Iowa is most affordable U.S. state, says new report from conservative-leaning firm
Rane Regan hands a bag of baby spinach to a customer as he rings up her grocery purchases at the Cultivate Hope Corner Store, 604 Ellis Blvd. NW in Cedar Rapids on Jan. 6, 2026. The grocery store, operated by the nonprofit Matthew 25, brings reduced cost foods to the Time Check neighborhood and helps alleviate a food desert.
Iowa is the most affordable state in the nation, according to a new report from a conservative-leaning national research firm that found while expenses have been increasing, incomes in the state have risen faster since 2019.
The newly released report — which can be read at the Common Sense Institute’s website, commonsenseinstituteus.org — ranked all U.S. states by the share of residents’ personal income left after their taxes and after regular expenses for the categories of shelter and utilities, groceries, health insurance, car insurance, gasoline and child care.
The report used data starting in 2019 to gauge where states stand after the post-pandemic surges in inflation.
Iowans on average retain 34.7% of their income after paying those categories of expenses and their taxes — the highest such rate in the country, according to Common Sense Institute.
That’s just ahead of three neighbor states: South Dakota was just 0.1% behind Iowa with 34.6% of income left after taxes and expenses. North Dakota was third at 33.5% and Nebraska fourth at 33.4%. Missouri was No. 7 at 31.5%.
The U.S. average was 24.7%, according to the report.
From 2019 to 2025, household income in Iowa increased 30% while expenses increased 22%, one of the slowest increases in the nation, according to the report. As a result, Iowans retain almost 4% more of their income than they did prior to the pandemic, according to the report.
“While rising costs have challenged households across the country, Iowa stands out for maintaining strong affordability,” Zachary Milne, senior economist at the Common Sense Institute, said in a statement. “Incomes have grown faster than expenses here, allowing families to keep more of what they earn and better absorb the higher cost of living that followed the pandemic.”
The most expensive states in which to live, according to the report, were Hawaii (9% of income left after expenses and taxes), California (10.9%) and Massachusetts (16%).
Sean Finn, a state policy analyst for the progressive-leaning Common Good Iowa research firm, said Iowa is indeed more affordable than many other states by various metrics. However, Finn — who oversees Common Good Iowa’s annual “Cost of Living in Iowa” report — also said that while Iowans fare better compared with other states, “affordability is a problem everywhere in the country.”
“I don’t think a report saying the average Iowan has 34% of their income left over after the essentials each month is going to resonate with the vast majority of Iowans,” Finn said in a statemen.
“More broadly, we also need to broaden the conversation around affordability to focusing on wages and income in addition to living costs and inflation,” Finn said. “Corporate profits have been sailing higher and higher since COVID, and that is money not being passed on to the workers whose labor is actually generating those profits.”
Rane Regan hands a bag of baby spinach to a customer as he rings up her grocery purchases at the Cultivate Hope Corner Store, 604 Ellis Blvd. NW in Cedar Rapids on Jan. 6, 2026. The grocery store, operated by the nonprofit Matthew 25, brings reduced cost foods to the Time Check neighborhood and helps alleviate a food desert.
According to the report, since 2019:
Iowa families’ annual housing and utility costs have increased by $2,800, groceries by $2,300, child care by $1,893, health insurance by $971, car insurance by $818 and gasoline by $234.
Housing costs in Iowa have increased 24% compared with a national average increase of nearly 34%.
Iowans on average have needed 14.2% of their income to pay for child care; that is the fourth-lowest rate in the nation.
Gov. Kim Reynolds highlighted the report in a social media post.
"lowa has a lot to offer — low taxes, affordable cost of living, and endless opportunity. Thanks to historic state and federal tax cuts, an lowa family of four will save $7,500 on average in 2026 and keep more than a third of their hard-earned paychecks,” Reynolds said in a statement.
"We've cut taxes six times resulting in a flat 3.8% income tax, eliminating taxes on retirement and inheritance, and reforming corporate and unemployment taxes. We maintain a fiscally responsible budget by reducing waste, funding essential government services and supporting pro-growth policies,” she said. “This balanced approach provides lowans the opportunity to live, work, raise a family, and retire in the most affordable state in the country.”
