It’s tough to be on a low-income in America, where the cost of living continues to rise steeply, particularly lately in this time of high inflation. According to the Federal Government, an individual is considered to live at the federal poverty line if they earn $14,580 or less, and a family of four if they earn $30,000 or less. While it’s never easy to struggle financially, which state you live in can make a difference, based on a number of factors.
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For this study, GOBankingRates looked at all 50 states and examined a variety of factors that contribute to or suggest a tougher life for people in lower-income brackets — such as monthly mortgage, overall cost of living, each state’s effective income tax rate, and state spending per capita on public welfare– and used them to generate an overall score to determine which states are more detrimental to people with lower incomes.
50. Hawaii
Monthly Mortgage: $5,226
Cost-of-living Index: 179
State Effective Income Tax Rate: 4.52%
State spending per capita on welfare: $2,115
In Hawaii, it’s tough to be low-income, because the cost of living is high overall. In addition to a cost of living that’s 79% higher than the rest of the nation, to put a 20% downpayment on a home here would cost a staggering $192,634 up front.
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49. Connecticut
Monthly Mortgage: $2,571
Cost-of-living Index: 113.1
State Effective Income Tax Rate: 3.85%
State spending per capita on welfare: $1,093
Connecticut also has a higher than average cost of living. In addition, in order to purchase a home here, a 20% downpayment is a steep $77,509.
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48. Massachusetts
Monthly Mortgage: $3,593
Cost-of-living Index: 148.4
State Effective Income Tax Rate: 5.00%
State spending per capita on welfare: $3,657
In addition to a cost of living that is over 48% higher than the national average, and a fairly high state income tax rate, property tax is pretty high in Massachusetts. With a property tax rate of 1.14%, homeowners here pay $6,695 per year in property taxes.
47. Utah
Monthly Mortgage: $2,961
Cost-of-living Index: 101.5
State Effective Income Tax Rate: 4.77%
State spending per capita on welfare: $1,465
Mortgages are lower in Utah than those at the top of the list, but the average primary loan amount to purchase a home in Utah is $418,506, with a 20% downpayment of $104,626.
46. Maryland
Monthly Mortgage: $2,437
Cost-of-living Index: 119.5
State Effective Income Tax Rate: 3.93%
State spending per capita on welfare: $2,405
In addition to a cost of living that is 19.5% higher than the national average, homeowners in Maryland are also paying a fairly high 1.04% in property tax, which comes out to $4,199 per year or $350 per month.
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45. Oregon
Monthly Mortgage: $2,966
Cost-of-living Index: 115.1
State Effective Income Tax Rate: 5.82%
State spending per capita on welfare: $3,091
Oregon has the highest state income tax rate on this list but the state spends more per capita on welfare than many other states on this list.
44. Washington
Monthly Mortgage: $3,448
Cost-of-living Index: 115.1
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,824
Washington state is one of a few that does not impose state taxes, though the cost of living is still 15.1% higher than the national average.
43. New Jersey
Monthly Mortgage: $3,302
Cost-of-living Index: 114.1
State Effective Income Tax Rate: 1.40%
State spending per capita on welfare: $2,129
New Jersey’s cost of living is 14.1% higher than the national average. In order to buy a home here, the average primary loan amount is $376,836, with a 20% downpayment of $94,209, pretty steep.
42. California
Monthly Mortgage: $4,305
Cost-of-living Index: 134.5
State Effective Income Tax Rate: 0.91%
State spending per capita on welfare: $3,466
While state taxes in California are relatively low compared to other states, people pay a sizable amount of property taxes in California, an average of $5,441 per year, at a tax rate of 0.73%.
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41. New Hampshire
Monthly Mortgage: $3,070
Cost-of-living Index: 115
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,876
Unlike its sister states in New England,New Hampshire does not impose state taxes, either, though purchasing a house here is not cheap: the primary loan amount is $361,092. With a home value of $451,365, a 20% downpayment is $90,273.
40. Colorado
Monthly Mortgage: $3,134
Cost-of-living Index: 105.5
State Effective Income Tax Rate: 1.44%
State spending per capita on welfare: $1,864
Though state taxes are relatively low, people pay over $3,000 annually in property taxes in Colorado, or $251 per month, because the property tax rate is 0.54%.
39. Virginia
Monthly Mortgage: $2,173
Cost-of-living Index: 103.1
State Effective Income Tax Rate: 3.02%
State spending per capita on welfare: $1,950
Though the monthly mortgage in Virginia isn’t super high, Virginia homeowners take out an average primary loan of $294,973. With a home value of $368,717, a 20% down payment comes out to a hefty $73,743.
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38. Idaho
Monthly Mortgage: $2,548
Cost-of-living Index: 106.1
State Effective Income Tax Rate: 1.23%
State spending per capita on welfare: $1,771
People pay over $3,100 annually in property taxes in Idaho, or $258 per month, because the property tax rate is 0.70%.
37. Georgia
Monthly Mortgage: $1,849
Cost-of-living Index: 91
State Effective Income Tax Rate: 2.33%
State spending per capita on welfare: $1,285
Georgia homeowners’ cost of living is almost 10% lower than the national average. However, buying a home here isn’t easy for those of lower income. With a home value of $311,990, a 20% downpayment is $62,398.
36. Florida
Monthly Mortgage: $2,378
Cost-of-living Index: 102.3
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,421
With no effective state income tax in Florida, and property taxes of 0.91%, Florida is not the worst state in which to be low income, even though cost of living is a tiny bit above national average.
35. Nevada
Monthly Mortgage: $2,420
Cost-of-living Index: 101.3
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,524
Nevadans may be paying slightly above the national average in overall cost of living, but there’s no effective state income tax.
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34. Michigan
Monthly Mortgage: $1,397
Cost-of-living Index: 92.7
State Effective Income Tax Rate: 4.25%
State spending per capita on welfare: $1,940
A lower income won’t stretch in Michigan as far, considering residents pay a pretty sizable 4.25% in effective state income taxes and over $3,000 per year in property taxes.
33. Illinois
Monthly Mortgage: $1,696
Cost-of-living Index: 90.8
State Effective Income Tax Rate: 4.95%
State spending per capita on welfare: $2,187
Illinois residents pay almost 5% on their income taxes, and the state spends more than $2,000 per capita on welfare.
32. Alabama
Monthly Mortgage: $1,142
Cost-of-living Index: 88.8
State Effective Income Tax Rate: 3.58%
State spending per capita on welfare: $1,554
Alabama has moderate state income tax, but the lowest property tax on this list, at 0.39%. Its overall cost of living, however, is quite low, at nearly 12% lower than the national average.
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31. Montana
Monthly Mortgage: $2,565
Cost-of-living Index: 103.7
State Effective Income Tax Rate: 1.55%
State spending per capita on welfare: $2,268
Though mortgages are not super high in Montana, the average primary loan Montana homeowners take out is $354,271. With a home value of $442,839, a 20% downpayment is a not super cheap $88,568.
30. Nebraska
Monthly Mortgage: $1,624
Cost-of-living Index: 90.1
State Effective Income Tax Rate: 1.73%
State spending per capita on welfare: $1,495
Nebraska has low state taxes, but a relatively high property tax rate, of 1.61%. Nebraskans pay an annual payment of over $4,000, or $335 per month.
29. Vermont
Monthly Mortgage: $2,271
Cost-of-living Index: 114.9
State Effective Income Tax Rate: 2.03%
State spending per capita on welfare: $3,046
The average primary loan Vermont homeowners take out is $271,746. With a home value of $339,683, a 20% downpayment is not easy for a low-income family, at $67,937.
28. North Carolina
Monthly Mortgage: $1,853
Cost-of-living Index: 96.1
State Effective Income Tax Rate: 0.39%
State spending per capita on welfare: $1,626
North Carolina has a very low effective tax rate and an equally low property tax rate, at just 0.82%. North Carolina homeowners pay half as much property tax, $2,597, as some other states on this list.
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27. South Dakota
Monthly Mortgage: $1,786
Cost-of-living Index: 93.8
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,391
South Dakota’s cost of living is almost 7% lower than the national average, and it doesn’t charge state taxes, a better state for the low-income.
26. Rhode Island
Monthly Mortgage: $2,725
Cost-of-living Index:
State Effective Income Tax Rate:
State spending per capita on welfare:
Rhode Island has a high property tax rate of 1.43%. As such, Rhode Island homeowners pay over $6,000 annually in property taxes, or $511 monthly.
25. Arizona
Monthly Mortgage: $2,402
Cost-of-living Index: 110.5
State Effective Income Tax Rate: 1.44%
State spending per capita on welfare: $2,926
Arizona is not a great place to be low-income. Cost of living is more than 10% above the national average. With a home value of $420,704, it’s tough to own a home here without a decent income.
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24. Texas
Monthly Mortgage: $1,959
Cost-of-living Index: 93
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,512
Texas has a relatively high property tax rate of 1.66%, but with no effective state income tax, it’s not a bad place to live if your income is on the low side.
23. Wyoming
Monthly Mortgage: $1,853
Cost-of-living Index:
State Effective Income Tax Rate:
State spending per capita on welfare:
Wyoming homeowners take out an average primary loan of $263,072. A 20% downpayment is an affordable $65,768.
22. Kansas
Monthly Mortgage: $1,358
Cost-of-living Index: 87.7
State Effective Income Tax Rate: 2.41%
State spending per capita on welfare: $1,751
Kansas has a relatively high property tax rate of 2.41%, but with home values averaging $216,647, Kansas homeowners pay less than other states with high property tax rates.
21. Iowa
Monthly Mortgage: $1,333
Cost-of-living Index: 89.7
State Effective Income Tax Rate: 4.00%
State spending per capita on welfare: $2,275
Residents in Iowa have a cost of living that’s more than 10% lower than the national average. Monthly mortgages are lower in Iowa here, as well, but state welfare spending per capita is higher than other states, at $2,275.
20. South Carolina
Monthly Mortgage: $1,574
Cost-of-living Index: 87.7
State Effective Income Tax Rate: 2.41%
State spending per capita on welfare: $1,751
South Carolina has a low property tax rate of 0.56%, which translates to property taxes of barely more than $1500 annually, or just $130 per month.
19. Delaware
Monthly Mortgage: $2,048
Cost-of-living Index: 96.5
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,688
Owning a home in Delaware is not easy if you’re low-income. A 20% dowpayment on the average home is $72,372. However, state income tax is zero, so you catch a break here.
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18. Maine
Monthly Mortgage: $2,226
Cost-of-living Index: 102.6
State Effective Income Tax Rate: 2.60%
State spending per capita on welfare: $2,839
Maine’s cost of living is only a few percent above the national average, but its effective tax rate is on the lower side. State spending per capita is nearly $3,000.
17. New York
Monthly Mortgage: $2,226
Cost-of-living Index: 111.5
State Effective Income Tax Rate: 0.74%
State spending per capita on welfare: $2,873
To own a home in New York requires taking out an average primary loan of $323,734, with a 20% downpayment of $80,933, which is hardly affordable. The cost of living is 11.5% above national average but the state effective tax rate is among the lowest on this list (next to zero).
16. Indiana
Monthly Mortgage: $1,335
Cost-of-living Index: 125.1
State Effective Income Tax Rate: 1.72%
State spending per capita on welfare: $4,119
Taxes are low in Indiana, with property tax rate at 0.84% and effective tax rate at just 1.72%. State welfare spending is the highest on the list, at $4,119.
15. Missouri
Monthly Mortgage: $1,399
Cost-of-living Index: 91.5
State Effective Income Tax Rate: 3.15%
State spending per capita on welfare: $2,477
Missouri residents enjoy a nearly 10% lower cost of living than the rest of the nation. Monthly mortgage is among the lowest on this list, but the effective tax rate is around the middle of the road.
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14. Wisconsin
Monthly Mortgage: $1,755
Cost-of-living Index: 88.4
State Effective Income Tax Rate: 0.15%
State spending per capita on welfare: $1,689
Wisconsin’s property tax rate of 1.63% is pretty high, but because Wisconsin’s home value is lower, homeowners are paying less than $4,500 in property taxes per year.
13. Tennessee
Monthly Mortgage: $1,703
Cost-of-living Index: 95
State Effective Income Tax Rate: 1.05%
State spending per capita on welfare: $2,416
Though the cost of living in Tennessee is only 5% lower than the national average, the state effective income tax rate is just above 1%.
12. Oklahoma
Monthly Mortgage: $1,154
Cost-of-living Index: 90.4
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $1,909
Oklahomans pay among the lowest property tax on the list at 0.88%, and there’s no state effective income tax rate.
11. Alaska
Monthly Mortgage: $2,150
Cost-of-living Index: 86
State Effective Income Tax Rate: 1.09%
State spending per capita on welfare: $1,803
Alaska has a cost of living that’s 14% below the national average, and a low effective income tax rate. The state spending per capita on welfare is less than $2,000.
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10. Arkansas
Monthly Mortgage: $1,027
Cost-of-living Index: 90.3
State Effective Income Tax Rate: 2.73%
State spending per capita on welfare: $2,445
Arkansas residents pay even less in property tax than Oklahoma, at less than $1,200 per year, and only 2.73% in income tax.
9. North Dakota
Monthly Mortgage: $1,485
Cost-of-living Index: 94.6
State Effective Income Tax Rate: 0.18%
State spending per capita on welfare: $2,157
North Dakota residents have a decently low mortgage, a cost of living below the national average, and a minor effective income tax rate.
8. Pennsylvania
Monthly Mortgage: $1,595
Cost-of-living Index: 99
State Effective Income Tax Rate: 3.07%
State spending per capita on welfare: $3,225
Pennsylvania residents don’t really have a lower cost of living, and the effective income tax rate isn’t as low as some states, but the per capita spending on welfare is higher, at $3,225.
7. Kentucky
Monthly Mortgage: $1,130
Cost-of-living Index: 93.8
State Effective Income Tax Rate: 3.45%
State spending per capita on welfare: $2,942
In addition to a cost of living that’s about 6% lower than the national average and low monthly mortgage, Kentucky homeowners can buy a house for a more affordable price. They take out an average primary loan of $154,542 with a 20% downpayment of $38,636.
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6. West Virginia
Monthly Mortgage: $855
Cost-of-living Index: 90.3
State Effective Income Tax Rate: 3.10%
State spending per capita on welfare: $2,789
West Virginia residents pay the second lowest amount in property taxes on this list. The property tax rate of 0.55% translates to less than $850 per year or $70 per month.
5. Minnesota
Monthly Mortgage: $1,981
Cost-of-living Index: 94.1
State Effective Income Tax Rate: 1.71%
State spending per capita on welfare: $3,158
In Minnesota, the cost of living is about 6% lower than the national average, and the effective tax rate is below 2%. The per capita spending on welfare is on the higher side, at $3,158.
4. Louisiana
Monthly Mortgage: $1,044
Cost-of-living Index: 92
State Effective Income Tax Rate: 1.85%
State spending per capita on welfare: $2,924
In Louisiana, residents pay a very low $1,004 annually in property taxes, or $84 per month. The property tax rate is 0.54%. They also pay less than 2% in effective state income tax.
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3. Ohio
Monthly Mortgage: $1,374
Cost-of-living Index: 94
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $2,669
In Ohio, being on the lower income side isn’t as painful as in other states. There’s no state income tax, mortgage is on the low side, and welfare per capita is $2,669.
2. Mississippi
Monthly Mortgage: $950
Cost-of-living Index: 85.3
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $2,211
In Mississippi, all costs are lower, given that the cost of living is almost 15% lower than the national average. Not only is there no state income tax, but residents pay a very low $1,082 annually in property taxes, or $90 per month. Also, it’s the only state on the list where a monthly mortgage payment is below $1,000.
1. New Mexico
Monthly Mortgage: $1,630
Cost-of-living Index: 94.2
State Effective Income Tax Rate: 0.00%
State spending per capita on welfare: $3,488
New Mexico takes the number one spot with a cost of living that is almost 6% lower than the national average, no state income taxes, and one of the highest per capita welfare spend in the country.
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Methodology: GOBankingRates determined the best and worst states to be in the lower income tax bracket by using four different factors and scoring them in order to reach a cumulative ranking from 1-50 for each state. The factors used were: 1) monthly mortgage using Zillow’s April 2023 data, 2) cost of living as sourced from the Missouri Economic and Research Center’s 2023 Q1 Cost of Living data, 3) individual state marginal income tax rate, and 4) state spending per capita on public welfare as sourced from the Census Bureau. All data was collected and is up to date as of June 8, 2023.
This article originally appeared on GOBankingRates.com: Best and Worst States To Be Poor in America
