$100 buys more in Mississippi than in any other state, study finds

One advantage to living in Mississippi is the relatively low cost of living in comparison to states with infamously expensive real estate such as California and New York. Now, a new study from the Tax Foundation, a leading independent tax-policy nonprofit, confirms what most of us already know.

The study maps the real value of $100, its purchasing power, in each of the 50 states, using data from the U.S. Bureau of Economic Analysis. USBEA has been measuring what the same amount of cash can buy in the states for four years, and recently published data covering 2017.

The states where $100 is worth the most are Mississippi ($116.69), Arkansas ($115.61), Alabama ($115.34), West Virginia ($114.94), and Kentucky ($113.77). In contrast, $100 is effectively worth the least in Hawaii ($84.39), the District of Columbia ($85.54), New York ($86.36), California ($87.11), and New Jersey ($88.57).

The Tax Foundation says that regional differences are “strikingly large.” In comparing Mississippi with New York, for example, real purchasing power is 35 percent greater in Mississippi. Effectively, this means that if you make $50,000 annually in Mississippi, you’ll need to pull down $67,500 a year in New York to achieve the same standard of living.

In general, jobs in states with higher price levels also offer higher incomes, what economists call a “compensating differential.” Of course, there are always exceptions. North Dakotans, for example, have high incomes and low prices. In comparison to Massachusetts, which has roughly the same nominal income but a higher cost of living, residing in North Dakota adds more than $6,700 a year in purchasing power.

To learn more, including where all of the states fall in the rankings, visit the Tax Foundation website.