If you are planning to move to a different state in the US, you might want to consider the cost of living before you pack your bags. The cost of living refers to the average amount of money you need to spend on essential expenses, such as housing, food, transportation, health care, and taxes. Depending on where you live, these costs can vary significantly and affect your quality of life and savings.
In this blog post, we will look at the 10 most expensive states to live in the US in 2024, based on the cost of living index from Forbes and other sources. The cost of living index compares the prices of goods and services across states, using the national average as a baseline of 100. Any index above 100 means that the state is more expensive than the national average, while any index below 100 means that the state is cheaper than the national average.
Top 10 Most Expensive States to Live in the US
Here are the 10 most expensive states to live in the US, along with their cost of living index and average annual expenditure on essential expenses:
1. Hawaii
Cost of living index: 179.00
Average annual expenditure: $55,491
Hawaii is the most expensive state to live in by far, with a cost of living index that is 79% higher than the national average. The main reason for this is the high cost of housing, which is driven by limited supply and high demand from tourists and residents. Hawaii also has high transportation costs, due to its remote location and dependence on imported goods. Additionally, Hawaii has high taxes, including a general excise tax that applies to most transactions.
2. California
Cost of living index: 134.50
Average annual expenditure: $46,776
California is the second-most expensive state to live in, with a cost of living index that is 34.5% higher than the national average. The main factor behind this is the high cost of housing, especially in major metropolitan areas like San Francisco, Los Angeles, and San Diego. California also has high transportation costs, due to its large size and traffic congestion. Moreover, California has high taxes, including a progressive income tax that can reach up to 13.3% for the highest earners.
3. Massachusetts
Cost of living index: 148.40
Average annual expenditure: $46,579
Massachusetts is the third-most expensive state to live in, with a cost of living index that is 48.4% higher than the national average. The main driver of this is the high cost of housing, especially in Boston and its suburbs. Massachusetts also has high health care costs, due to its high-quality medical facilities and services. Furthermore, Massachusetts has high taxes, including a 6.25% sales tax and a 5% income tax.
4. New York
Cost of living index: 125.10
Average annual expenditure: $45,273
New York is the fourth-most expensive state to live in, with a cost of living index that is 25.1% higher than the national average. The main contributor to this is the high cost of housing, especially in New York City and its surrounding areas. New York also has high transportation costs, due to its extensive public transit system and tolls. Additionally, New York has high taxes, including an 8.82% income tax for the highest earners and a 4% sales tax.
5. Alaska
Cost of living index: 124.40
Average annual expenditure: $44,941
Alaska is the fifth-most expensive state to live in, with a cost of living index that is 24.4% higher than the national average. The main reason for this is the high cost of food, which is affected by Alaska's remote location and harsh climate. Alaska also has high health care costs, due to its low population density and limited access to medical services. However, Alaska has no income tax or sales tax, which helps offset some of its expenses.
6. Maryland
Cost of living index: 119.50
Average annual expenditure: $43,921
Maryland is the sixth-most expensive state to live in, with a cost of living index that is 19.5% higher than the national average. The main factor behind this is the high cost of housing, especially in areas close to Washington D.C., Baltimore, and Annapolis. Maryland also has high transportation costs, due to its reliance on toll roads and bridges. Moreover, Maryland has high taxes, including a progressive income tax that can reach up to 8% for the highest earners and a 6% sales tax.
7. Oregon
Cost of living index: 115.10
Average annual expenditure: $42,281
Oregon is the seventh-most expensive state to live in, with a cost of living index that is 15.1% higher than the national average. The main driver of this is the high cost of housing, especially in Portland and its suburbs. Oregon also has high food costs, due to its preference for organic and local products. Furthermore, Oregon has high taxes, including a progressive income tax that can reach up to 9.9% for the highest earners and no sales tax.
8. Washington
Cost of living index: 115.10
Average annual expenditure: $42,281
Washington is the eighth-most expensive state to live in, with a cost of living index that is 15.1% higher than the national average. The main contributor to this is the high cost of housing, especially in Seattle and its surrounding areas. Washington also has high transportation costs, due to its heavy traffic and public transit fees. Additionally, Washington has high taxes, including a 6.5% sales tax and no income tax.
9. New Hampshire
Cost of living index: 115.00
Average annual expenditure: $42,251
New Hampshire is the ninth-most expensive state to live in, with a cost of living index that is 15% higher than the national average. The main reason for this is the high cost of housing, especially in areas near Boston and the coast. New Hampshire also has high health care costs, due to its aging population and limited providers. However, New Hampshire has low taxes, including no sales tax and no income tax.
10. Vermont
Cost of living index: 114.90
Average annual expenditure: $42,221
Vermont is the tenth-most expensive state to live in, with a cost of living index that is 14.9% higher than the national average. The main factor behind this is the high cost of housing, especially in Burlington and its suburbs. Vermont also has high food costs, due to its rural nature and small farms. Moreover, Vermont has high taxes, including a progressive income tax that can reach up to 8.75% for the highest earners and a 6% sales tax.
These are the 10 most expensive states to live in the US in 2023, based on the cost of living index and average annual expenditure on essential expenses. As you can see, housing costs are the most significant factor that affects the cost of living, followed by transportation, health care, food, and taxes. If you are looking for a more affordable place to live, you might want to consider some of the cheapest states to live in, such as Mississippi, Oklahoma, Kansas, Missouri, and Alabama.
References:
- https://www.forbes.com/advisor/mortgages/cost-of-living-by-state/
- https://worldpopulationreview.com/state-rankings/most-expensive-states-to-live-in
- https://www.businessinsider.com/top-states-with-highest-living-expenses-2023-8
