Cost of Living in All 50 States: What Drives Major Regional Price Differences?

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Oklahoma is the cheapest state to live in and Hawaii is the most expensive, according to the 2025 cost of living index from the Missouri Economic Research and Information Center (MERIC). Oklahoma scored 84.7 against a national baseline of 100. Hawaii scored 183.9. The cost of living in Hawaii therefore runs about 84% above the U.S. average and more than double Oklahoma’s. Housing explains most of that gap. Groceries, utilities, transportation and healthcare also differ by state, but none moves the overall number as much as what it costs to buy or rent a home.

Use the ranking to compare prices, then test it against income. Buyers should weigh the housing subindex more than the composite rank, while renters and households that already own can lean on the composite. Incomes vary almost as much as prices, so the income adjustment below decides whether a cheaper state actually leaves a household ahead.

How States Are Ranked by Cost of Living

The standard yardstick for ordering states by price is a composite cost of living index. MERIC, a research unit of the Missouri Department of Economic Development, publishes the most widely cited state version. It sets the national average at 100 and expresses every state as a ratio to that baseline:

• A score below 100 means living costs are lower than the national average. Oklahoma’s 84.7 puts it about 15% below.
• A score above 100 means costs are higher. Massachusetts at 148.5 sits about 48% above.
• The distance from 100 reads as a percentage. A state at 120 is roughly 20% more expensive than average, not 120% more.

The composite combines several subindexes, each scored the same way: groceries, housing, utilities, transportation, healthcare and miscellaneous goods and services. Housing carries the largest share of the composite. A state with average grocery and utility prices but very expensive homes still lands near the top of the ranking.

The index is built from price surveys taken in participating cities and urban areas, then averaged to the state level. That method has consequences for anyone using the ranking to plan a move:

• It describes a typical metro area, not every town. Prices in a state’s largest city and its rural counties can sit far apart. A state that ranks as affordable overall can still contain expensive metro areas, and the reverse also holds.
• It measures prices, not taxes. State income tax, property tax rates and sales tax structures fall outside the composite, so two states with similar scores can leave very different amounts in a paycheck. States with no income tax are a natural starting point for that check.
• It is relative, not historical. The baseline resets to 100 each period, so a state’s score can fall while its prices rise, if prices elsewhere rose faster. Price changes over time are a separate question, covered by the U.S. inflation rate by year.

The Lowest Cost of Living States

In MERIC’s 2025 index, the five cheapest states were:

1. Oklahoma (84.7)
2. Mississippi (86.0)
3. West Virginia (88.0)
4. Alabama (88.1)
5. Kansas (88.4)

The most affordable states cluster almost entirely in the South and Midwest. They are cheaper on groceries, utilities, transportation and healthcare as well as on housing.

Housing still accounts for most of the advantage. Oklahoma’s housing subindex was 68.8, about 31% below the national average. Its median home value was $222,100 in the Census Bureau’s 2024 American Community Survey (ACS). Under an assumed 10% down payment, that works out to about $22,200 at the median. The same 10% on Hawaii’s median home would be about $87,600.

The composite score can also hide a housing trend. Tennessee’s composite of 90.1 places it among the 10 most affordable states, yet its median home value has climbed to $332,600. That is roughly $110,000 above Oklahoma’s median, in a state whose overall index differs by only about five points. Years of in-migration have pushed home prices up faster than the broader cost structure. For a buyer, the housing figure matters more than the composite rank. For a renter or a household that already owns, the composite may be the more relevant number.

The Highest Cost of Living States

The five most expensive places in MERIC’s 2025 index were:

1. Hawaii (183.9)
2. Massachusetts (148.5)
3. California (143.1)
4. District of Columbia (137.8)
5. New York (125.8)

The District of Columbia is not a state, but MERIC scores it alongside the 50 states.

Hawaii is the clearest outlier. Its housing subindex of 299.0 is about three times the national average. Its median home value of $875,900 is nearly four times Oklahoma’s, and its median monthly rent of $1,942 is the second highest of any state in the 2024 ACS. Hawaii’s distance from the mainland adds a cost layer that other states do not face: a large share of food, fuel and consumer goods arrives by ship, and transport costs are built into shelf prices.

California shows what a long-running housing shortage does to an index. Its housing subindex of 199.4 is about double the national average, which policy researchers attribute to decades of difficulty adding housing supply. Its median gross rent of $2,104 is the highest of any state. Housing costs and the overall cost of living were cited as primary drivers when California ranked as the top outbound migration state in North American Van Lines’ 2025 moving report.

New Jersey has a composite of 115.3, among the more expensive states, but its median household income of $104,294 ranks behind only Massachusetts and the District of Columbia. That leaves residents more room to absorb higher prices.

What Drives Regional Price Differences

The gap between an 84.7 state and a 183.9 state comes from a few forces that tend to reinforce each other.

Housing supply relative to demand. Land availability, zoning and the pace of construction decide how quickly housing can expand when more people want to live somewhere. Where supply is constrained, as in California, rising demand shows up almost entirely in prices. Where land is plentiful and building is easier, as in much of the South and Midwest, demand pushes prices up more slowly.

Migration. Moves toward lower-cost states raise demand in the places people move to. Tennessee illustrates the early stage of that process: a still-low composite score paired with home values that have risen well above those of its lowest-cost neighbors.

Wages and local services. Many everyday costs, from restaurant meals to childcare to medical visits, are largely labor. States with higher wages tend to pay more for anything a local worker provides, which is one reason the expensive states also score above average outside housing.

Geography and transport. Remote locations pay more to bring goods in. Hawaii is the extreme case, but the same logic applies wherever supply chains are long and volume is low.

These forces explain why the ranking is fairly stable year to year. Housing stock, land constraints and wage levels change slowly, so the states at either end of the list rarely swap places quickly.

Cost of Living Relative to Income

A salary in an expensive state and a smaller salary in a cheap state can buy similar lifestyles, or the cheaper state can come out ahead. One rough way to compare them is to divide a state’s median household income by its composite index, expressed as a decimal:

Adjusted income = median household income ÷ (index ÷ 100)

The result estimates what that income would be worth at national average prices. Using the Census median incomes and MERIC 2025 composites cited above:

Massachusetts’ median income is nearly $39,000 higher than Oklahoma’s, yet after adjusting for prices the typical Oklahoma household has about $7,500 more purchasing power. New Jersey keeps a lead over both because its income premium is larger than its price premium.

The calculation rests on several assumptions:

• It applies one composite index to the whole household budget. A renter, a homeowner with no mortgage and a first-time buyer face very different housing costs in the same state.
• It ignores taxes.
• It combines income and price data from different survey years (2024 ACS income, 2025 MERIC index), so it is an approximation, not a precise figure.
• It uses state medians. A specific job offer in a specific city can sit far from either median.

How to Use a State Cost of Living Ranking

The ranking is a screening tool. It narrows the field, but it cannot pick a state on its own. A practical sequence for comparing destinations:

1. Start with the composite score to see which states sit above or below the national average.
2. Check the housing subindex separately. It is the largest cost and the one that diverges most between states with similar composites, as Tennessee shows.
3. Adjust the income you expect to earn with the formula above, using the actual salary offered and, where possible, the destination city’s index instead of the state average.
4. Add taxes using each state’s income, property and sales tax rules, since the index leaves them out.
5. Narrow from state to city. A state average can mask a large gap between its main metro area and smaller towns.
6. Compare your own budget, not a typical one. A household that spends heavily on housing feels the index gap more. One that already owns a home outright, or works remotely on a salary set elsewhere, may feel it less.

The Bottom Line

The ranking matters most to households weighing a move between states, especially buyers, who should focus on the housing subindex over the composite rank. A cheaper state leaves a household ahead only when income, taxes and city-level prices still work in its favor. Renters, owners without a mortgage and remote workers paid on another state's salary should test the numbers against their own budget.