What is cost of living? A state and city breakdown

Think of cost of living as a snapshot of how far your income goes in one location versus another. For example, in some cities, an income of $2,500 a month might cover rent, groceries and your car payment. In other places, that amount may barely cover housing. Calculating cost of living is a practical way to set realistic expectations when budgeting, job hunting or planning a move.

Most cost-of-living indexes compare a selection of major spending categories to show how affordable (or not) one place is compared to another.

What’s included in cost-of-living estimates?

A common misconception is that housing is the only cost that matters—but it's just one part of the equation. A true cost-of-living comparison takes into account all of the major expenses that impact your daily life. Cost of living often varies depending on the source, but here’s what typically gets factored in: 

• Housing: Rent or mortgage payments, property taxes and homeowners or renters insurance. 
• Groceries: Basic food and household items like milk, meat, produce and cleaning supplies. 
• Utilities: Monthly bills for electricity, natural gas, water, garbage collection, phone, internet and cable service. 
• Transportation: Car payments, gas, car insurance or public transit fares.
• Healthcare: Out-of-pocket expenses for medical care, insurance premiums, prescriptions and routine care. 
• Taxes: Local and state income, property and sales tax rates—all of which can impact take-home pay and everyday expenses. 

Other categories that may be included are: 

• Childcare and education: Daycare, babysitters and school fees.
• Miscellaneous/personal spending: Clothing, entertainment, dining and other flexible personal expenses. 

 Who calculates cost of living? 

Cost-of-living comparisons are compiled by several trusted organizations—some government, some academic and some designed with consumers in mind. Each one offers a different perspective on everyday costs across the U.S. Here’s a quick guide to some of the most reliable sources: 

• Bureau of Labor Statistics: Tracks national price trends through the Consumer Price Index—a key measure of inflation and cost-of-living changes over time. 
• Council for Community and Economic Research: Publishes the Cost of Living Index, which compares prices in more than 300 U.S. cities across categories like housing, groceries and transportation. 
• MIT Living Wage Calculator: Estimates the income needed to meet basic expenses by location and household size. 
• Bureau of Economic Analysis: Provides Regional Price Parities, which show how prices vary from state to state and city to city, helping you compare purchasing power across regions.

One of the easiest ways to compare costs across the country is by using the Cost of Living Index, published by the Council for Community and Economic Research. Each location receives a score based on how its prices stack up against the national average, which is set at 100. 

• A score above 100 means the area is more expensive than average.
• A score below 100 means it’s more affordable. 

This index takes into account everyday expenses like housing, groceries, transportation and healthcare, giving you a well-rounded view of local costs.

Cost-of-living trends 

When you zoom out and look at the national picture, some clear patterns emerge. The Northeast and West Coast are typically the most expensive, driven by high housing costs, local taxes and elevated wages in dense urban centers. Meanwhile, the Midwest and South tend to be more budget friendly thanks to lower housing costs and generally modest tax rates. And Sunbelt states like Florida, Texas and Tennessee often land just above the national average, offering a mix of affordability and strong job growth—especially in areas that don’t charge state income tax. 

Highest cost of living states 

The states with the highest cost of living include Hawaii, Alaska, California, Massachusetts, New York and Washington, D.C. Hawaii regularly tops the list, with prices for housing and groceries well above average. In California and New York, high housing demand, income taxes and expensive services drive up the overall cost of living. For example, California’s state income tax tops out at 13.3% for those whose annual household income is $1 million or more, the highest in the country. 

Lowest cost of living states 

The best states for cost of living—like West Virginia, Oklahoma and Kansas—consistently rank among the most affordable places to live. These states offer housing prices 20-30% below the national median and boast lower costs for essentials like food, utilities and healthcare. Oklahoma also has no state-level property tax, and both Oklahoma and West Virginia have relatively low income tax rates, helping stretch your take-home pay. 

States with the highest cost of living

States with the lowest cost of living  

Source: Missouri Economic Research and Information Center. Last updated Q3 2025.

Cost of living can vary just as much between cities as it does between states—sometimes even more. Large metro areas like New York City and San Francisco routinely rank among the most expensive in the country, driven by sky-high rent, steep taxes and pricey everyday essentials. In contrast, rapidly growing cities like Austin and Tampa offer more affordable living, thanks to lower housing costs and no state income tax.

Cost of living examples: NYC vs. Austin

Even within the same state, the cost of living can vary a lot. For example, moving from Albany to NYC or Fresno to San Francisco could raise your expenses significantly. That’s why it pays to compare individual metro areas—not just states—so you can gain a clear idea of how far your budget might go in different areas.

It’s not just about how much you earn—it’s how far your money goes. A $60,000 salary might comfortably cover the essentials in San Antonio but fall short in San Francisco. That’s why understanding the cost of living is key when planning a move or switching jobs. 

With more people working remotely, many are choosing to live in lower-cost cities while keeping higher-paying jobs in expensive metro areas—gaining more space, savings and overall higher quality of life.

Housing tops the list. Rent or mortgage payments make up the largest portion of a household budget. For example, average monthly rent in San Jose is around $3,000—more than double the $1,450 average in Cincinnati. 

Taxes are another major expense. States like Texas, Florida and Alaska don’t tax income, but they often make up for it with higher property or sales taxes. In contrast, residents of New York and California may pay 9-10% in state income taxes. Healthcare and childcare costs also vary widely by region. For young families, childcare alone can add thousands of dollars per year. 

Broad economic factors like inflation and supply chain disruptions can also impact everyday costs. For instance, in July 2025, gas prices in California increased to an average of $4.31 per gallon—far above the national average—due to various supply chain constraints. Even as national inflation trends ease, local challenges can continue to push prices higher.

For homebuyers, mortgage terms can significantly influence long-term affordability. Factors like interest rates, down payment requirements and loan structure all affect how manageable monthly housing costs are. Exploring different mortgage options, such as Citi’s home loan offerings, may help align housing costs with your broader cost-of-living budget.