How Much Annual Income a Four-Person Household Needs Across America in 2025

In 2025, the average cost of living in the U.S. for a family of four reveals a stark divide across regions. An analysis examining annual household expenses shows that more than half of all American states now require six-figure incomes—$100,000 or higher—for families to maintain comfortable lifestyles that cover both essential needs and discretionary spending.

Understanding the Budget Framework

Research analyzing household expenditure patterns defines sustainable family finances using the 50-30-20 budget model: 50% of income allocated to necessities (housing, food, utilities, healthcare, transportation), 30% for discretionary purchases, and 20% for savings. By doubling the essential expenses baseline, analysts determined the minimum income required for families of four to achieve financial stability in each state.

Regional Cost Disparities: The Extremes

The Most Expensive Living Environments

Hawaii tops the nation’s most costly locations, requiring families to earn $258,918 annually. The state’s elevated housing costs ($66,412 per year) and grocery expenses ($28,290 yearly) drive this extraordinary threshold. Massachusetts follows at $199,671, with California at $188,269. In these high-cost regions, housing alone consumes a disproportionate share of budgets, with New York’s annual housing costs reaching $37,354.

The Most Affordable States

West Virginia emerges as the most budget-friendly state, with families needing just $82,338 annually. Mississippi ($87,564) and Alabama ($87,607) round out the most economical tier. In these regions, housing costs average under $16,000 yearly, and groceries typically run around $6,000-$6,750 per household per year.

Breaking Down State-by-State Requirements

Lower-Cost Region (Under $95,000)

States like West Virginia, Mississippi, Alabama, Kansas, Arkansas, Oklahoma, Iowa, and Missouri maintain living wage requirements below $95,000. These predominantly rural and Midwest locations benefit from significantly lower housing and food expenses.

Mid-Range Tier ($95,000-$110,000)

Texas ($95,763), Minnesota ($96,640), Montana ($96,870), South Carolina ($98,082), and Pennsylvania ($98,427) exemplify moderate-cost states. Healthcare expenses in this category typically range from $7,000 to $8,000 annually, while housing costs hover between $17,000 and $21,000 per year.

High-Cost Region ($110,000-$140,000)

Virginia ($111,303), Florida ($112,401), Colorado ($112,828), Nevada ($112,965), Rhode Island ($123,298), New Hampshire ($123,863), Connecticut ($126,753), Utah ($128,484), Washington ($131,024), Arizona ($131,102), Oregon ($131,824), Vermont ($131,996), New Jersey ($134,990), Maine ($135,943), and Alaska ($136,990) demand substantially higher incomes. Western coastal states and Northeast locations dominate this bracket, driven primarily by housing market pressures.

Premium-Cost Markets (Over $140,000)

New York requires $155,738, California demands $188,269, Massachusetts necessitates $199,671, and Hawaii requires $258,918. These four states represent outliers where housing costs exceed $25,000 annually, with some approaching or exceeding $66,000 in island and major metropolitan areas.

What Drives These Variations

Housing expenses represent the primary cost differentiator, accounting for the largest variance between states. Healthcare represents a secondary factor, ranging from $6,486 in Nevada to $11,290 in Alaska. Grocery costs similarly reflect regional availability and transportation factors, varying from $5,731 in West Virginia to $28,290 in Hawaii.

The average cost of living in the U.S. for a family of four demonstrates that geographic location remains one of the most significant determinants of financial requirements. Families considering relocation should carefully evaluate not just salaries, but the purchasing power those earnings provide in different state markets.

Methodology Notes

This analysis utilized 2023 Consumer Expenditure Survey data from the Bureau of Labor Statistics, combined with state-level cost-of-living indices from the Missouri Economic Research and Information Center (2024 Q3 data). The examination covered five essential expense categories: housing, food, utilities, healthcare, and transportation, as of December 2024.