1. HAWAII (COST OF LIVING INDEX: 188.4)
Hawaii's remote location makes it the most expensive state in the nation. Most goods have to be shipped in, significantly raising prices for everything from groceries to building materials. Electricity costs are also sky-high, averaging 42.45 cents per kWh in June 2024-more than double the national average of 16.41 cents per kWh.
2. CALIFORNIA (COST OF LIVING INDEX: 143.0)
California's housing market remains a challenge, with demand far outstripping supply, especially in tech-heavy areas. Forty percent of homeowners and 50% of renters spend over 30% of their income on housing costs.
State excise tax rates for gasoline are the highest in the U.S., at 59.6 cents per gallon, thanks to a mix of regulations, taxes, and limited supply. Utilities and food costs also weigh heavily on residents' wallets.
3. WASHINGTON, D.C. (COST OF LIVING INDEX: 140.6)
The nation's capital isn't just a political hotspot-it's a pricey place to live. Washington, D.C., collects more in state and local taxes per capita ($13,275 in 2021) than any other state. A years-long housing shortage has led to high demand, resulting in a prevalence of "missing households," where unrelated individuals live together to share costs.
4. MASSACHUSETTS (COST OF LIVING INDEX: 139 9)
Massachusetts ranks high thanks to soaring housing costs, especially in the Boston area. The median down payment for a home in Greater Boston reached $105,300 in late 2023, exceeding the area's median annual income. And at 22% above the national average, the cost of building a starter home in Massachusetts is the second highest in the U.S. Utility costs are also elevated, with ongoing supply issues for heating oil and diesel.
5. NEW YORK (COST OF LIVING INDEX: 123.5)
Living in the Empire State comes with the nation's highest combined tax burden (12.02%). Even New Yorkers who don't own property pay the highest state income tax in the U.S. at 4.63%. Manhattan alone drives much of the expense, as it remains the most expensive area in the U.S. to live in due to limited space and overwhelming demand.
6. ALASKA (COST OF LIVING INDEX: 123.0)
Alaska's sparse population and remote geography mean high transportation costs for goods, making groceries in cities like Juneau (#1) and Fairbanks (#2) the highest in the nation, with cost of living indices in this category at 127.4 and 126.5, respectively. Utility costs are also the highest in the U.S., further adding to the strain on residents.
7. WASHINGTON (COST OF LIVING INDEX: 115.8)
Adventure abounds in the Pacific Northwest, but so do high prices. Seattle, in particular, faces a critical housing shortage, leading to famously jaw-dropping real estate prices. Healthcare and transportation costs in the state are also among the highest in the U.S.
8. NEW JERSEY (COST OF LIVING INDEX: 115.0)
New Jersey's proximity to New York City has driven up housing costs, especially in Jersey City-now the second-priciest city for renters in the U.S. The state's overall housing market remains significantly above average, though suburban areas offer slightly more affordability.
9. MARYLAND (COST OF LIVING INDEX: 114.7)
High car insurance rates contribute to Maryland's elevated cost of living. Drivers here pay 50% more than the national average for minimum coverage-around $2,120 annually compared to $1,400. Housing costs in the Baltimore metro area increased 22.3% from 2010 to 2020.
10. VERMONT (COST OF LIVING INDEX: 113.8)
Vermont's surge in popularity during the COVID-19 pandemic brought much needed population growth but also significantly increased housing costs. Between Q1 2023 and Q1 2024, real estate prices rose faster here than in any other state, climbing 12.8% over 12 months. High healthcare costs further add to Vermonters' financial challenges.
WHAT'S DRIVING THE COSTS?
Coastal and metropolitan areas face unique challenges, from housing shortages and high taxes to elevated utility and transportation costs. The Midwest and South generally offer new residents a lower cost of living compared to popular coastal states in the Northeast and West. Meanwhile, states like Alaska and Hawaii grapple with their remote locations, which increase prices for basic goods and services.
If your state made this list, it's easy to see why many Americans are reconsidering where to live to stretch their dollars further. Interested in learning more? Check out the full Cost of Living Index for a deeper dive into affordability across the U.S.
Source: BAM
