How to Compare the Cost of Living Between Two Cities

A job offer in another city, a lower rent two states away, the pull of being closer to family: at some point the question stops being “would I like it there?” and becomes “can I actually afford it, and would I come out ahead?” Comparing the cost of living between two specific places is how you answer that. Done well, it tells you whether a move helps or hurts your finances before you sign a lease or accept a salary number. Done badly, it leaves you trusting a single website’s “City A is 14% cheaper” headline that may not reflect your own spending at all.

This guide walks through the comparison the way you’d actually do it: what cost of living is made of, which official data sources measure it honestly, why housing usually swings the result, how taxes change what you keep, and how to adjust a salary so you’re comparing apples to apples. It’s about the comparison method for two places you’re weighing, not about choosing a city from scratch (for that framework, see our guide on choosing the right city to move to) or the price of the move itself.

What “Cost of Living” Actually Includes

“Cost of living” is shorthand for the total price of maintaining your standard of living in a given place. It isn’t one number you can look up; it’s the sum of several categories that each move differently from city to city. The big ones are:

• Housing: rent or a mortgage, by far the category most likely to differ sharply between two places.
• Taxes: state and local income tax, sales tax, and property tax, which change how much of your paycheck you keep.
• Transportation: whether you need a car, fuel and insurance costs, parking, and transit fares.
• Groceries and everyday goods.
• Utilities: electricity, gas, water, and the like.
• Healthcare.

The reason a single percentage can mislead you is that these categories don’t weigh the same for everyone. A renter who bikes to work feels housing and transit very differently than a homeowner with a long commute. So the useful question isn’t “what’s the cost of living in City B?” but “what’s the cost of my life in City B versus City A?” That framing keeps you focused on the categories you actually spend in.

It’s also worth separating two ideas people often blur. The cost of living in a place is an ongoing, year-after-year figure. The cost of the move (movers, a truck rental, a long-distance shipment) is a one-time expense. They’re different budgets. For the price of relocating itself, see our breakdown of what a move costs and our guide on long-distance moving costs; this post stays on the recurring cost of living there.

How Cost-of-Living Indexes and Regional Price Comparisons Work (and How to Read Them)

A cost-of-living index expresses prices in one place as a percentage of a national baseline, usually set at 100. A score of 110 means prices run about 10 percent above the national average; 90 means about 10 percent below. To compare two cities, you look at both scores and read the gap.

The most important thing to understand here is which official measure does what, because two well-known federal numbers are easy to confuse:

The Consumer Price Index (CPI) from the Bureau of Labor Statistics is not a tool for comparing one city against another. The BLS is explicit: the CPI “cannot be used to measure differences in price levels or living costs between one area and another” because it measures only time-to-time price change within each area. Its area indexes “do not measure differences in the level of prices among cities.” The CPI is excellent for tracking how fast prices are rising in a metro, but it can’t tell you whether Denver is cheaper than Austin today. BLS also cautions that local-area indexes are built from smaller samples than the national index and are therefore more volatile.

The measure built for cross-area comparison is the Bureau of Economic Analysis’s Regional Price Parities (RPP). RPPs measure differences in price levels across states and metro areas for a given year, expressed as a percentage of the overall national price level. They let you “compare buying power across the 50 states and the District of Columbia, or from one metro area to another.” If one metro’s all-items RPP is 120 and another’s is 90, prices are roughly 20 percent above and 10 percent below the national average, respectively. RPP is also broken into subcomponents, goods, housing rents, utilities, and other services, so you can see which part of the budget is driving the difference.

When you read any third-party “cost of living calculator,” check what it’s actually measuring and whether it cites a primary source. A blog index with no methodology behind it isn’t authority. Anchor your comparison to the official data, and treat a single unsourced percentage as a starting hypothesis, not a verdict.

Housing: Usually the Biggest Difference Between Two Cities

If you only have time to compare one category carefully, make it housing. It’s typically the largest line in a household budget and the category that varies most between cities, which means it usually decides whether one place is meaningfully cheaper than another. BEA’s own data shows housing rents as the widest-swinging subcomponent in regional price differences: high-cost states can run roughly twice the national rent level while low-cost states sit far below it.

To compare housing honestly, look at the real local figures rather than a national headline:

• Census American Community Survey (ACS) data, available at data.census.gov down to small geographies, reports median gross rent (contract rent plus tenant-paid utilities) and median home value for a place. Nationally, median gross rent was about $1,413 a month in the 2020–2024 ACS five-year estimates, and median home value was roughly $303,400 in the 2019–2023 estimates. The point, though, is to pull the figures for your two specific cities, not the national average.
• HUD Fair Market Rents (FMR) estimate the 40th-percentile gross rent for standard-quality units in each metro area and county, by bedroom size. The 40th percentile is the dollar amount below which 40 percent of recent-mover rentals fall, so it’s a reasonable benchmark for what a modest unit costs locally.

Compare like with like: a two-bedroom in one city against a two-bedroom in the other, rent against rent or home value against home value, and ideally for the same year of data. Then weigh the gap against the rest of the budget. A city with rent that’s $400 a month higher but no state income tax and a shorter commute may still come out even or ahead, which is exactly why housing is the start of the comparison and not the whole of it.

Taxes That Change What You Keep (Income, Sales, Property, Verify by State)

Two cities can have identical sticker prices and still leave you with very different amounts in your pocket, because taxes change what you actually keep. Three matter most for a move:

• State (and sometimes local) income tax. This comes straight out of your earnings. Some states levy no broad personal income tax at all, while others have graduated rates; the spread directly affects your take-home pay.
• Sales tax. Most states and many cities charge sales tax, often at different rates for different goods, and some items aren’t taxed at all. It quietly affects nearly everything you buy.
• Property tax. Local governments tax real estate, and rates and assessment rules vary widely by jurisdiction. This hits homeowners directly and renters indirectly through what landlords charge.

Because these rules and rates vary by state and locality and change over time, this section is general information, not tax advice, and the responsible move is to verify current figures with the official source rather than rely on a number you read once. USA.gov notes that how much state and local income tax you pay “will depend on how much income you earn and the tax rate of the state or locality where you live,” and points residents to their state’s tax agency for specifics. Look up each city’s state department of revenue (and county or city site for local taxes) and confirm the current rates yourself.

When you cross a state line, taxes are just one of several state-level differences worth checking. For the full list of questions a state move raises, see our guide on questions to ask before relocating to a new state; for how to actually transfer your license, registration, and other records once you’ve moved, see our records-transfer guides.

Adjusting a Salary: What You’d Need to Earn to Break Even

This is where the comparison gets practical. The question behind most moves is: if I earn a certain salary in City A, what would I need to earn in City B to keep the same standard of living? RPP gives you a clean way to estimate it, and BEA’s own real-personal-income method shows the arithmetic.

To convert a nominal income into its real, price-adjusted value, you divide the income by the area’s RPP expressed as a decimal (RPP ÷ 100). BEA’s illustration: if Area A’s RPP is 120 and Area B’s is 90, then $12,000 in Area A is worth $12,000 ÷ 1.20 = $10,000 in real terms, while $9,000 in Area B is worth $9,000 ÷ 0.90 = $10,000, the two incomes have equal purchasing power even though the dollar figures differ.

You can run the same logic in reverse to find your break-even salary. To keep equivalent buying power when moving from a place with RPP 90 to one with RPP 120, you’d need roughly 120/90, about 33 percent, more income just to stay even, before factoring in tax differences. Move the other direction and a smaller salary can still leave you better off. The practical takeaways:

• A raise that comes with a move to a higher-cost city can be partly or fully erased by prices; do the adjustment before celebrating the number.
• A pay cut into a much cheaper city can still leave you ahead.
• Tax differences sit on top of this calculation, so check them separately rather than assuming they’re baked in.

Use the official RPPs for the specific metros you’re weighing rather than a generic national figure, and remember this is an estimate of average prices, not a forecast of your exact budget.

Putting It Together Without Trusting a Single Source

No single number settles a two-city comparison, and the people who get burned are usually the ones who let one website’s percentage decide for them. Build the picture from primary data instead: pull housing from Census/ACS and HUD, read the overall and housing-specific price gap from BEA’s RPP, confirm taxes with each state’s revenue department, and run the salary adjustment for your own income. Then sanity-check the result against your actual spending, because the category that matters most is the one you spend the most on.

A reasonable workflow looks like this: list the cost categories that dominate your budget, find the local figure for each in both cities from an official source, weight them the way your life actually does, and only then look at any third-party index, treating it as a cross-check rather than the answer. If two trustworthy sources disagree, dig into why before you trust either.

Keep the move’s own cost in its own column. For the one-time price of relocating, see our full price breakdown of a move and our long-distance moving cost guide; for building the budget around it, see our moving-budget guide. The cost-of-living comparison tells you whether the destination is affordable to live in. The moving budget tells you what it costs to get there. You want both, and you want them separate.

This article is general information, not tax, legal, or financial advice. Tax rates, rent data, and price indexes change, and they vary by state and locality. Verify current figures with the official sources below before making a decision.

Sources

• Regional Price Parities by State and Metro Area, U.S. Bureau of Economic Analysis, RPP definition, expressed as a percentage of the national price level (100 = national average); comparison of buying power across states and metros.
• Real Personal Income for States and Metropolitan Areas, U.S. Bureau of Economic Analysis, RPP subcomponents (goods, housing rents, utilities, other services); worked example of dividing income by RPP to find equivalent purchasing power.
• Consumer Price Index Frequently Asked Questions, U.S. Bureau of Labor Statistics, CPI cannot measure price-level or living-cost differences between areas; area indexes measure only time-to-time change; local indexes are smaller-sample and more volatile.
• Occupational Employment and Wage Statistics (OEWS), U.S. Bureau of Labor Statistics, area and occupation wage estimates used for the salary side of a two-city comparison.
• Ownership, Home Value, and Rent, American Community Survey, U.S. Census Bureau, definition of median gross rent (contract rent plus tenant-paid utilities) and median home value; local housing data via data.census.gov.
• Fair Market Rents (40th Percentile Rents), HUD USER, FMRs as 40th-percentile gross rent estimates for standard-quality units by metro area and bedroom size.
• How to Pay and Get Help With State and Local Taxes, USA.gov, state and local income, sales, and property taxes vary by state and locality; directs residents to their state tax agency to verify current rules.