What Is the Cost of Living in California?

California is a state of extremes. It’s home to some of America’s richest and poorest cities and counties. That means there’s no single cost of living in California. Still, there are some things that apply to locations across the state, like a high income tax. To take you through the range of prices in California, we put together a guide of the cost of living in the Golden State.

If you’re looking to rent or buy in California, a financial advisor could help you put a financial plan together for your needs and goals.

Housing Costs in California

For most people, the largest portion of their budget is housing. Needless to say, there’s a huge spectrum of housing costs in California, from ultra-expensive San Francisco to smaller cities. According to NeighborhoodScout, the median home value in San Francisco is $1,426,481 in march 2023 (up from $1,236,049 in March 2022), whereas Sacramento boasts a median home value of $531,642 (up from $449,716).

2023 Data from RentCafe shows that the average rent in California is $1,726. Comparatively, the average rent in the U.S. is $1,718. Most cities in California come out above that mark. Apartment List’s data indicates that the median two-bedroom rent in Los Angeles is $2,275. And San Diego is $2,467.

For a comparison, the table below compares California home values and rents for the five biggest cities in 2022. Data is pulled from Neighborhood Scout.

Utilities

Californians pay relatively low utility bills. According to data from the March 2023 Save on Energy Electricity Bill Report, Californians consume an average of 542 kWh per month (down from 572 kWh in March 2022). They pay an average of 24.46 cents/kWh (up from 23.22 cents/kWh), resulting in an average monthly electricity bill of $132.57 (up from $101.49). For reference, the most expensive average monthly bill is Hawaii ($237.78 in March 2023 and $191.01 in March 2022) and the cheapest is Utah ($81.69 in March 2023 and $78.13 in March 2022). The average for the U.S. as a whole is $138.57 in March 2023 (up from $122.79 in March 2022).

Food

According to the MIT Living Wage Calculator, an adult with no children in California requires a living wage of $44,180 before taxes in 2023. Of that annual income, food expenses account for $4,686, or 10.61%. This is a simple living wage calculation, though, so it doesn’t allow for luxuries.

Of course, food expenses vary within California. Based on 2023 data from Numbeo.com, the average cost of a gallon of milk and a dozen eggs in Fresno is $4.33 and $3.35, respectively. In LA, those prices each jump to $4.55 and $4.79. For reference, the national average price for a gallon of milk and a dozen eggs $3.88 and $4.11, respectively.

Transportation

California is known for its beautiful stretches of highway, and its traffic. According to GasBuddy, a gallon of regular gas in California has an average cost of $4.74 in March 2023, the second-most expensive state in the U.S after Hawaii ($4.81).

If you’re looking to own and drive a car in California, you’ll need insurance. Insure.com’s report on car insurance rates from March 2023 shows that California has the fifth-highest average annual premium at $2,115. This is more than $400 than the national average of $1,682

There are public transportation options in California, but the cost varies from place to place. For example, a monthly transit pass in LA will cost you $50 ($100 regular price). A monthly pass for San Francisco-area transit costs $81, or $98 for access to the San Francisco municipal transit plus the Bay Area Rapid Transit (BART).

Taxes

California holds the honor of some of the highest income taxes in America. Its top state income tax bracket comes with a 12.3% rate. It’s a progressive tax system, though. Residents in the bottom bracket pay just 1% in state income taxes. If your taxable income is over $1 million, you’ll pay a 1% surtax on top of the 12.3% rate, bringing the total to 13.3%.

California also has the highest base rate for state sales tax, at 7.25%. Counties and cities can add sales taxes of their own, which is why some cities in Los Angeles have sales tax rates of 9.5%.

Here’s some good news for the tax-averse: California’s property tax rates are below average. The state has an average effective property tax rate of 0.71%, compared to the national average of 0.99%. This is largely because of California’s Proposition 13, a state law that reduced property taxes by more than 50% and capped annual increases in assessed home values.

Miscellaneous Cost of Living Facts

Moving to California is a dream for many. There’s no place quite like the Golden State. Wine lovers could look into Napa. Art fans can check out the Getty, the Los Angeles County Museum of Art (LACMA), the De Young in San Francisco or any number of other museums and galleries.

California also features a number of places where you can surf, hike and road trip your way through some of the country’s most beautiful terrain. There’s also a lot to love if you’re a sports fan – the Los Angeles Dodgers and Golden State Warriors have been contenders for the last few years, and the state also boasts multiple teams in the NFL and NHL.

Next Steps If You’re Moving to the Golden State

• A financial advisor can help you navigate big life changes like a move, or offer assistance with identifying and meeting your financial goals in general. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Check out some of the top financial advisor firms in Los Angeles, Sacramento, San Diego and San Jose.
• If you make the move to California, it might be worth moving your savings to a local, in-state bank. Some options include Poppy Bank, Pacific Premier Bank, Beneficial State Bank, Preferred Bank and Bank of Hope.

Photo credit: ©iStock.com/Jeremiah Pierucci, ©iStock.com/Long_Strange_Trip_01, ©iStock.com/Larry Gibson