cost of living

As the cost of living in large cities continues to rise due to inflation, tariffs and other economic factors, more and more people are realizing that the value of a dollar in the United States is a very relative concept. For decades, cost of living indices have sought to address and benchmark the inconsistencies in what money will buy, but they are often so specific as to prevent a holistic picture or the ability to "browse" the data based on geographic location.

Each year, the Tax Foundation addresses many of these shortcomings using the most recent Bureau of Economic Analysis data to provide a familiar map of the United States overlaid with the relative value of what $100 is "worth" in each state. In recent years, they've further updated their data so that you can break down the value of your money across every single metro area in the United States. It's an incredibly valuable tool with so many people considering, or having already migrated from states like California to Florida, Texas and other states with friendly state taxes rates and more affordable housing options.

The map quantifies and presents the cost of living by geography in a brilliantly simple way. For instance, if you're looking for a beach lifestyle but don't want to pay California prices, try Florida, which is about as close to "average" — in terms of purchasing power, anyway — as any state in the Union. If you happen to earn, or luck, your way into Silicon Valley tax brackets, head to Hawaii, D.C., or New York. You'll burn through your money in no time. And in some of those places like Hawaii, there are quality of life measurements that often exceed raw purchasing power.

So, where does your dollar go the furthest in 2025? The financial planning site GoBanking.com compiled its own list of cash purchasing power across each state and found that in California, you get the least bang for your buck, only $87.42 in real purchasing power for every $100 of cash. The average person in California makes $96,344, one of the higher income levels in the country. However, just living in California on average costs residents a staggering $86,408, leaving the average person with little flexibility for long-term financial planning projects like retirement, saving for a new home or even buying a new car.

At the other end of the spectrum is Arkansas, the state where your dollar goes the furthest. In fact, that $100 bill burning a hole in your proverbial wallet is in fact worth more than its technical value, with a real value of $113.49. On top of that, the cost of living is only $37,067, less than half of that in California. Further, the average cost of a new home in Arkansas is $208,743, less than one-third of a new home in California. Not coincidentally, in 2023, Arkansas was the top destination for people moving to another state within the United States, followed by Texas.

A woman holds six $100 billsImage via Canva

How about Florida, which has received outsized attention in recent years for its overt efforts to draw residents from California and other states with higher costs of living? According to the most recent data, Florida is in fact much closer to California than Arkansas, coming in only in 40th place on the GoBanking rankings, with $100 in cash only being worth $96.55. However, the annual cost of living is still only slightly more than half of that in California, $53,505. And if you're looking to buy some real estate, the average home is valued at $404,924. That's still well outside the purchasing power of many Americans but with built-in advantages such as warm weather and the top-ranked state education system in America, it's obvious why so many people, especially those with families, are choosing Florida over California in recent years.

According to U.S. News and World Report's data analysis, California only has the nation's 23rd best education system and is ranked a paltry 37th overall in their state rankings. It's quite a contrast for a state that bills itself on the promise on opportunity, natural wonder and positive lifestyle options. And with 2024's wildfires, the constant threat of earthquakes and other factors, California clearly has challenges beyond economics if it wants to remain one of the more attractive states in the nation.

Of course, those numbers are always in flux. And political leaders in California have promised concrete reforms in order to address the state's high cost of living compared with the value of the its social and emergency services. If you want proof of how quickly things can change, look at a similar analysis of the value of $100 in each state from 2015:

- YouTubewww.youtube.com

However, those negative statistical trends aside, California continues to have an incredible pull on our collective imagination. 423,194 Americans left their state for California according to the most recent data in 2023, placing it in third behind our previously mentioned top two states, Arkansas and Texas.

So, it's clear there are a number of factors that determine the best place of live in America. When it comes to raw purchasing power, you cannot beat Arkansas. But there's so much else to consider: public resources like education and healthcare, job opportunities (you probably won't make nearly as much in Arkansas as you might in California) and other factors such as proximity to family, friends and personal interests.

There's no doubt America is rapidly changing and that includes what people value the most when they decide where to live. In uncertain economic times, the face of America will likely change radically in the coming years, with the political, economic and social landscape shifting in meaningful ways.