What Is the Best State to Live in Financially? Top Picks for Affordable Housing and Low Costs
Jan, 20 2026
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Living paycheck to paycheck isn’t a lifestyle choice-it’s a trap millions of Americans are stuck in. The real question isn’t just where you can afford to live, but where you can actually thrive without sacrificing your future. If you’re tired of paying half your income just to keep a roof over your head, you’re not alone. And the good news? Some states make it possible to live well without breaking the bank.
Why Cost of Living Matters More Than Salary
A $75,000 salary in San Francisco doesn’t go as far as $45,000 in Iowa. That’s not a myth-it’s data from the MIT Living Wage Calculator and the Bureau of Economic Analysis. In high-cost areas, rent alone can eat up 50% or more of your take-home pay. Add groceries, gas, childcare, and healthcare, and you’re left with little to save, invest, or even enjoy life.
Financial freedom isn’t about how much you earn. It’s about how much you keep after essentials. That’s why people are moving. In 2024, over 1.2 million Americans relocated to states with lower taxes and housing costs, according to U.S. Postal Service data. The goal isn’t just to cut expenses-it’s to rebuild stability.
Top 5 States for Financial Stability in 2026
Based on housing prices, taxes, utilities, groceries, and median income, these five states stand out for people looking to stretch their dollars without giving up quality of life.
1. Iowa
Iowa has the lowest housing cost-to-income ratio in the U.S. The median home price is around $210,000, while the median household income is $69,000. That means the average family spends just 26% of their income on housing-well below the national average of 34%. Property taxes are low, and utilities are among the cheapest in the Midwest. Cities like Des Moines and Cedar Rapids offer good public transit, decent schools, and access to healthcare.
Healthcare costs are 12% below the national average. And unlike states with no income tax, Iowa doesn’t make up for it with high sales taxes-its rate is just 6%. That means more money stays in your pocket when you buy groceries or fill up your tank.
2. Ohio
Ohio’s housing market is one of the most balanced in the country. In cities like Columbus, Cincinnati, and Toledo, you can buy a three-bedroom home for under $200,000. The state has no inheritance tax, and property taxes are capped by law, so your bill won’t spike overnight.
Ohio’s median rent for a two-bedroom apartment is $1,150-nearly $400 less than the national average. The state also offers strong workforce training programs that help people land skilled jobs without needing a four-year degree. Jobs in manufacturing, logistics, and skilled trades pay well and are in high demand.
3. Arkansas
Arkansas has the cheapest cost of living of any state in the South. The median home price is $185,000. Rent for a one-bedroom apartment in Little Rock averages $850. Groceries are 15% cheaper than the national average. Even healthcare is more affordable, with doctor visits costing 20% less than in most states.
Arkansas doesn’t have a state income tax on Social Security, and its sales tax is only 6.5%. It’s not a flashy state, but it’s a smart one. People who move here often report lower stress levels, more savings, and better sleep-because they’re not constantly worried about bills.
4. Mississippi
If you’re looking for the absolute lowest housing costs, Mississippi wins. The median home price is just $165,000. In Jackson, you can rent a two-bedroom apartment for under $800. Utilities are among the cheapest in the nation, thanks to low electricity rates and natural gas availability.
Mississippi has no estate tax and no inheritance tax. Its sales tax is 7%, but many essentials like groceries and prescription drugs are exempt. The state’s poverty rate is high, but that’s because wages are low-not because living costs are high. For people with remote jobs or stable income, Mississippi offers unmatched affordability.
5. West Virginia
West Virginia’s housing market is a hidden gem. The median home price is $158,000. Rent for a one-bedroom in Morgantown or Huntington is around $750. The state has no corporate income tax, and property taxes are among the lowest in the country.
It’s not for everyone-rural areas lack public transit, and internet access can be spotty outside cities. But for remote workers, retirees, or people who value quiet and space, West Virginia delivers. The state even offers relocation grants of up to $12,000 for remote workers who move there and stay for a year.
What States to Avoid for Financial Health
Not all states are created equal when it comes to affordability. Some are actively pushing people out.
California remains the most expensive state. The median home price is over $800,000. Rent for a one-bedroom in Los Angeles averages $2,800. Even with high salaries, most workers spend over 50% of their income on housing.
Hawaii is worse. The median home price is $1.1 million. Groceries cost nearly twice the national average. Electricity is the most expensive in the country-over 40 cents per kilowatt-hour.
New York and Massachusetts aren’t far behind. High taxes, expensive childcare, and stagnant wage growth make these states tough for middle-income families. If you’re not in tech, finance, or law, you’re paying a premium just to survive.
How to Decide What’s Right for You
There’s no single ‘best’ state. It depends on your job, family needs, and lifestyle.
- If you have a remote job or freelance income, consider Arkansas, Mississippi, or West Virginia. Low housing costs and low taxes let you save aggressively.
- If you need access to major airports, healthcare systems, or public transit, Ohio and Iowa are better choices.
- If you’re retiring and want low property taxes and affordable healthcare, Mississippi and West Virginia offer strong senior benefits.
- If you’re raising kids and want good schools without private school prices, Iowa and Ohio have strong public education systems.
Use tools like the Council for Community and Economic Research’s Cost of Living Index to compare cities. Plug in your salary, family size, and spending habits. You’ll be surprised how much difference a 10% lower rent can make over five years.
Hidden Costs That Sneak Up on You
People focus on rent and taxes, but other expenses can wreck a budget:
- Auto insurance: In Michigan and Louisiana, rates are double the national average. In Iowa and Ohio, they’re among the lowest.
- Property insurance: Coastal states like Florida and Louisiana charge high premiums for hurricane coverage. Inland states avoid this.
- Childcare: In D.C. and Massachusetts, full-time childcare costs more than rent. In Iowa and Arkansas, it’s half that.
- Internet: In rural areas, you might pay more for slower service. Check providers before you move.
These hidden costs can add $1,000+ a month to your budget. Don’t assume a cheap house means cheap living.
Real Stories, Real Savings
Emily, 34, moved from Chicago to Des Moines in 2023. Her rent dropped from $1,800 to $1,100. Her commute went from 45 minutes to 12. She now saves $800 a month. In two years, she paid off $15,000 in student debt and bought a $190,000 house with no down payment assistance.
James, 58, retired from a job in New York City and moved to West Virginia. His monthly expenses dropped from $5,200 to $2,100. He now has $3,000 left over each month-money he uses to travel, fix up his home, and help his grandchildren.
These aren’t outliers. They’re people who made a simple choice: live where your money works for you.
Final Thought: It’s Not About Poverty-It’s About Power
Choosing an affordable state isn’t about settling. It’s about reclaiming control. When you’re not drowning in rent and bills, you can take risks-start a business, go back to school, work less, or spend more time with family. That’s financial freedom.
The best state to live in financially isn’t the one with the highest salaries. It’s the one where your paycheck lasts longer, your stress drops, and your future looks brighter-not just because you made more money, but because you kept more of it.
What state has the lowest cost of living in 2026?
Mississippi has the lowest overall cost of living in 2026, followed closely by West Virginia and Arkansas. Housing, groceries, and utilities are all significantly cheaper than the national average. Mississippi’s median home price is around $165,000, and rent for a one-bedroom apartment averages $700. While wages are lower, so are expenses, making it a top choice for those on fixed or remote incomes.
Which state is best for retirees on a fixed income?
Iowa and West Virginia are top picks for retirees. Iowa has low property taxes, affordable healthcare, and no tax on Social Security. West Virginia offers even lower housing costs and a state program that gives remote workers up to $12,000 to relocate. Both states have lower-than-average prescription drug prices and property tax relief programs for seniors.
Is it smarter to rent or buy in affordable states?
In most affordable states, buying is the better long-term choice. In Iowa, Ohio, and Arkansas, home prices are so low that monthly mortgage payments are often less than rent. For example, a $200,000 home with a 10% down payment and 6.5% interest costs about $1,200/month-while rent for a similar home is $1,300-$1,500. You’re building equity instead of paying someone else’s mortgage.
What are the downsides of moving to a low-cost state?
Lower wages can be a problem if you don’t have remote work or a portable career. Some states have fewer job opportunities in high-paying fields like tech or finance. Rural areas may lack public transit, specialized healthcare, or diverse grocery options. Internet speeds can be slow. But if you’re flexible and plan ahead, these trade-offs are manageable.
Do low-cost states have good schools?
Yes, many do. Iowa consistently ranks in the top 10 for public education nationwide. Ohio has strong vocational programs and high graduation rates. Arkansas and Mississippi have improved significantly in recent years, especially in rural districts with state-funded initiatives. While they may not have the resources of top-tier urban districts, they offer solid education at a fraction of the cost.
Can I afford to move to a cheaper state if I have debt?
Yes-and it’s often the best way to pay it off. Moving to a state with lower housing and living costs can free up hundreds or thousands of dollars a month. That extra cash can go straight toward student loans, credit cards, or medical bills. People who move from high-cost areas to Iowa or Ohio often cut their debt repayment time in half.