How cost of living works
A cost of living index measures how expensive it is to live in one place compared to another. The national average is set at 100. A city comparison works by dividing each city's index to calculate the salary equivalent:
Equivalent Salary = Current Salary × (City 2 Index ÷ City 1 Index)
Example: A $75,000 salary in Houston (index 100) would need to be $134,250 in San Francisco (index 179) for the same purchasing power: $75,000 × (179 ÷ 100) = $134,250.
Top 10 most expensive US cities
The most expensive cities are driven primarily by housing costs. Cost of living NYC leads at 87% above the national average:
| City | Overall | Housing |
|---|---|---|
| New York, NY | 187 | 302 |
| San Francisco, CA | 179 | 298 |
| Honolulu, HI | 170 | 264 |
| San Jose, CA | 167 | 270 |
| Washington, DC | 152 | 222 |
| Boston, MA | 148 | 218 |
| Los Angeles, CA | 146 | 219 |
| Seattle, WA | 143 | 208 |
| San Diego, CA | 142 | 207 |
| Miami, FL | 132 | 178 |
Top 10 most affordable US cities
The most affordable metros offer housing at 35–50% below the national average. Wondering about the best state to live in 2026? Texas, Oklahoma, and Arkansas dominate the affordability rankings:
| City | Overall | Housing |
|---|---|---|
| Brownsville, TX | 82 | 54 |
| McAllen, TX | 83 | 55 |
| El Paso, TX | 85 | 60 |
| Wichita, KS | 86 | 62 |
| Little Rock, AR | 86 | 62 |
| Tulsa, OK | 87 | 65 |
| Oklahoma City, OK | 88 | 68 |
| Buffalo, NY | 89 | 68 |
| Birmingham, AL | 90 | 72 |
| Cleveland, OH | 90 | 72 |
How to compare cities
When evaluating a move, look beyond the overall index. Use the calculator above to compare cities across five categories:
- Housing — typically the largest factor (30–40% of expenses). Includes rent, mortgage, property taxes.
- Groceries — food costs vary less than housing but can be 10–30% higher in expensive metros.
- Utilities — electricity, gas, water. Hawaii and the Northeast tend to be highest.
- Transportation — gas, insurance, transit passes. Car-dependent cities vs. transit cities.
- Healthcare — varies by region. Use our salary calculator to see net pay after taxes in each location.
FAQs
What is cost of living?
Cost of living is the amount of money needed to maintain a certain standard of living in a given location. It includes housing, food, utilities, transportation, healthcare, and taxes. A cost of living index compares these expenses to a national average (100). A city with an index of 130 is 30% more expensive than average; 85 means 15% cheaper.
What is the most expensive US city to live in?
New York City and San Francisco consistently rank as the most expensive US cities, with overall cost of living indices around 180–190 (80–90% above the national average). Housing is the primary driver — NYC housing costs are roughly 3× the national average. Honolulu, San Jose, and Washington DC round out the top 5.
What are the cheapest places to live in the US?
The most affordable metro areas include cities in Texas (McAllen, El Paso, San Antonio), Oklahoma (Tulsa, OKC), Arkansas (Little Rock), and Kansas (Wichita). These cities have overall indices of 82–88, meaning they're 12–18% cheaper than the national average, with housing costs often 40–50% below average.
Does salary adjust for cost of living?
Not automatically. Many employers offer cost-of-living adjustments (COLA) when relocating employees, but the adjustment rarely covers the full difference. If you earn $75,000 in Houston (index 100) and move to San Francisco (index 179), you'd need about $134,250 to maintain the same lifestyle. Most employers offer 70–80% of the theoretical adjustment.
How does New York compare to Los Angeles?
NYC is significantly more expensive than LA overall (index 187 vs 146). The biggest gap is housing: NYC's housing index is 302 vs LA's 219. However, LA has higher transportation costs due to car dependency. Groceries, utilities, and healthcare are similar. A $100,000 salary in NYC would need about $78,000 in LA for the same purchasing power.
How does housing affect cost of living?
Housing is the single largest factor in cost of living differences between cities, typically accounting for 30–40% of total living expenses. In expensive metros, housing can cost 2–3× the national average (NYC: 302, SF: 298), while affordable cities may be 40–50% below average (Memphis: 73, Tulsa: 65). This is why remote workers often relocate to lower-cost areas.
What is the best state to live in 2026?
The 'best state to live in 2026' depends on your priorities. For affordability: Texas, Tennessee, and Oklahoma offer low cost of living with no state income tax. For jobs and wages: California, New York, and Washington lead in median income. For quality of life (balanced cost/income/safety): Colorado, Minnesota, and Virginia consistently rank highly. Use this calculator to compare specific cities.
What is a cost of living index?
A cost of living index is a numerical score that compares the cost of goods and services in one location to a baseline (typically the US national average, set at 100). The index is broken into categories: housing, groceries, utilities, transportation, and healthcare. An overall index of 120 means living there costs 20% more than the national average.
Do remote workers benefit from cost of living differences?
Yes — significantly. A remote worker earning a San Francisco salary ($150K) while living in a city like Indianapolis (index 97 vs SF's 179) effectively gives themselves a 46% raise in purchasing power. Some companies have adjusted remote salaries based on location, but many still pay the same rate regardless of where employees live, creating a major financial advantage.
How do I negotiate a relocation salary?
Research the cost of living difference between your current and target city using this calculator. Present the equivalent salary needed to maintain your current standard of living. Ask for a relocation package that includes: moving expenses, temporary housing, cost-of-living adjustment to base salary, and a signing bonus. Most companies expect negotiation — prepare data showing the exact percentage difference.