Calculating Cost of Living Before Relocation

Calculating Cost of Living Before Relocation
Calculating Cost of Living Before Relocation

When you’re moving, whether because you want to be in a new location, or you’re relocating for a job, there’s a lot to consider. One of the biggest things to consider is the cost of living, yet this is something often overlooked. The cost of living and understanding how much it’s going to cost you to live in a new city is relevant whether you’re moving for retirement, you’re moving as an employee of a company, or you’re self-employed and operate your own business.

So how you do you calculate the cost of living before making a move? What are the factors to consider and what plays a role in the cost of living in any given location?


Understanding taxes is an important consideration when looking at the cost of living. Your income is the primary determinant of the federal income tax you owe, and that doesn’t change regardless of where you move. Federal income taxes are only part of the picture, however.

Other taxes you may be required to pay include a state income tax, which is required by state governments. The majority of states have progressive tax structures, meaning the more money you earn, the more state tax you have to pay. Some states have no state income tax. These include:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming

Tennessee and New Hampshire don’t have a state income tax on wages, but only on dividends and interest.

Among the states that have an income tax, the lowest rates are in North Dakota, Pennsylvania, Indiana,and Michigan. States with the highest state income tax rates include California, Hawaii, Oregon,and Minnesota.

When thinking about taxes and moving to a new location, you’ll also have to consider property tax rates and other local taxes that may be levied. For example, while you won’t pay a state income tax in Texas, the property tax rate is among the highest in the nation.

Regional Cost-of-Living

There are certain regions of the country that have a higher cost of living than others and vice versa. The Northeast has seen more people leaving than moving than for six consecutive years according to research from United Van Lines. The Northeast saw a 57 percent rate of outbound moves and this is likely due to the higher cost of living.

The South, however, sees most moves being inbound. 52 percent to be exact. The Carolinas tend to be a favorite for people making a move, because of the lower cost of living as well as the mild climate. The western area of the United States also has a lot of appeal for people making a move including to states like Nevada and Colorado with lower costs of living. Often people from California will move to these states.

What If You Move to an Economically Depressed Area for a Good Job?

Sometimes businesses will move to areas of the country that could otherwise be considered economically depressed. It’s cheaper, and they can often find many employees in the area willing to work for lower wages than they would be elsewhere. These companies might bring some of their existing employees to these areas, and what if you’re asked to do that?

You do have to consider what it would be like working for a good, thriving company but being in the middle of an otherwise economically depressed community. Will the trade-off be worth it?

Cost-of-Living Factors

Along with taxes and the overall regional trends that impact the cost of living, there are other factors as well. Some of the primary factors that play a role in cost-of-living include:

  • Mortgage or rent
  • Utility costs each month
  • The costs of transportation
  • Repairs or maintenance for your home
  • Food and groceries
  • Insurance
  • Property taxes

There are also the fun things that make life enjoyable such as dining out, or entertainment. In bigger cities, these costs are going to be much higher than in smaller cities and towns. A lot of people find that when they move to a big city or a state with a high cost of living, they have to cut a lot of extras out of their lives.

As with most things in life, if you’re contemplating a move, it might be worthwhile to calculate what your return on investment would be. You’ll have to consider those easily measurable factors such as your new salary, and those that are important but not as easy to measure, such as your happiness and quality of life.

A cost of living calculator can help you with the measurable factors, but you’ll have to ultimately be the one to decide whether or not certain sacrifices are worth the benefits of relocating.

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