The 8 Least Expensive States to Live in the U.S.

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After looking at the cheapest cities in the country to live, it only makes sense to determine which states have the lowest cost of living for Americans. With states such as California and Texas competing with each other for business and tourism, it’s time to have a competitive look at the states that make life less expensive.

The Bureau of Economic Analysis’s Regional Price Parity metric helps determine which states are more competitively priced than others in terms of cost of living. It’s important to note, though, that the RPP includes rent in its basket of priced goods, which can sometimes weigh heavily on the outcomes of expensive versus inexpensive. Now, here’s a look at the eight cheapest states in the union:

8) Nebraska

Coming in at number eight is Nebraska. The Midwestern state has the second-lowest unemployment in the nation at 3.8 percent. Moreover, the RPP shows that the cost of goods and services there is 10.2 percent lower than the national average. The Cornhuskers pay a 5.5 percent sales tax, placing it in the middle of the pack, at twenty-eighth, when compared to other states. It fares slightly worse in property taxes, with residents paying 1.76 percent of their home’s value in tax.



7) Kentucky

The Bluegrass State also turns out to be a relatively cheap place to call home. Kentucky residents enjoy paying 10.4 percent less for goods and services than the average American. The state also boasts some of the lowest property taxes in the nation, with homeowners only paying 0.72 percent of their home’s value in tax. Unfortunately, it makes up for that in sales tax, where it collects 6 percent from consumers in the marketplace. Unemployment in the state is also above the national average, with 8.1 percent of residents looking for work.



6) Iowa

It’s the second Midwestern state on the list. Iowans enjoy a cost of living that is 10.6 percent below the national average. Employment is quite healthy in Iowa, where only 4.6 percent of residents are out of work. The state ranks in the middle of the sales tax burden by states, with a paid home-value rate of 1.29 percent. Its sales tax is tied with Kentucky’s at 6 percent.



5) Arkansas

Representing the first deep South state on the list, Arkansas enjoys a 10.8 percent discount on goods and services as compared to the nation. While unemployment is only slightly below the national average, the state’s property tax is among the cheapest in the nation: only 0.52 percent of home value is assessed for tax. Sales tax in Arkansas is on par with Iowa and Kentucky, coming in at 6 percent.



4) Missouri

Missouri prices sit exactly 11 percent below the national average, so it’s a nice discount to those living there. The unemployment rate is a bit below the national average at 6.8 percent, while property taxes sit a bit higher than the previous few states, at 0.91 percent. The sales tax, though, is a bit more desirable, at 4.225 percent.

Jefferson City, Missouri

3) Mississippi

The cost of living is quite cheap in the state, where goods and services paid are 11.3 percent below the national average. Unfortunately for Mississippi, its unemployment rate is the second highest in the nation; 9.1 percent of its residents are looking for work. The states makes up for that with a desirable property tax of 0.52 percent, but offsets its low property tax with the second-highest sales tax in the country at 7 percent. A mixed bag, despite the favorable RPP.



2) North Dakota

North Dakota is the second-best state on the list for RPP, a feature that might cause some rivalry between it and the winner. In North Dakota, prices are 11.3 percent below what the average American pays, and the property tax is 1.45 percent, placing it exactly in the middle of all 50 states. But its unemployment is the lowest in the U.S., at only 3.2 percent. Sales tax is a reasonable 5 percent, making the overall prospect of living in North Dakota rather lucrative for those interested in value.

north dakota


1) And the winner is…

South Dakota! The state is home to the lowest prices in the country, at 13 percent below the national average. It also has the third lowest unemployment at 4 percent. Property taxes are better than average at 1.28 percent, and the sales tax is a bargain at 4 percent. So, congratulations to South Dakota for being the cheapest state in America to live!

South Dakota


Property tax figures used are from the Tax Foundation and represent the aggregate rates from 2004 to 2009.  Sales tax numbers are the most recent statewide figures, also from the Tax Foundation, and do not factor in local taxes.

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