Cost of living

Cost of living, in plain terms

It is important to distinguish cost of living from payroll deductions. Federal and state taxes are calculated based on your gross salary, regardless of local rent or grocery prices. Cost of living is not a factor in determining statutory tax withholdings. Therefore, high taxes and high expenses are independent variables that both impact your financial reality but are calculated using entirely different frameworks.

Cost of living on a real salary

Every figure below is produced by the same engine that runs the AfterTaxLab calculators — nothing here is estimated by hand.

The payroll engine calculates net income based on tax laws rather than regional price variations. For example, a gross salary of $100,000 results in $6,598 a month in Texas. Because the engine does not account for local living expenses, the value of that salary remains tied solely to payroll tax rates. What that salary is actually worth depends on what it rents and buys in a specific city, which falls outside the payroll model.

Using cost of living on AfterTaxLab

Cost of living information does not appear within the automated payroll results. The calculator focuses exclusively on tax-related deductions for any state within the United States. Users should look at the provided table to see how state-specific taxes impact take-home pay, keeping in mind that the engine carries no cost-of-living adjustment for regional price differences.

How cost of living is measured

Two public datasets sit behind the figures used on this site. The Bureau of Economic Analysis publishes Regional Price Parities (RPP), a price-level measure in which the national average is 100; the 2024 release puts California at 110.7, New York at 107.9, Texas at 97.1 and Arkansas at 86.9. The Bureau of Labor Statistics Consumer Expenditure Survey for 2024 reports that the average American household spent $78,535 over the year, or $6,545 a month.

Multiplying that national average by a state RPP answers one narrow question: what would the same basket of goods, services and housing cost there? The method is deliberately simple, and every figure in the table below can be reproduced with a calculator rather than a subscription.

Sources: BEA Regional Price Parities 2024 and BLS Consumer Expenditure Survey 2024. The survey figure is a national average and the parity is an index, so both describe a typical household rather than a bill for yours.

What the index leaves out

Regional price parities do not include taxes, and the Consumer Expenditure Survey is national, so neither dataset knows about your childcare bill, your insurance premium or your student loan. The gaps that matter most in practice:

• State and local income, sales and property taxes, which the tax engine models separately from prices.
• Childcare and tuition, which vary far more between two cities than groceries do.
• Health insurance premiums and out-of-pocket medical costs.
• Debt payments, from car loans to credit cards.
• Commuting and car ownership, including insurance, fuel and parking.
• Energy and utility prices, which swing with the season and the local grid.

Read the index as the first step of a comparison rather than the answer. Pair it with the state figures in the states hub, the rent data in the cities hub and the take-home numbers on the salary page, then put two locations next to each other on the comparison pages.