Is Minnesota a Cheap Place to Live?
Evaluate Minnesota's cost of living. Understand key expenses, regional variations, and income factors to assess overall affordability.
Minnesota’s diverse landscape and vibrant communities often lead to questions about its affordability. This article explores the financial aspects of living in the state, examining key expenses such as housing, transportation, and daily necessities. Understanding these factors helps individuals make informed decisions about managing their personal finances within Minnesota.
Overall Cost of Living Assessment
Minnesota generally offers a more moderate financial environment compared to many other parts of the United States. The overall cost of living in Minnesota is approximately 5% lower than the national average. This difference is largely influenced by housing expenses, which are notably more affordable. For instance, the cost of living in Minneapolis, the state’s largest city, is about 6% lower than the national average, contributing to the state’s overall affordability perception.
While some individual categories of expenses may be slightly higher, the aggregate picture suggests a balanced financial landscape. The state’s position below the national average for overall living costs indicates that a typical budget may stretch further here than in higher-cost regions. This relative affordability can provide residents with greater financial flexibility.
Key Living Expense Categories
Housing constitutes a significant portion of living expenses, and in Minnesota, it is generally more affordable than the national average, with costs roughly 16% lower. The median home price in Minnesota was approximately $342,900 as of January 2025. For renters, the average one-bedroom apartment in Minnesota is projected to cost around $1,595 per month in 2025. In Minneapolis, a one-bedroom apartment averaged $1,395 per month in August 2025.
Transportation costs in Minnesota are also typically lower than the national average. The average price for a gallon of regular gasoline was about $3.13 in 2025. For those utilizing public transit, a one-way fare is generally $2.00, with monthly passes available for $65. Annual vehicle maintenance expenses average around $1,200, while auto insurance premiums average about $986.19 per year.
Utility expenses in Minnesota reflect a moderate cost, influenced significantly by seasonal demands. For a standard apartment, monthly utilities can average approximately $259.52, including about $199.52 for electricity and $60.00 for internet services. Heating costs can be substantial during the colder winter months, making energy efficiency a consideration for managing these bills.
Grocery and food expenses in Minnesota are slightly above the national average, about 3% higher. A single person’s monthly grocery bill is estimated to be around $300.00. Healthcare costs are generally more favorable, coming in about 1% to 4% lower than the national average. For individuals with employer-sponsored health insurance, the average monthly premium is approximately $140.33.
Minnesota’s tax structure includes a progressive state income tax, with rates ranging from 5.35% to 9.85% for the 2024 tax year. A 1% net investment income tax applies to income over $1 million, effective for the 2024 tax year, bringing the top rate to 10.85%. The state sales tax rate is 6.875%, though combined state and local sales tax rates average around 8.04% to 8.12% due to local jurisdictions imposing additional taxes. Property taxes also vary by location, with an effective average rate of about 0.98% to 1.11% of owner-occupied housing value.
Regional Cost Variations
The cost of living in Minnesota exhibits noticeable variations across its regions, primarily between urban centers and more rural areas. Major metropolitan areas, such as Minneapolis and St. Paul, tend to have higher living expenses compared to smaller cities and rural communities. Housing costs illustrate this disparity clearly.
The median home price in Hennepin County, which includes Minneapolis, was $380,000 in August 2024, while Ramsey County, home to St. Paul, saw a median of $330,000. In contrast, rural areas often present more affordable housing options. Similarly, rental prices reflect this trend; a one-bedroom apartment in St. Paul averaged $1,210 in July 2025, which is slightly less than Minneapolis.
Beyond housing, other expenses like groceries can also show regional differences. Urban areas, particularly the Twin Cities metro, typically experience grocery costs that are 10-15% higher than those in smaller cities or rural parts of Minnesota. Sales tax rates, while having a statewide base of 6.875%, can increase due to local additions, leading to combined rates that vary by municipality. This localized impact means that the total sales tax paid on goods and services can differ depending on where purchases are made within the state.
Income and Affordability
Understanding income levels provides essential context for Minnesota’s cost of living, illustrating how typical earnings align with expenses. The median household income in Minnesota was $87,556 in 2023. This figure generally surpasses the national median, reflecting a robust economy and diverse industries. For individuals, the average annual salary in Minnesota was around $52,043 as of August 2025.
When considering affordability, a comfortable lifestyle for a single person in Minnesota might require an annual salary in the range of $55,000 to $75,000. To adhere to the common guideline of spending no more than 30% of income on housing, an annual income of approximately $56,800 would be needed to afford the average Minnesota rent of $1,420 per month. For those residing in Minneapolis, where average one-bedroom rent is around $1,337, a recommended annual income of $53,472 would support this housing guideline.
Industries such as healthcare, technology, and manufacturing contribute to Minnesota’s higher-than-average wages, particularly in urban centers. While median salaries in Minneapolis can reach $67,500, they tend to be lower in rural regions.