Guide
A $90,000 salary can feel like plenty in one place and barely enough in another. The number on your offer letter doesn't tell you how far it will actually stretch — that depends on cost of living, and the gap between cities is enormous. Before you accept a relocation, compare a raise across regions, or decide where to build a life, it pays to translate your salary into what it can actually buy where you'll live. This guide explains what drives those differences and how to compare two places on equal terms.
Cost of living measures how much it costs to cover housing, food, transportation, healthcare, and taxes in a given area. A salary that's comfortable in a low-cost metro can leave you stretched thin in an expensive coastal city, because the biggest expenses — especially rent or a mortgage — vary far more than pay does. Economists call the salary figure your nominal income and what it can actually buy your real income; two people with identical nominal pay can have very different real incomes depending on where they live. The Consumer Price Index published by the U.S. Bureau of Labor Statistics is the standard measure of how these costs change over time and differ by region.
Housing is usually the single largest line in any budget and the one that differs most between cities. Median rent in the priciest metros can run two to three times what it costs in an affordable one. Two people with identical salaries can end up with wildly different amounts left over after rent, which is why housing deserves the closest look when you compare locations. A common budgeting benchmark is to keep housing under about 30% of gross income — the same threshold the U.S. Department of Housing and Urban Development uses to define a household as "cost burdened" (spending more than 50% is "severely cost burdened"). In the most expensive metros, meeting that guideline on a mid-level salary is genuinely difficult, which is why so many cost-of-living comparisons live or die on the rent line alone. When you compare cities, price out a specific, realistic home or apartment in each — not the metro average — because your actual housing choice drives your actual budget.
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State income tax ranges from zero in states like Texas and Florida to over 10% at the top in states like California. Two identical salaries in two states can produce noticeably different take-home pay before you've paid a cent of rent. Sales and property taxes add further variation.
To judge whether a relocation salary is really a raise, translate it into equivalent purchasing power:
| City cost index | Salary needed to match $70,000 |
|---|---|
| 85 (lower cost) | ~$59,500 |
| 100 (national avg) | $70,000 |
| 140 (high cost) | ~$98,000 |
If your job is location-independent, cost of living becomes a lever you control. Earning a salary benchmarked to an expensive metro while living somewhere more affordable can dramatically raise your real standard of living. The reverse is also true: some employers adjust remote pay to local rates, so it's worth confirming whether a remote offer is tied to your location or to the company's headquarters before you plan a move around it.
Imagine you earn $80,000 in a city with a cost-of-living index of 100, and you're offered $98,000 to move to a city with an index of 135. The bigger number looks like a clear win — but translate it into equivalent purchasing power first:
Despite the $18,000 raise on paper, this move would likely leave you with less real spending power than you have today. The lesson isn't that you should never take it — a career step, a better team, or a place you'd love to live can be worth a real-terms pay cut — but you should make that trade-off with clear eyes, knowing the numbers.
To sanity-check whether a salary actually covers the basics in a given place, the MIT Living Wage Calculator estimates what a full-time worker needs to earn to cover housing, food, childcare, healthcare, transportation, and taxes in any U.S. county, metro, or state — a useful reality check alongside a cost-of-living index.
Start by knowing your baseline hourly and annual pay. The salary calculator and state salary lookup shows how your pay compares to regional benchmarks and the living wage for your state, so you can see whether a number is genuinely competitive where you live.
What is a cost-of-living index? It's a number that compares the overall cost of goods and services in one place against a baseline, usually set at 100 for the national average. An index of 130 means the area costs roughly 30% more than average; 85 means about 15% less. It's a quick way to translate salaries between locations.
How much more do I need to earn to break even in a pricier city? Multiply your current salary by the ratio of the two cost indexes. Moving from an index of 100 to 130 means you need about 30% more just to maintain the same standard of living — before accounting for differences in state taxes and your specific housing choice.
Do taxes matter as much as cost of living? They can. State income tax ranges from zero in states like Texas and Florida to over 10% at the top in states like California, and property and sales taxes add further variation. Two identical salaries can produce meaningfully different take-home pay before any spending happens, so always compare after-tax income alongside the cost index.
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