Composite Index
142.2
US average = 100.0
California (CA) | Composite 142.2
California Cost of Living 2026
California sits at 142.2 on the 2026 cost of living index, with housing at 196.5 (nearly double the US average) as the single dominant driver. State income tax tops out at 13.3% (the highest in the US). Inland California is much cheaper than the Bay Area and LA metro.
Composite 142.2Housing index 196.5Income tax 1% to 13.3%
Median Home
$785,300
2BR rent $2,120/mo
Median Income
$84,907
Household, Census ACS
Category breakdown
All 6 categories vs national average
| Category | CA index | National avg | Difference |
|---|---|---|---|
| Housing | 196.5 | 100.0 | 96.5% |
| Groceries | 105.1 | 100.0 | 5.1% |
| Utilities | 113.2 | 100.0 | 13.2% |
| Transportation | 118.9 | 100.0 | 18.9% |
| Healthcare | 107.8 | 100.0 | 7.8% |
| Miscellaneous | 111.5 | 100.0 | 11.5% |
Sources: BEA Regional Price Parities, C2ER Cost of Living Index, Census ACS 5-year (median income, home value), California Franchise Tax Board (income tax), EIA (electricity rates), KFF (uninsured rate), AAA Gas Prices.
Pros / offsets
What works in California.
Highest tech wages in the US. The Bay Area, LA and San Diego host the densest cluster of high-paying tech, biotech and entertainment employment. BLS OEWS shows median wages for tech occupations 30-60% above the US median.
Low effective property tax. Proposition 13 caps property assessment increases at 2% per year regardless of market price. Effective property tax rate is 0.71%, below the national average, though high home values keep absolute dollar amounts substantial.
Strong renewable energy. California's renewable energy adoption has kept electricity rate growth in check despite high gross consumption. Average residential rate 27.10 cents per kWh per EIA - high in cents but with state energy efficiency programs reducing total bills.
Diverse, large economy. Multiple career paths beyond tech: agriculture (Central Valley), tourism, entertainment, biotech, aerospace. The diversity insulates against single-sector downturns.
Cons / drivers
Where California costs more.
Housing is the dominant driver. Housing sub-index 196.5 is nearly double the US average. Median home $785,300; coastal metros routinely exceed $1M. The C2ER housing sub-index is weighted at 28% of the composite, which is why California's composite is 142.2 even though several other sub-indexes are closer to 110.
State income tax up to 13.3%. Nine brackets from 1% to 13.3%, with the top bracket kicking in above $1M (with a 1% mental-health surtax above $1M added separately). The Franchise Tax Board (FTB) publishes the full table.
Gas at $4.85/gallon. California consistently leads the AAA per-state averages, driven by state gas tax, summer-blend gasoline requirements and refining capacity constraints. Combined with longer commutes, transportation sub-index reaches 118.9.
Combined sales tax 9-10%. 7.25% state plus local district rates produce combined rates of 9-10% in many cities. Groceries are exempt; prepared food and clothing are not.
Tax + benefit signals
California tax and access overview
State income tax
1-13.3%
Graduated or flat
Property tax effective
0.71%
Of assessed value, annual
Sales tax (state)
7.25%
Local can add 1-4% more
Uninsured rate
6.8%
Medicaid: expanded
Metro variation
State averages mask city variation.
California state composite 142.2 averages enormous regional variation:
San Francisco / Bay Area: Roughly 175-200 RPP. Median home in central San Francisco $1.3M+; even south Bay (San Jose) and east Bay (Oakland) routinely exceed $900,000.
Los Angeles County: Roughly 140-160 RPP. Median home $850,000+ in LA metro; coastal LA is substantially higher, inland LA County substantially lower.
San Diego: Roughly 135-145 RPP. Median home $800,000+ with a constrained coastal supply.
Sacramento: Roughly 110-120 RPP. Median home $475,000 - state capital with growing population but no Bay Area premium.
Central Valley (Fresno, Bakersfield, Stockton): Roughly 95-110 RPP. Median home in Fresno $375,000; Bakersfield $310,000. Inland California is closer to Texas-level cost than to Bay Area.
For metro-level Regional Price Parities, the BEA publishes 384 metro areas. California's range from 200+ (San Francisco) to 95 (Fresno) is the widest intra-state spread in the US.
Frequently Asked
California cost of living, answered
Why is California so expensive?
Housing. The housing sub-index is 196.5, nearly double the US average, and housing is weighted 28% of the C2ER composite. Without the housing premium, California's composite would be in the 105-110 range, similar to Colorado or Utah. Other categories are above average but not extreme.
What is the state income tax in California?
Nine brackets from 1% to 13.3% per the Franchise Tax Board. The top 13.3% bracket applies to income over approximately $677,000 for single filers ($1M for joint, with a 1% mental health surtax on income over $1M added separately). The marginal-vs-effective rate distinction matters: a $200,000 single filer pays roughly 9% effective, not 13.3%.
How does Proposition 13 affect property tax?
Prop 13 caps annual property assessment increases at 2% regardless of market price, until the property is sold. This means long-term owners pay tax on a low assessment even if market value has risen substantially. Effective property tax rate is 0.71% statewide, but the per-property variance is wide because of cohort effects from purchase year.
Is California Central Valley really cheaper than Texas?
For housing, often yes. Fresno median home $375,000 vs Houston $310,000 and Dallas $370,000 - similar range, with Fresno slightly higher. State income tax is the main differentiator. For a household earning under $80,000 in income tax brackets, Fresno can be close to Texas-equivalent in net cost.
What does the high gas price do to total transportation cost?
California gas at $4.85/gallon vs national average ~$3.30 adds roughly $480-600/year per typical driver. Combined with longer commutes in major metros (mean commute 30 minutes), transportation sub-index reaches 118.9, second-highest in the US after Hawaii.
Should I leave California for Texas or Florida?
Depends. The state income tax saving is real (5-9% of high incomes), but California's housing inflation has been offset by Prop 13 for long-term owners; selling a long-held home triggers capital gains tax and resets the property tax base on the next home. For renters and recent buyers, the case for relocation is stronger. For retirees, factor in healthcare networks and family proximity. The /calculator page lets you run the math.