All-items parity
86.9
US = 100.0
Arkansas (AR) | All-items parity 86.9
Arkansas Cost of Living 2026
Arkansas posts the lowest all-items price parity in the United States: 86.9 against the national 100 for 2024, with housing rents pricing at just 58.2. The median home of $215,600, median two-bedroom rent of $934 and repeated income-tax cuts (top rate now 3.9%) make it the literal floor of American living costs. The state splits in two: the Walmart-and-Tyson-funded Northwest Arkansas boom, with trails, museums and rising prices, and a Delta-and-hills remainder where cheapness reflects thin labor markets.
Cheapest state in the US (BEA)Top income tax rate 3.9%Median rent $830
Median Home
$215,600
2BR rent $934/mo
Median Income
$62,106
Household, Census ACS
Category breakdown
The four BEA price parities vs the nation
| Category | AR index | National avg | Difference |
|---|---|---|---|
| All items | 86.9 | 100.0 | -13.1% |
| Services: housing rents | 58.2 | 100.6 | -42.1% |
| Goods | 93.6 | 99.6 | -6.0% |
| Services: utilities | 74.7 | 98.4 | -24.1% |
| Services: other | 95.3 | 100.1 | -4.8% |
U.S. Bureau of Economic Analysis publishes these four component parities and no others. There is no federal grocery, healthcare or transportation price parity, so this table shows none. Food at home sits inside Goods; medical and transport services sit inside Services: other.
Sources: BEA Regional Price Parities by State (table SARPP), 2024 reference year, U.S. Bureau of Economic Analysis. Census ACS 2024 1-year (median income, home value), Arkansas Department of Finance and Administration (income and sales tax), Tax Foundation (effective property tax), EIA (electricity rates), KFF (uninsured rate).
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Pros / offsets
What works in Arkansas.
The national price floor, measured. No state prices lower on the federal all-items parity, and the components agree: rents at 58.2, utilities at 74.7, goods at 93.6. A dollar simply buys more here than anywhere else in the country.
Income tax keeps stepping down. Successive special sessions have cut the top individual rate to 3.9% within a 2-3.9% schedule, from 5.9% only a few years ago, and the homestead property-tax credit has been raised repeatedly alongside a 0.57% effective property tax.
Northwest Arkansas is a real economy, not a company town anymore. Walmart's new Bentonville headquarters, Tyson, J.B. Hunt and their supplier ecosystems anchor one of the fastest-growing metros in the South, with Crystal Bridges, hundreds of miles of funded mountain-bike trails and the state's best schools attached.
Groceries at near-zero state tax. The state sales tax on groceries is a token 0.125%, and household food spending averages $370 a month, among the lowest figures in the country.
Cons / drivers
Where Arkansas costs more.
Incomes sit near the national bottom. Median household income of $62,106 is 49th-tier; outside Northwest Arkansas and Little Rock's professional base, wages track the cheap prices down, so the parity advantage mostly rewards imported salaries and pensions.
Health outcomes and access lag. Rural hospital finances are strained across the Delta and the Ouachitas, and the state consistently ranks near the bottom on health metrics; the 8.4% uninsured rate is moderate, but distance-to-care is the real cost in much of the state.
Combined sales taxes are steep. The 6.5% state rate plus city and county levies pushes combined rates past 9% in much of the state, among the highest in the country, the standard cheap-property, tax-the-register trade.
NWA's boom is pricing out its own bargain. Benton and Washington counties have seen home prices climb far faster than the state, Bentonville itself now trades above $400,000 medians in popular neighborhoods, so the headline state figures increasingly understate the cost of the one region most movers are actually considering.
Tax + benefit signals
Arkansas tax and access overview
State income tax
2-3.9%
Graduated or flat
Property tax effective
0.57%
Of assessed value, annual
Sales tax (state)
6.50%
Local can add 1-4% more
Uninsured rate
8.4%
Medicaid: expanded
Your take-home pay in Arkansas
Federal, Arkansas and any local income tax on your salary, per paycheck.
The mortgage on a $215,600 home
Monthly payment at today’s rates with Arkansas property tax (0.57%) and average home insurance.
Metro variation
State averages mask city variation.
Arkansas averages 86.9 on the BEA all-items parity, the lowest in the nation, but the internal spread is wide:
Northwest Arkansas (Bentonville, Rogers, Fayetteville, Springdale): The boom corridor. Corporate and vendor-community salaries, the Razorbacks, Crystal Bridges and the trail network have pushed prices well above state medians and rising; it remains cheap only against the coastal metros its transplants left.
Little Rock: The capital and medical hub (UAMS) sells established neighborhoods (Hillcrest, the Heights) in the $200,000s to $300,000s, with metro-wide medians below the national floor states.
Fort Smith and Jonesboro: Manufacturing and ag-services cities with housing in the $150,000s, two of the cheapest functional metros in America.
The Delta and the Ozark/Ouachita interior: Housing under $100,000 is common; so are long drives for specialist care and shrinking school districts. Hot Springs stands out as the retirement-priced exception with lakes and a national park downtown.
Price the region, not the state: NWA is converging on Sun Belt pricing while the Delta sets the national floor.
Frequently Asked
Arkansas cost of living, answered
Is Arkansas really the cheapest state in America?
On the federal measure, yes: its all-items regional price parity of 86.9 is the lowest of all fifty states for 2024, with Mississippi a fraction behind. Rents price at 58.2 against the national 100.6, the median home is $215,600, and the median two-bedroom rent of $934 is less than half of California's. Cheapness is unevenly distributed, though; Northwest Arkansas runs well above these numbers.
What is driving the Northwest Arkansas boom?
Walmart's multi-billion-dollar Bentonville home-office campus and the thousands of supplier offices that orbit it, plus Tyson in Springdale, J.B. Hunt in Lowell and the University of Arkansas in Fayetteville. Layer on quality-of-life investment at a scale unusual for the region, Crystal Bridges Museum, the Momentary, and one of the best-funded mountain-bike trail networks in the world, and NWA has become a destination metro drawing tens of thousands of transplants, with home prices to match.
How has Arkansas income tax changed?
Rapidly downward. A series of regular and special legislative sessions cut the top individual rate from 5.9% to 3.9% inside a 2-3.9% schedule, with corporate rates reduced in parallel, and the homestead credit against property tax raised repeatedly. Social Security is fully exempt, and military retirement pay is exempt too. The state leans instead on combined sales taxes that are among the nation's highest.
What should retirees know about Arkansas?
The tax side is friendly: no tax on Social Security or military retirement, up to $6,000 of other pension income excluded, a 0.57% effective property tax trimmed further by the homestead credit, and the nation's lowest price level. Hot Springs is the signature retirement town, lakes, Oaklawn and a walkable historic core. The cautions are healthcare: specialist access thins fast outside Little Rock and NWA, so retirees with complex needs should anchor near UAMS or Washington Regional.
Why are Arkansas sales taxes so high?
The state rate of 6.5% plus near-universal city and county add-ons produces combined rates above 9% across much of the state, perennially top-three nationally. It is the deliberate counterweight to cheap property taxes and falling income taxes: consumption carries the load. Groceries are the exception, taxed at a token 0.125% state rate, which matters in a state where food is one of the few essentials bought at the same volume everywhere.
Where does a remote salary stretch furthest in Arkansas?
If you want the boom with the discount, Springdale and Siloam Springs still undercut Bentonville and Fayetteville inside the NWA economy. If you want maximum stretch with city services, Little Rock's established neighborhoods or Fort Smith's $150,000s housing are hard to beat anywhere in America. Hot Springs splits the difference for lifestyle. The honest floor, Delta towns under $100,000, suits buyers who need little from local labor markets or hospitals.