States With the Best Income to Cost of Living Ratio (Updated for 2025)

Relocating to states with the best income-to-cost-of-living ratio is the soundest financial move. If the costs of rent, utilities, food, groceries and health care consume a massive portion of your monthly income, consider changing your location.

Out of the 50 states, where should you settle next? Check out these seven locales that give you your dollar’s worth.

Indiana

Indiana is currently one of the most affordable places to live in the U.S., particularly Fort Wayne and Indianapolis. Indiana’s 2024 cost of living is 8% lower than the national average, with housing being 21% lower than the national average, while utilities are 1% higher. Otherwise, food, transportation, health care and goods and services are below the national average. 

The state’s median household income is $62,743. While lower than the national median household income, it may still be suitable since it appropriately matches Indiana’s low cost of living. 

The cost of living in Fort Wayne, Indiana is 9% lower than the national average with a median household income of $58,233. This city has undergone various economic development projects and manufacturers like BAE Systems and General Motors have also made major investments in the economy, making it a good place to start a career or launch a business. 

Alternatively, Indianapolis, Indiana is $2,129, which belongs in the top 16% of the most expensive cities globally. This city offers benefits such as numerous attractions and entertainment options, such as one of the world’s largest children’s museums, recreational trails, theaters, and various sporting events. 

Texas

Relocating to the Lone Star State offers numerous advantages in lifestyle, access to quality necessities and getting the most out of each dollar. It can be hot during summer, but other than that, it has a wallet-friendly cost of living and a flourishing job economy that entices many people to move here. A single person in Texas earns a median income of $55,441.

El Paso’s cost of living is 12% lower than the nationwide average. Meanwhile, Sherman and San Antonio are 9% lower. The average rental price in Texas is about $1,904, which is 9% lower than the national median.

Utilities, grocery, transportation and health care costs are also below the country average. Utilities are 7% lower and the cost of gas per gallon in Texas is $2.77. The national average price is $3.22, so residents spend less for transportation. Texas also doesn’t charge state income tax, which compels retirees to move here. 

Alabama

If you want to move to a warmer place, Alabama boasts excellent weather for many outdoor activities, like hiking and water sports. Besides the beautiful landscapes and southern charm, it’s also a very livable state. Cities like Huntsville and Montgomery offer cheap costs of living.

The average income in Montgomery is $61,980, but the median rent is $1,100. On average, you’ll pay $398 per month for utilities — that includes gas, water, cable and electricity. Food and groceries are also fairly cheap, at $271.75 per person monthly. In addition, the state has lower housing costs and inexpensive property tax rates.

Alabama is like most states that use a graduated-rate income tax structure for sales, with the highest individual tax rate of five percent. Compared to South Carolina and West Virginia, Alabama has a lower top marginal tax rate and is one of the states with the best income-to-cost-of-living ratio. 

Missouri

You may prefer Missouri for its excellent mix of affordability and famous attractions like the Gateway Arch, museums and theme parks. Missouri’s current cost of living is around $1,972, including rent. Its median household income is $68,545, with over 150,000 employer establishments and a 61.5% employment rate. 

Springfield, Missouri, may be an excellent option because its cost of living is 7% below the state average and 15% lower than the national average. However, this also means the average household income is lower, at $43,450. 

Kansas City, Missouri also has a worthwhile income to cost of living ratio because its median household income is higher, at $65,256. This also means that the cost of living is slightly higher. The cost of living in Kansas City is 2% higher than the state average and 6% lower than the U.S. average. 

While you might expect higher housing and utilities costs, all other costs of living expenses may be lower, with health care and transportation being 10% lower than the state average. 

North Carolina

North Carolina has stunning coastlines, fantastic career opportunities, and rich culture and history. It’s also one of the most affordable states to live in.

Housing in North Carolina is 14% lower than the national average. The median rent for a two-bed apartment in smaller cities like Greenville is $914. Utilities are also 6% less than the average city in the U.S. If you live in Durham-Chapel Hill, you’ll pay 10% less. In Raleigh — the capital city — grocery and health care costs are 12% and 3% less, respectively.  Regarding transportation costs, the Thomasville-Lexington area is 27% below the average, but the cost of health care here is relatively high. 

Illinois

The Prairie State has astonishing lush forests, farmland and rolling hills. People often move to Illinois to find high-paying jobs in industries like transportation, publishing, engineering, food processing and electronics.

The cost of living in Illinois is 8% lower than the average in the country. However, living in larger cities is expensive, with the cost of living going as high as 14% more than the country’s average. If you want to relocate to Illinois, choose smaller cities like Decatur and Danville, where the cost of living is 22% and 21% below the state average. Medical costs and non-necessary expenses are also cheaper here. 

Kansas

Kansas has a cost of living index of 87.0, which is below the country’s average. It’s one of the states with the best income to cost of living ratio since everything from groceries, utilities, transportation and housing are all below the current standard.

House prices here are mostly within the budget, currently sitting at around $232,507 per home. While it might still seem like a lot, that’s 64% of the national average. Additionally, Kansas has an income-to-home ratio of 30% — one of the most affordable in the U.S. Aside from the Kansas-style barbeque that many people love, the highly affordable cost of living — even in the urban belt — is what attracts people to move to Kansas. 

Be Financially Wise in Choosing Your Next Home

People have different reasons for moving out of state. Some may want to live in a smaller city because they like the weather, have better access to health care or want to start a new life. Others relocate so they can maximize their financial resources.

Whatever prompts you to pack your things, ensure you research the place you’ll move to. Rarely will you find the perfect location with good weather, affordable living and high income. One city will have at least one thing you must compromise on. Check out the smaller cities in these six states and find the place that balances everything you want in your next home.

Original Publish Date: 7/10/2023 – Updated 1/23/2025