Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A cost-of-living index comparison collapses many different expense categories into one blended figure, and housing typically varies far more sharply between two locations than groceries, utilities or transportation do, so the blended figure can understate exactly how large the real difference is for someone whose housing cost is the dominant piece of their actual budget.
Before you rely on it
What to check
Compare housing costs between the two locations separately from the blended overall index, since housing variance typically drives most of the real difference between markets.
The common error
Where people go wrong with cost of living calculator
Relying on a single blended cost-of-living index figure without checking housing costs separately. Housing differences typically dominate real cost-of-living gaps between markets far more than the blended index alone reveals.
Sensitivity evidence
How current salary changes the equivalent destination salary
| Current salary | Equivalent destination salary | Annual income difference |
|---|---|---|
| $72,000 | $86,400 | $14,400 |
| $81,000 | $97,200 | $16,200 |
| $90,000worked example | $108,000 | $18,000 |
| $99,000 | $118,800 | $19,800 |
| $108,000 | $129,600 | $21,600 |
Every input, tested
Which input moves the equivalent destination salary most
| Input | Tested from | To | Equivalent destination salary at each end | Swing |
|---|---|---|---|---|
| Current location cost index | 90 | 110 | $120,000 to $98,182 | $21,818 (20%) |
| Current salary | $81,000 | $99,000 | $97,200 to $118,800 | $21,600 (20%) |
| Destination cost index | 108 | 132 | $97,200 to $118,800 | $21,600 (20%) |
Two variables at once
Equivalent destination salary by current salary and current location cost index
| Current salary \ Current location cost index | 80 | 100 | 120 |
|---|---|---|---|
| $72,000 | $108,000 | $86,400 | $72,000 |
| $81,000 | $121,500 | $97,200 | $81,000 |
| $90,000 | $135,000 | $108,000 | $90,000 |
| $99,000 | $148,500 | $118,800 | $99,000 |
| $108,000 | $162,000 | $129,600 | $108,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Current salary | $90,000 |
| Current location cost index | 100 |
| Destination cost index | 120 |
| Equivalent destination salary | $108,000 |
| Annual income difference | $18,000 |
Where the inputs come from
Current salary is your pay now, and the current and destination cost indexes compare the overall costs of the two places, where 100 is a baseline and a higher number means higher costs. Get the indexes from a cost-of-living source such as the Bureau of Economic Analysis regional price parities or a reputable index, and check housing separately, since it drives most of the difference. Use the same source for both locations.
When the result stops applying
Cost-of-living indexes average many items, but your own mix of spending differs. Housing swings widely within a metro area. Taxes, commuting costs and the cost of childcare matter, and a lower cost of living can come with lower wages. The index does not capture quality of life, weather or family ties.
What to compare it with
Compare job offers on the job offer comparison calculator, and the moving cost page for the one-time expense. The take-home pay and state income tax calculators show taxes. The rent affordability and mortgage calculators show housing costs at the destination.
People also ask
Frequently asked questions
How do I compare the cost of living between cities?
Use a regional cost index and compare housing separately, since it varies the most. Then adjust for taxes and your own spending pattern.
Does a higher salary always make up for a higher cost of living?
Only if it exceeds the difference in costs and taxes. Use the equivalent salary as the minimum to maintain your standard of living.
What costs differ most between cities?
Housing differs most, followed by transportation, taxes and childcare. Groceries and utilities differ far less between cities.