What are the cheapest states in the United States in 2025?

While inflation continues to affect millions of households in the United States, a new study from the economic channel CNBC identifies the 11 states where the cost of living remains affordable and, in some cases, even beats inflation.

The analysis is part of the annual report by CNBC on the best states for doing business, where the cost of living is regarded as one of the top ten categories.

For this ranking, the media used data from the Council for Community and Economic Research (C2ER), evaluating prices of basic goods and services, housing, and even the cost of insuring a property.

West Virginia: the most affordable

At the top of this year's ranking is West Virginia, recognized as the cheapest state in the country to live in.

With a cost of living index of 84.1 (well below the national average), West Virginia provides its residents with greater purchasing power compared to much more expensive states like Hawaii, which recorded an index of 186.9.

Less than 20% of the state's residents allocate more than a third of their income to housing, which is a positive indicator against the national inflationary pressure.

However, the study also warns of structural challenges: the state is facing a shortage of affordable housing.

According to the National Coalition for Low-Income Housing, at least 25,000 new housing units are needed, as there are only 58 available homes for every 100 low-income households.

The rise of short-term rentals further complicates the landscape for permanent residents.

Ranking of the 11 cheapest states in 2025 (in descending order):

West Virginia

Indiana

Kansas

Missouri

Alabama

North Dakota

Ohio

Wyoming

Delaware

Iowa

Michigan

These states offer significant advantages for both citizens and businesses, which are looking to reduce operational costs and attract workers in an economic environment still affected by inflation.

Inflation: a persistent pressure

Although the overall inflation in the United States showed a slight increase in May 2025, with a year-on-year rise of 2.4%, the cost of living remains a key concern.

According to the Bureau of Labor Statistics, the main drivers of the increase were housing (+3.9% annually) and food, while other sectors such as energy and vehicles showed declines.

Jerome Powell, the president of the Federal Reserve, recently warned that the tariffs imposed this year could drive prices up again during the summer. "Tariffs take time to reach the final consumer," he said at a press conference.

Why is this ranking important?

For companies looking to establish themselves in states with lower operating costs and greater hiring potential, the cost of living is a strategic factor.

CNBC assigns a weight of 2.4% to the cost of living within its overall scoring system. In this context, states with affordable housing, inexpensive services, and reasonable insurance become increasingly competitive destinations.

In contrast, states like California, New York, and Hawaii, despite their economic and tourist appeal, face such high costs that they pose a barrier for many working families.

A breath amidst uncertainty

Although inflation appears to be under control compared to the peaks recorded in 2022, the current economic conditions—including new tariffs and the insurance crisis in some regions—are still putting pressure on households.

In this scenario, states with a lower cost of living, such as West Virginia and Indiana, provide tangible relief.

For millions of Americans, living in one of these 11 states can make the difference between a tight family budget and a more comfortable quality of life.

And in times of uncertainty, that kind of stability can be the greatest advantage.

Frequently Asked Questions about the Cheapest States to Live in the U.S. in 2025