Cost of Living by State: 2026 Data, Rankings, and What the Numbers Actually Mean

• By Mike McCall
Cost of Living by State: 2026 Data, Rankings, and What the Numbers Actually Mean

Here is the number that puts everything else in context: overall prices in the United States are up roughly 26% since 2020. That is more than double the cumulative inflation of the five years before the pandemic. 1

The rate of increase has slowed — the annual inflation rate through February 2026 is 2.4%, according to the Bureau of Labor Statistics. But the prices that hit households every day — groceries, utilities, rent, insurance — are not coming back down. They are higher than they were, and in many states they are still rising faster than wages and retirement income can absorb. 2

That is the backdrop for every relocation decision happening in America right now. For retirees on fixed incomes, for workers evaluating remote-work options, and for families deciding where to plant roots, state-level cost of living is one of the most consequential numbers in personal finance — and one of the least understood.

This page presents the 2026 state-by-state cost of living data, explains what drives the differences, and identifies where your dollar stretches furthest. For ZIP-code-level income and demographic data, explore any state linked below. For a look at where retirees are relocating based on these numbers, see Where Retirees Are Moving in 2026.

How the Cost of Living Index Works

The standard benchmark for comparing cost of living across states is the MERIC Cost of Living Index — produced by the Missouri Economic Research and Information Center using methodology from the Council for Community and Economic Research (C2ER). It is the most widely cited state-level measure and the source used by the Bureau of Economic Analysis, GOBankingRates, World Population Review, and most major financial publications. 3

The index sets the national average at 100. A state with an index of 85 costs about 15% less than average. A state at 140 costs 40% more. The basket covers six categories:

  • Groceries
  • Housing (the dominant driver — typically accounts for 60-70% of differences between states)
  • Utilities
  • Transportation
  • Healthcare
  • Miscellaneous goods and services 4

It is worth understanding what the index does not capture. State and local taxes are not included. Quality of infrastructure, school systems, healthcare access, and climate are not included. The index measures prices — not the full value equation of living somewhere. A state can have a low cost of living index and high property taxes, limited job markets, or poor healthcare infrastructure. Those factors matter particularly for retirees weighing a relocation decision.

The Most Expensive States to Live In — 2026

The five most expensive states share a common pattern: geography-constrained housing markets, high population density, and policy environments that have historically kept housing supply tight relative to demand. 3 4

1. Hawaii — MERIC Index: 185.0

Hawaii sits 85% above the national average — the most expensive state in the country by a significant margin. The core driver is housing, where island geography makes construction inherently more expensive and supply permanently constrained. Hawaii’s housing subindex runs approximately 315, meaning housing alone costs more than three times the national average. Groceries run roughly 50% above average, driven by the cost of shipping goods to the islands. A family of four needs a living wage of approximately $120,000 to $130,000 per year in Hawaii to cover basic expenses. 3 5

2. New York — MERIC Index: 148.2

New York comes in at 48% above the national average. The state average is pulled heavily upward by New York City, where a two-bedroom apartment rents for a median of $5,874 per month in the city proper — though the state-level average is significantly lower. Outside the metro, New York’s costs drop considerably, but the overall index reflects the weight of the metro. 4

3. California — MERIC Index: 142.3

California runs 42% above the national average. Housing dominates: the median home price statewide exceeds $750,000, compared to roughly $160,000 in the most affordable states. The state’s cost pressure is structural — strict zoning and land use regulations have constrained new housing supply for decades, keeping prices elevated even as domestic outmigration runs at roughly 230,000 residents per year on a net basis. 4 5

4. Massachusetts — MERIC Index: 141.2

Massachusetts is the fourth most expensive state, at 41% above the national average. Its housing index runs approximately 232 — more than double the national baseline. Despite the high costs, Massachusetts has the highest median family income in the nation at $140,309 for a family of four, which partially offsets the price pressure for working-age households. Retirees on fixed incomes face a harder calculation. 5

5. Oregon and Washington — Also in the Expensive Tier

Oregon and Washington round out the top expensive tier, both well above the national average. Oregon’s median single-family home costs approximately $447,968. Washington has no income tax, but that advantage is significantly offset by its elevated overall cost of living — particularly housing — for most households. 5

The Most Affordable States to Live In — 2026

The most affordable states share a different structural profile: abundant land, lower population density, housing supply that has generally kept pace with demand, and in most cases lower regulatory overhead on construction. 4

1. Oklahoma — MERIC Index: 86.0

Oklahoma is the most affordable state in the country, running 14% below the national average. Housing is among the lowest in the country, with median home prices in many Oklahoma markets around $175,000. A family of four can cover essential expenses on approximately $89,353 in annual income — one of the lowest thresholds in the nation. 3 4

2. Mississippi — MERIC Index: 87.3

Mississippi is the second most affordable state, with a median home price of approximately $160,000 — the lowest of any state. The low cost of living is real and measurable, but context matters: Mississippi has the highest poverty rate in the nation at nearly 20%, and real per capita personal income adjusted for costs is the lowest of any state at $40,465. Affordability and opportunity are not the same thing. 3 5

3. Kansas — MERIC Index: 86.5

Kansas runs close behind Oklahoma and Mississippi. The average single-family home costs $176,898, with two-bedroom rentals averaging $995 per month — among the lowest in the nation. The state’s median family income of $92,980 exceeds its living wage requirement of $89,353 for a family of four, a positive sign for affordability relative to income. 3

4. Alabama — MERIC Index: 88.6

Alabama consistently ranks among the top five most affordable states, with particularly low property tax rates that add under $1,000 annually to housing costs on a median-priced home. Combined with below-average housing costs, Alabama offers some of the most favorable conditions in the country for retirees managing a fixed-income budget. 6 4

5. West Virginia — MERIC Index: ~89

West Virginia rounds out the bottom five in cost, with housing costs well below the national average. It is worth noting that as of 2026, West Virginia joined the list of states that do not tax Social Security benefits — a meaningful addition for retirees evaluating the state’s overall financial picture. For a full breakdown of state income tax treatment of retirement income, see States With No Income Tax — What Retirees Need to Know.

The Middle Tier: Where Cost and Opportunity Intersect

Some of the most compelling relocation destinations in 2026 sit in the middle tier of the cost index — at or just below the national average — with strong job markets, improving infrastructure, and lifestyle advantages that pure affordability rankings do not fully capture.

Tennessee — Index: ~89–92

Tennessee is below the national average on cost of living and has no state income tax — a combination that makes it particularly attractive for retirees. Nashville’s 37228 ZIP code has ranked among the nation’s top ten for inbound moves per capita multiple months running in 2025-2026. Tennessee’s lower cost base, combined with economic momentum and no income tax, creates the kind of structural advantage that sustains long-term migration pressure. 6 7

North Carolina — Index: ~96–99

North Carolina sits near the national average overall but with significant variation by metro. The Raleigh-Durham-Chapel Hill corridor runs above average; western and coastal markets run well below. North Carolina ranks third in the nation for net population growth at 1.3% and consistently tops the list of states gaining retirement-age residents. 6

South Carolina — Index: ~97–100

South Carolina comes in at or just below the national average, with significant affordability in its non-coastal interior and growing demand in its coastal markets. It led the nation in net retirement-age migration in 2025 with a net gain of 5,427 adults aged 65 and over. The combination of coastal lifestyle, below-average overall costs, and no tax on Social Security benefits makes South Carolina a case study in the middle-tier advantage. 7

Texas — Index: ~93–95

Texas runs slightly below the national average on cost with no state income tax. Housing costs vary enormously by metro — Austin is no longer affordable in its urban core, while suburban markets like Cypress (77433), New Braunfels (78130), and Crandall (75114) remain meaningfully below national averages. Texas added 391,243 new residents in 2025 — more than any other state in absolute numbers. 6

Housing: The Number That Drives Everything Else

Housing accounts for 60 to 70% of the cost-of-living differences between states. Every other factor — groceries, utilities, healthcare, transportation — matters, but none comes close to housing in explaining why one state costs 85% more to live in than another. 4

The scale of the divergence is striking:

  • Median home price in Mississippi: approximately $160,000
  • Median home price in California: over $750,000 — nearly 4.7 times as much 4
  • National home prices are up 55% since 2019, a cumulative increase that has outpaced wage growth in most markets 4
  • Montana and Idaho, both popular migration destinations, saw median home prices surge over 56% between 2020 and 2025, significantly compressing their affordability advantage 8

The post-pandemic affordability math has shifted in ways that are easy to miss if you’re looking at current index scores without historical context. States that were genuinely cheap five years ago — Idaho, Montana, Arizona — have absorbed enough migration demand that housing costs have risen substantially. The affordability advantage that drew people there has partially eroded for new arrivals, even if the index still shows them below the national average.

Beyond Housing: The Other Cost Drivers

Groceries

Food prices in 2026 are running 3.1% higher than a year ago for food eaten at home, and 3.9% higher for restaurant meals, according to USDA Economic Research Service forecasts based on February 2026 data. 2 Both figures are above their 20-year historical averages. Since 2020, the cumulative increase in grocery prices has been substantial — beef and veal prices were 14.4% higher in February 2026 than a year earlier. Hawaii’s grocery index runs approximately 50% above the national average; Oklahoma and Mississippi run the lowest.

Utilities

The average residential electricity rate has risen 48% since 2019, from 13.0 cents per kilowatt-hour to 19.2 cents. 4 Natural gas prices have risen more than twice as fast as wages over the past year. These increases hit lower-income households and retirees on fixed incomes disproportionately, since utilities represent a higher share of spending for those with lower total budgets.

Healthcare

Healthcare is running faster than general inflation. Medical care services CPI was up 3.4% year over year through February 2026, with hospital services up 6.7%. 9 Employee premiums for family health insurance have risen 23% in the past five years to nearly $6,900 annually. For retirees, Medicare Part B premiums rose 9.7% in 2026 alone — consuming more than a third of the Social Security cost-of-living adjustment before it arrived.

Taxes: The Factor the Index Doesn’t Include

State and local taxes are not captured in the MERIC index, but they are a material component of what it actually costs to live somewhere. The nine states with no income tax — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — save residents thousands of dollars per year on top of whatever the cost-of-living index shows. As of 2026, 42 states do not tax Social Security benefits — up from 41 last year, with West Virginia joining the list. For the full breakdown, see States With No Income Tax — What Retirees Need to Know.

What This Means for Relocation Decisions

The cost-of-living gap between states is not academic. At the extremes, it represents the difference between financial security and financial stress on a fixed retirement income.

Consider a retiree receiving $2,071 per month in Social Security — the 2026 average after the COLA increase. In Hawaii, that income is worth roughly half of what it buys at the national average. In Oklahoma or Mississippi, it goes about 14% further. That gap compounds over a 20-year retirement into a difference that can run into hundreds of thousands of dollars in cumulative purchasing power.

This is precisely why the migration data shows what it does. South Carolina, Tennessee, and North Carolina — all middle-tier cost states with no or low income tax on retirement income — led the nation in net retirement-age migration in 2025. Florida’s position at near-parity between inbound and outbound retiree moves reflects the reality that its cost advantage over the Northeast has narrowed substantially, even as its no-income-tax structure remains attractive.

The states gaining the most retirement-age residents are not the cheapest states. They are the states with the best combination of cost, climate, taxes, healthcare access, and lifestyle quality. That balance — not raw affordability — is what the migration data reveals when you look closely at it.

Sources

Page last updated: April 2026. MERIC Cost of Living Index updates quarterly. State migration and tax data updates annually.

Footnotes

  1. CNBC Make It, “See how much prices have increased since 2020 — in one chart,” citing BLS CPI data, December 2025. https://www.cnbc.com/2025/12/18/cumulative-inflation-since-2020.html ↩

  2. USDA Economic Research Service, Food Price Outlook Summary Findings, March 2026. BLS Consumer Price Index — February 2026. https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings ↩ ↩2

  3. DontPayFull, “Cost of Living Statistics: 60+ Key Facts and Data for 2026,” citing MERIC 2025 Q3 data, BEA/FRED Regional Price Parities, April 2026. https://www.dontpayfull.com/explore/cost-of-living-statistics ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  4. Keeping Up With Inflation, “Cost of Living by State 2026,” citing MERIC, BLS, Zillow ZORI, and EIA data. https://keepingupwithinflation.com/statistics/cost-of-living-by-state/ ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9 ↩10 ↩11

  5. GOBankingRates, “Here’s the Cost of Living in Every State in 2026,” analyzing MERIC Q3 2025 indexes and BLS 2024 Consumer Expenditure Survey, January 2026. https://www.gobankingrates.com/money/economy/heres-the-cost-of-living-in-every-state-in-2026/ ↩ ↩2 ↩3 ↩4 ↩5

  6. Coastal Moving Services, “States Ranked by Cost of Living,” citing World Population Review and USACLI Cost Reports 2026, March 2026. https://coastalmovingservices.com/city-state-guides/states-ranked-by-cost-of-living/ ↩ ↩2 ↩3 ↩4

  7. HireAHelper / AARP retirement migration data, 2025-2026. https://www.aarp.org/money/retirement/retirees-top-states-2025/ ↩ ↩2

  8. Coastal Moving Services, “States Ranked by Housing Affordability 2025,” citing World Population Review and Construction Coverage price-to-income data. https://coastalmovingservices.com/city-state-guides/states-ranked-by-housing-affordability-2025/ ↩

  9. Kiplinger, “9 No-Income-Tax States Ranked by Cost of Living in 2026,” citing BEA Regional Price Parities, Tax Foundation, April 2026. https://www.kiplinger.com/taxes/no-income-tax-states-ranked-by-cost-of-living ↩

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