Three States with the Lowest Cost of Living

For those thinking about retirement or who have been considering moving out of a state due to the high cost of living, there are a surprising number of options across the country from which to choose. It is important to note, however, that while the state in general may have a low cost of living some of the larger individual cities will have a higher associated cost than others.

Before choosing which state is the best fit, it is always a good idea to visit and explore the area. There are often trade-offs for having a lower cost of living, such as decreased access to higher paying jobs and cultural centers. It is important to assess the differences between the current location and any prospective locations to ensure they are adequate for one’s preferences.


Texas makes the top of the list for a few reasons. The state has no state income tax and the maximum state and local sales tax is a modest 8.25 percent. However, the state property tax is one of the highest in the nation at nearly 2 percent. To make the most of living in Texas, residents may be better off renting.

Another benefit of living in the Lone Star state is the fact that the energy market has been deregulated. Since the implementation of the deregulation legislation, Texas residents have had energy costs below the national average. Direct Energy is a leader in the field and has their national headquarters located in Houston, Texas.


Tennessee is another state with no state income tax. Another key reason for the lower cost of living in the state is the predominance of rural areas. In general, states with a large percentage The state has a lower than national average cost in healthcare, childcare, transportation, and food.

The housing prices in Tennessee are only moderately below the national average because of the higher costs in the larger cities. These are still lower than the overall national average, but they cause the housing market to be less favorable than it actually is in much of the state. Those who wish to optimize their cost of living savings should consider the more rural areas for purchasing a home.


Mississippi is the only state on the list that does have a state income tax, which is based on taxable income. The maximum state income tax rate is 5 percent. They also have a state sales tax that varies by local municipality but reaches 8 percent in some areas.

The property tax in Mississippi is one of the lowest median rates in the nation at an average of .52 percent. For those interested in purchasing a home in a state known for having a lower cost of living, this is an excellent option. As an additional incentive, housing prices are also as much as 30 percent lower in the state than in other areas of the country.

Those who decide to move to one of the states that have the lowest cost of living may want to consider keeping the home in the state they are moving from and using it as a rental property. This is especially beneficial for those who have already paid off their mortgage. Rental prices in the area are most likely higher than the place you’ll be moving to and may even help fund the move.

2 Responses to “Three States with the Lowest Cost of Living”

  1. Ninja Budgeter

    Mar 09. 2017

    I came because I read somewhere that you live in Vancouver. Nice to connect with other Canadian finance bloggers. I’m in Victoria!

    • Dividend Ninja

      Mar 09. 2017

      Hey Mike, thanx for dropping by! I like your site btw.