Why Is Missouri So Cheap? Factors in the Cost of Living
Understand the comprehensive factors influencing Missouri's low cost of living, offering insights into its affordability.
Missouri has consistently garnered a reputation for its affordability, drawing interest from individuals and families seeking a lower cost of living. This perception stems from a combination of economic factors that influence various aspects of daily expenses. The overall cost of living in Missouri is approximately 10% lower than the national average, making it an attractive destination.
Understanding the Housing Market
Housing costs represent a significant component of overall affordability, and Missouri’s market reflects this trend with generally lower prices compared to the national landscape. The typical home value in Missouri is around $262,355, with a median sale price of approximately $259,650 as of May 2025. This contrasts with the national median home sales price of $410,800 and average of $512,800 in the second quarter of 2025.
Missouri’s housing market has seen a steady increase in available properties, with inventory climbing by 18.8% year-over-year to 25,207 homes as of March 2025. This increase provides prospective buyers with more choices and potentially less competition. Despite this growing inventory, homes in Missouri are still selling relatively quickly, averaging about 24 days to pending status.
The state’s affordability is further highlighted by its housing affordability ratio, which is 4.4. This metric suggests that it takes 4.4 years of the median household income to afford the median home sale price in Missouri, ranking it among the most affordable states for homebuyers. Overall housing costs are 18% lower than the national average, contributing to reduced rental expenses. For example, the average effective rent in St. Louis is projected to be $1,289 by the fourth quarter of 2025.
New residential construction also plays a role in balancing the housing supply and demand within the state. As of March 2025, 9,863 new housing units had been authorized. This ongoing development helps to meet demand and can alleviate upward pressure on prices, particularly in growing suburban areas. Lower home values, increasing inventory, and new construction contribute to Missouri’s housing affordability.
Cost of Daily Living
Beyond housing, the expenses associated with daily life in Missouri also tend to be lower than national averages, contributing to the state’s overall affordability. The cost of groceries, for instance, is approximately 2% lower than the rest of the country. Missouri’s Composite Grocery Index is 88.7. Residents in urban centers like Kansas City paid an average of $358 less on groceries compared to the national average in 2023.
Utility costs in Missouri are also generally lower, coming in around 2% less than the national average. For a family of three residing in a single-family home, the average monthly utility expenditure in Missouri is approximately $513.39 in 2025. The average monthly electric bill for Missourians is about $178, which is 23% lower than the national average. The average residential electricity rate in the state is between 12.91 and 14 cents per kilowatt-hour, considerably lower than the national average of 21 cents per kilowatt-hour.
Natural gas expenses can fluctuate with seasonal temperature changes, and the average monthly gas bill for Missourians is around $131.54 in 2025. While Missouri’s gas bills can be among the more expensive nationally, they are influenced by heating needs during colder months. Water and sewer services typically cost about $59.00 per month, and garbage removal averages around $23.00 monthly.
Economic Factors and Employment
Missouri’s economic landscape, characterized by specific industry strengths and employment trends, influences its cost of living by balancing income levels with expenses. Major industries contributing to the state’s economy include healthcare and social assistance, retail trade, manufacturing, food and beverage production, and research and development.
While Missouri’s employment growth rate of 0.9% over the five years leading up to 2025 has been slightly below the national average of 2.0%, the state has consistently maintained a stable unemployment rate. In May and June 2025, Missouri’s unemployment rate stood at 4%, which is either comparable to or slightly lower than the national rate of 4.1% or 4.2%.
The average personal income in Missouri is approximately $59,630, and the median household income was $78,290 in January 2023. These figures are close to or slightly below the national average personal income of $63,214. However, the lower cost of living in Missouri helps to offset these income differences, allowing residents to maintain a comfortable lifestyle. While a single person might need to earn around $86,819 annually to live comfortably, the state’s median income for single earners is $63,185.
State and Local Tax Structure
Missouri’s tax environment is another contributing factor to its overall affordability, with its structure impacting residents’ disposable income and total expenses. The state’s total tax burden is estimated at 7.83% of income, which is below the national average of 8.74%. This favorable tax structure helps Missouri rank 13th overall on the 2025 State Tax Competitiveness Index.
The state implements a graduated individual income tax system, with rates ranging from 2% to 4.8% for the 2024 tax year, which are filed in 2025. The top income tax rate is scheduled to decrease further to 4.7% in 2025, with further reductions planned to 4.5% upon full implementation of approved tax cuts. Some larger municipalities, such as St. Louis and Kansas City, impose an additional 1% local income tax.
Missouri’s state sales tax rate is 4.225%. However, local sales taxes vary significantly, ranging from 0% to 5.875%, resulting in a combined state and local sales tax rate that can reach up to 10.1%. The average combined state and local sales tax rate in Missouri is 8.39%, which is higher than the national average of 6.61%.
Notably, Missouri is one of only twelve states that levy sales tax on groceries, which can impact household budgets. Property taxes in Missouri are generally lower than in many other states, with an average effective property tax rate of 0.88%. Competitive income tax rates, despite higher sales taxes in some areas, and lower property taxes contribute to Missouri’s overall tax-friendly environment.