The increasing pressure of inflation on the American economy, and household, is making cost of living an even greater issue than it had already been. According to the Bureau of Labor Statistics (BLS), the consumer price index for all items increased by 7% over the last 12 months from December 2020 to December 2021. That’s the largest 12-month increase since the 12-month period that ended in June 1982, the latter era being one of double-dip recession and sky-high interest rates implemented to rein in the runaway inflation of the late-1970s.
The Most Expensive States to Live in 2022
In order to help Americans manage this new surge in cost of living, Credit Karma conducted a study of the most expensive states to live in and the least expensive states to live in 2022. This study analyzed all 50 states across 11 different, relevant factors, including various cost of living indices for everyday expenditures like transportation, groceries, and healthcare, to larger, monthly, and annual expenditures like monthly rent, mortgage payments, property, and sales taxes.
What Is the Most Expensive State to Live In?
Below is a list of the five most expensive states to live in the U.S. according to the study:
- New Jersey
The full list of all the most expensive states and least expensive states to live in provides a more thorough breakdown of all 11 factors that went into the study. Here’s a look at some of the findings that stood out the most when it comes to the cheapest states to live in and most expensive states to live in the U.S.
Monthly Housing Costs
A big driver of high cost of living is monthly housing costs. This shouldn’t be particularly surprising, but housing costs are more than just home prices and mortgage payments; property taxes and homeowner’s insurance must be paid for as well. For the No. 1 and No. 2 most expensive states to live in — Hawaii and California, respectively — have high monthly housing costs are driven mostly by high home prices. However, for No. 4 New Jersey and No. 5 Connecticut, property taxes play a much bigger role in pushing up monthly housing costs: New Jersey has the highest effective property tax rate at 2.13%, and Connecticut isn’t far behind with an effective property tax rate of 1.73%. Indeed, according to the study, New Jersey has the highest median annual real estate taxes at $8,490, based on 2019 American Community Survey data.
The Least Expensive States to Live in 2022
Mississippi ranked as the No. 1 least expensive state to live in, driven by not just low housing costs, but also cheaper itemized costs of living, such as groceries, transportation, and healthcare. West Virginia, which ranked as the No. 6 least expensive state to live in, has the lowest median monthly housing costs at $1,050. Often, however, the flipside of low housing costs is low home values, with West Virginia, Mississippi, Arkansas, Oklahoma, and Iowa having the lowest home values, according to Zillow’s Home Value Index at the time the study was conducted.
What State Has the Lowest Cost of Living?
Below are the five cheapest states to live in 2022, according to the study:
It’s important to note, again, that a variety of factors go into creating the least expensive states to live in. Non-housing costs of living, like utilities, healthcare, transportation, and groceries play a significant role. As do property taxes, just as they did with the list of the most expensive states to live in. The No. 3 cheapest state to live in — Alabama — reported the lowest median annual real estate taxes at $679, and the No. 2 cheapest state — Arkansas — has median annual real estate taxes costing just $936.