Cost of Living · Updated June 2026
Lowest cost of living states in the US
The value end of the 2026 table: Tennessee (90), Michigan and Indiana (91), Ohio, Texas and Georgia (92) – states where median homes sit under $350k and one-bed rents under $1,400, yet major-metro amenities remain within reach.
Cheap states differ in how they're cheap: Tennessee pairs its low index with zero income tax (but the nation's highest sales tax), Indiana runs low-everything, and Texas funds itself through property tax. The right pick depends on whether you rent, own, or live off investments.
Cost of living calculator
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Composite 2026 index incl. centre rent (NYC = 100). Salary figures are gross – taxes not included; pair with the salary after tax calculator.
Key insights
Key insights
- Cheapest tier 2026: TN 90 · MI/IN 91 · OH/TX/GA 92.
- Tennessee: renter-optimal (no income tax, low rents, 9.55% sales).
- Indiana/NC: owner-optimal via sub-0.85% property tax.
- Texas "no tax" returns ~$5,400/yr via property tax on a median home.
- The arbitrage pays movers who bring coastal income with them.
| State | COL index (US=100) | Income tax | Median home | 1-bed rent |
|---|---|---|---|---|
| Tennessee | 90 | None | $320,000 | $1,250 |
| Indiana | 91 | 2.95% flat | $250,000 | $1,150 |
| Michigan | 91 | 4.25% flat | $250,000 | $1,200 |
| Texas | 92 | None | $340,000 | $1,300 |
| Ohio | 92 | 2.75% flat | $240,000 | $1,100 |
| Georgia | 92 | 5.19% flat | $330,000 | $1,400 |
| Illinois | 94 | 4.95% flat | $280,000 | $1,500 |
| Pennsylvania | 95 | 3.07% flat | $270,000 | $1,300 |
| South Carolina | 95 | up to 6.2% | $300,000 | $1,250 |
| North Carolina | 96 | 3.99% flat | $340,000 | $1,350 |
Three flavours of affordable
Renter-optimal: no-income-tax + low rents (Tennessee – wage earners renting capture both savings cleanly). Owner-optimal: low property tax + cheap homes (Indiana 0.84%, NC 0.63%). Retiree-optimal: low index + retirement-income exemptions (several southern states tax pensions lightly or not at all).
Texas illustrates the fine print: a renter saves the full income-tax wedge, but an owner returns ~1.58% of home value annually – on a $340k median that's $5,400/year, most of the "no tax" headline.
The arbitrage in practice
A remote $100k earner relocating NYC → Tennessee keeps ~$8,703 more per year in tax alone, then saves again on every rent and grocery line. Stack the COL and tax tools to price your own version.
The catch is income gravity: local salaries in cheap states run 10–25% below coastal ones in matched roles. The arbitrage belongs to movers who bring their income with them – remote workers, retirees, and equity-rich sellers.
FAQ
Frequently asked questions
What is the cheapest state to live in (2026)?
Among covered states, Tennessee at index 90 – $320k median homes, $1,250 one-bed rents, no wage income tax. Mississippi/Arkansas-tier states (not covered above) run a few points lower nationally.
Which cheap state is best for renters?
Tennessee: rents near $1,250 and zero income tax stack two savings; the high sales tax (9.55%) costs renters far less than property tax costs owners elsewhere.
Which is best for homeowners?
Indiana and North Carolina: sub-$350k medians with 0.63–0.84% property taxes give the lowest all-in carrying costs in the covered set.
Do salaries fall as much as costs?
Local salaries run 10–25% below coastal levels – still a net win, but the full arbitrage goes to remote workers and retirees who import their income.
What's the catch with no-income-tax cheap states?
Revenue moves to sales tax (TN 9.55%, highest in the US) or property tax (TX 1.58%). Match the tax mix to whether you spend, own, or earn.
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