2,434
Montana – $836 California – $1,957
North Dakota – $839 New Jersey – $1,788
Iowa – $928 New York – $1,777
Arkansas – $962 Massachusetts – $1,767

Credit Karma used data from the U.S. Census Bureau’s 2020 American Community Survey to find the states with the lowest median monthly housing costs. These costs include items like mortgage payments, real estate taxes, insurance, utilities and condo fees.

Lowest median monthly housing costs Highest median monthly housing costs
West Virginia – $626 California – $1,688
Mississippi – $725 Hawaii – $1,665
Arkansas – $731 New Jersey – $1,635
Alabama – $788 Massachusetts – $1,584
Kentucky – $790 Maryland – $1,544

A lot of the usual suspects make the list for most expensive states in terms of housing prices: Hawaii, California, New Jersey and Massachusetts. The same is true for the cheapest states. West Virginia, Mississippi, Arkansas and Alabama show up repeatedly throughout the study with low costs.

States with the lowest taxes in 2022

The study methodology incorporated two types of taxes: property and sales.

There are several states with no sales tax. They are …

  • Alaska
  • Delaware
  • Montana
  • New Hampshire
  • Oregon

Interestingly, a couple of states that tend to a have higher cost of living also have lower sales taxes, including the following:

  1. Colorado: 2.9%
  2. Hawaii: 4%
  3. New York: 4%

There were a few surprises for sales tax. Some of the overall cheapest states, like Mississippi and Tennessee, had higher sales taxes. The states with the highest sales tax rates are …

  1. California: 7.25%
  2. Mississippi: 7%
  3. Tennessee: 7%
  4. Indiana: 7%
  5. Rhode Island: 7%

One thing to note: Sales taxes can vary on the local level since municipalities can impose additional sales taxes on top of the state baseline sales tax.

Instead of looking at the actual property tax rates, we looked at the median amount paid in real estate taxes for occupied units both with mortgages and without mortgages using data from the 2020 American Community Survey. This gives a better understanding of how much a person might expect to pay in property tax while taking into account the overall cost of housing in any given state.

Lowest median annual real estate taxes Highest median annual real estate taxes
Alabama – $608 New Jersey – $8,489
West Virginia – $719 Connecticut – $5,966
Arkansas – $828 New Hampshire – $5,796
Louisiana – $926 New York – $5,590
South Carolina – $962 Massachusetts – $4,836

For illustrative purposes, we’ve included a table below with the average effective property tax rates sourced from the nonprofit Tax Foundation. It helps explain how Illinois landed on the list above. Illinois has the second-highest average effective property tax, which offsets the below-average typical home values. Interestingly, Hawaii has the lowest average effective property tax.

State Ranking Avg. effective property tax rates
Hawaii 1 0.31%
Alabama 2 0.37%
Louisiana 3 0.51%
Wyoming 3 0.51%
Colorado 4 0.52%
South Carolina 5 0.53%
West Virginia 5 0.53%
Nevada 6 0.56%
Utah 6 0.56%
Delaware 7 0.59%
New Mexico 7 0.59%
Arizona 8 0.60%
Arkansas 9 0.61%
Mississippi 10 0.63%
Tennessee 10 0.63%
Idaho 11 0.65%
California 12 0.70%
Montana 13 0.74%
Kentucky 14 0.78%
North Carolina 14 0.78%
Indiana 15 0.81%
Oklahoma 16 0.83%
Virginia 17 0.84%
Washington 18 0.84%
Florida 19 0.86%
Georgia 20 0.87%
North Dakota 21 0.88%
Oregon 22 0.91%
Missouri 23 0.96%
Alaska 24 0.98%
Maryland 25 1.01%
Minnesota 26 1.05%
Massachusetts 27 1.08%
South Dakota 28 1.14%
Maine 29 1.20%
Kansas 30 1.28%
New York 31 1.30%
Michigan 32 1.31%
Rhode Island 33 1.37%
Iowa 34 1.43%
Pennsylvania 35 1.43%
Ohio 36 1.52%
Wisconsin 37 1.53%
Nebraska 38 1.54%
Texas 39 1.60%
Connecticut 40 1.73%
Vermont 41 1.76%
New Hampshire 42 1.89%
Illinois 43 1.97%
New Jersey 44 2.13%

States with the lowest cost-of-living indexes in 2022

Credit Karma used the Missouri Economic Research and Information Center for the cost-of-living datasets. This study used the following cost-of-living indexes: Overall, grocery, transportation, housing, utilities, health and miscellaneous.

The overall cost-of-living category combines and weights the other indexes. Here are the states with the highest and lowest overall cost of living.

Lowest overall cost of living Highest overall cost of living
Mississippi Hawaii
Oklahoma New York
Kansas California
Alabama Massachusetts
Iowa Alaska

Mississippi makes multiple appearances as the state with the lowest cost of living across a few indexes, including housing, transportation and miscellaneous. This helps explain why, according to our study, Mississippi ranks so highly among the cheapest states.

Hawaii tops almost every index for cost of living as the most expensive state, except in terms of healthcare. That dubious honor goes to Alaska — likely because of the difficulty of getting supplies and doctors there.

The table below allows you to sort by all the cost-of-living indexes included in this study.

State Overall COL Grocery COL Housing COL Utilities COL Transportation COL Health COL Misc. COL
Mississippi 1 4 1 8 2 22 3
Oklahoma 2 8 3 19 5 7 1
Kansas 3 3 2 27 12 33 2
Alabama 4 18 4 32 4 4 12
Iowa 5 24 5 17 10 26 14
Georgia 6 9 7 11 7 10 16
Indiana 7 6 9 30 19 11 8
Tennessee 8 10 15 16 1 6 7
Arkansas 9 2 12 26 15 20 15
Michigan 10 5 11 23 13 1 28
Missouri 11 13 16 21 3 8 5
West Virginia 12 21 6 15 39 31 20
Ohio 13 25 8 14 14 21 23
Illinois 14 14 14 20 36 19 11
Nebraska 15 19 17 5 24 39 9
Texas 16 1 18 34 9 >16 17
Louisiana 17 17 23 4 18 30 19
Kentucky 18 7 10 36 26 2 39
Wyoming 19 28 24 9 17 25 10
New Mexico 20 35 22 2 28 24 13
South Carolina 21 26 13 43 11 9 27
North Carolina 22 16 25 22 6 41 26
South Dakota 23 34 27 6 8 14 6
Wisconsin 24 20 21 33 16 45 21
North Dakota 25 29 26 24 21 43 18
Minnesota 26 33 19 25 22 40 34
Pennsylvania 27 38 20 41 33 17 25
Idaho 28 12 28 1 40 12 24
Colorado 29 15 34 10 27 13 29
Florida 30 39 29 35 23 15 22
Virginia 31 11 31 29 20 32 33
Nevada 32 31 35 12 44 29 4
Utah 33 27 32 13 31 5 36
Montana 34 23 36 3 29 27 32
Delaware 35 40 30 18 45 36 37
Arizona 36 30 37 28 25 23 30
Rhode Island 37 22 38 46 35 28 43
New Jersey 38 41 43 39 30 18 35
Washington 39 44 39 7 43 48 42
Maine 40 36 40 40 38 38 45
Vermont 41 32 44 45 46 44 31
New Hampshire 42 42 33 44 32 49 50
Connecticut 43 37 42 48 41 35 46
Oregon 44 43 45 37 50 34 40
Maryland 45 45 47 38 34 3 38
Alaska 46 49 41 50 42 50 47
Massachusetts 47 46 46 42 47 46 44
California 48 47 48 47 49 42 41
New York 49 48 49 31 37 37 48
Hawaii 50 50 50 49 48 47 49

Tips for choosing a place to live

Choosing a place to live is a highly personal decision, and there are a lot of factors that go into it besides purely financial ones. For example, maybe you live in a place with a high cost of living, but you’re also close to your friends and family. Or maybe you work in an industry that only exists in certain regions. Or maybe you just really love the school district your kids are in.

If you’re trying to make a decision about where to live, you could try replicating this study in miniature with things you care about. For example, say you’re interested in California, Colorado and Virginia as potential options. You would add each state to the spreadsheet as rows, then add the things you care about in the columns.

The variables could be anything — they could be factors with objective numbers, like the average cost of a house in each state or crime rates in the area you’re interested in. You could even use this article or the sources cited in it to help out with cost-of-living indexes.

You could also include some more subjective variables, like proximity to family or access to hobbies. It would be up to you to decide how many points to give these “softer” categories.

Once you have all the variables and their values added, give each one a score from one to 100, with 100 being the best and one the worst.

Here’s an example.

State Housing cost Housing score Friends & family score
Calif. $500,000 1 75
Colo. $325,000 50 0
Va. $225,000 100 25

Now it’s time to weight them according to their importance to you. For example, if you really care about taxes and don’t care too much about school quality, you would weight taxes more heavily. In order to weight the variables, just multiply the score by the weight as a percentage. Remember that your total weighting across all categories should add up to 100%, which in decimal format is 1.00. Take a look below.

State Housing score Housing score weighting Friends & family score Friends & family score weighting Total
Calif. 1 x 0.3 = 3 75 x 0.7 = 52.5 3 + 52.5 = 55.5
Colo. 50 x 0.3 = 15 0 x 0.7 = 0 15 + 0 = 15
Va. 100 x 0.3 = 30 25 x 0.7 = 17.5 25 + 17.5 = 42.5

Once you’ve done all the weighting, you just add up the weighted scores and see which one had the most total points. In the example above, California came in first place.

Ultimately the decision is up to you. Some data and your heart could give you the answers you’re looking for.

Compare the cost of living in two cities

Our cost-of-living calculator can help you see how much it’ll cost to live somewhere new compared to your current city so you can make an informed decision about your finances.

Methodology

  1. Overall cost of living index, sourced from the Missouri Economic Research and Information Center for Q1 2022
  2. Cost of groceries index, sourced from the Missouri Economic Research and Information Center for Q1 2022
  3. Cost of utilities index, sourced from the Missouri Economic Research and Information Center for Q1 2022
  4. Cost of transportation index, sourced from the Missouri Economic Research and Information Center for Q1 2022
  5. Cost of health index, sourced from the Missouri Economic Research and Information Center for Q1 2022
  6. Cost of miscellaneous items index, sourced from the Missouri Economic Research and Information Center for Q1 2022
  7. Redfin median sale price for homes May 2022
  8. Average monthly apartment rent in the U.S. in June 2022, sourced from Apartment List
  9. Median monthly housing costs, sourced from the U.S. Census Bureau’s 2020 American Community Survey, five-year estimates.
  10. Median annual real estate taxes, sourced from the U.S. Census Bureau’s 2020 American Community Survey, 5-year estimates.
  11. Tax Policy Center’s State Sales Tax Rates for 2022

Sources


About the author: Gaby Lapera is a researcher and writer at Credit Karma and a personal finance expert. She also spends time working on investing and science communication. Gaby graduated with a master's degree in biological anthropolo… Read more.