Rounding it up
Overall, Canada is more affordable than the US, but the US has a higher median income.
Comparing the cost of living in both countries is tricky because living costs vary dramatically within each city.
It’s important to consider the hidden costs and savings of public goods and services when comparing costs of living.
If you want a more accurate cost of living comparison, it’s better to compare two cities or towns in the US and Canada.
Regardless of which side of the border you live on, comparing the United States and Canada is sort of a national pastime.
Both countries boast massive land areas, well-developed economies, and high standards of living. The US and Canada also have a long and storied history of allyship as well as many similar cultural characteristics — even if many Canadians would opt for a hockey stick rather than their American counterparts’ baseball bats.
However, if there’s one age-old debate that’s never been settled, it's this: Is it more expensive to live in Canada or the US?
The answer? On average, it’s more expensive to live in the US than to live in Canada. But median incomes are higher in the US than up North and the cost of living varies widely between different regions of each country — there’s a lot more to this cost of living debate than you might think.
In this article, we’ll take a closer look at the cost of living in both the US and Canada. We’ll compare recent data about consumer prices, housing costs, and other expenses that are typical in both countries to help keep you in the know.
Is it more expensive to live in Canada than the US?
Comparing the cost of living in two places is no easy feat. This task becomes even more complicated when we compare two large countries like the US and Canada that each have huge costs of living disparities within their own borders.
Luckily, the hard work has been done for you. After digging through the numbers, we’ve put together a short comparison of the costs of living in each country.
Before we get to the numbers, note that all prices listed are in Canadian dollars. When necessary, conversions from US dollars to Canadian dollars were done using conversion rates from mid-July 2021.
With that in mind, let’s take a look at how much it costs to live in Canada and the US.
The cost of living in Canada
Canada consistently ranks as one of the most expensive places to live in the world, though it also has one of the world’s highest median incomes. In fact, the median income in Canada is approximately $37,800, which is among the top 20 in the world.
However, with high median incomes come high costs of living. Here are some of the average costs of typical Canadian expenses:
Apartment rental (monthly): $1,335
Apartment price per square meter: $5,746
Basic utilities (monthly): $164
Household food costs (annually): $10,311
Private health insurance (annually): $4,000
Car insurance premiums (annually) $1,320
Litre of gas (2021): $1.34
The cost of living in the United States
Like Canada, the US also consistently ranks as one of the world’s most expensive places to call home. However, it has an even higher median income of $85,500, a statistic that just might be bolstered by the fact that the US has more billionaires and millionaires than any other country.
As is the case with the country’s northerly neighbors, the cost of living in the US isn’t exactly cheap. These are some of the average costs of typical American expenses:
Apartment rental (monthly): $1,655
Apartment price per square meter: $4,456
Basic utilities (monthly): $205
Household food costs (annually): $9,958
Private health insurance (annually): $7,392
Car insurance (annually): $2,972
Litre of gas (2021): $1.01
So, which is more expensive: The US or Canada?
After looking at all of the data, the US has a clear edge in the race to be crowned the more expensive country to live in. But before we settle this debate and call the US the “winner,” it’s important to take a more nuanced approach to these numbers.
Regional cost of living disparities
The average annual and monthly living expenses of the typical American are generally quite a bit larger than those of the average Canadian. However, remember that these are all averages across the entire US and Canada.
So these numbers account for everything from the cost of city dwelling in Montreal and Los Angeles to the cost of living in a more rural community like Brandon, Manitoba or Utqiagvik, Alaska. It also includes the cost of living in relatively affordable small cities in the Midwestern US such as Minneapolis, or in small cities in Canada such as Winnipeg.
In fact, within the biggest cities in each country, the cost of living disparity between the US and Canada becomes even larger. For example, the cost of consumer goods and groceries is up to 37% higher in New York City than in Vancouver. Rent prices are also upward of 81% higher in New York than in Vancouver.
Cost of renting vs. Owning a home
At the same time, many cost-of-living comparisons focus mostly on the cost of renting an apartment or home in a given place, so they’re not as accurate if you’re a homeowner. Given Canada's red-hot real estate market, this can cause a big skew in the data.
When we compare Vancouver and New York City yet again—but this time for real estate prices—we find that there’s an interesting twist in the numbers.
While the average Greater Vancouver home price was $1.83 million in early 2021, the median sale price in New York City was $921,000 around the same time period. So, the cost of living in the US might actually be lower if you’re a homeowner than it would be in some of Canada’s hottest real estate markets.
Of course, this is an oversimplification of the cost of owning a home in either country. Homeowners in the US and Canada are usually on the hook for things like property taxes, homeowners’ insurance, and the like, so there are other expenses to think about, too. Plus, mortgage rates in Canada and the US vary widely, and they can both affect your bottom line.
Taxes, taxes, taxes
If there’s one thing that we all probably give a collective sigh to, it’s the thought of paying taxes. But no cost of living comparison would be complete without an investigation into the different tax rates in Canada and the US.
Unfortunately, these simplified tax brackets don’t tell the whole story. If we just look at the federal tax brackets, the lowest-income Americans effectively pay less tax than their Canadian counterparts.
At the same time, middle-class Canadians get a bit of a tax cut when compared to middle-class Americans. Additionally, the highest-income Canadians technically pay less tax than their southerly neighbours.
Of course, this all assumes that everyone’s tax rate is the same as what they pay. But when you factor in tax deductions and credits, these tax rates vary widely—to say nothing of what happens when we throw provincial, territorial, state, and local taxes into the mix.
As you can see, trying to compare tax rates between the US and Canada is a messy business, but it’s an integral part of assessing the cost of living in both countries. If you fall into one of the lower tax brackets, you may actually pay more to the government each year if you live in Canada. Nevertheless, higher-income earners technically have more tax liability in the US.
Public goods & services
Finally, whenever you compare the cost of living between two countries, you need to look at hidden costs—and savings—of life in each place.
Hidden costs and potential savings usually stem from public goods and services that most people don't think about when they look at their monthly budget. These goods and services may cause an increase in taxes, but they often correlate with fewer out-of-pocket expenses.
When comparing the US and Canada, there are quite a few key public goods and services disparities that are worth considering.
Things like universal basic healthcare and overall lower higher education costs reduce many out-of-pocket expenses for Canadians. While many Canadians do opt for additional private health insurance to the tune of approximately $4,000 in premiums per year, Americans shell out an average of $7,392 in premiums annually.
These sorts of services do often mean an increase in taxes (which is the case for some Canadians), but it’s one of the reasons why it’s cheaper to live in Canada, on average, than it is to live in the US.
All things considered, it’s cheaper, on average, to live in Canada than it is to live in the US.
If you can wrap your head around the currency and unit conversions that go into comparing the cost of living between the two countries, most things, from rental costs to car insurance, are cheaper in Canada.
Of course, there are some things that are more expensive in Canada, like food, gas, real estate prices, and some taxes. There are also some parts of Canada that are more expensive to live in than some parts of the US. Plus, the median salary is higher in the US, so you may find that you have more buying power to the South of the border, even if daily purchases are more expensive.
But when we take a birds-eye view of the costs of living in both countries, Canada is the more affordable choice.
Gaby Pilson is a writer, educator, travel guide, and lover of all things personal finance. She’s passionate about helping people feel empowered to take control of their financial lives by making investing, budgeting, and money-saving resources accessible to everyone.