Is Cost of Living Higher in Canada Than US?

Understanding the cost of living, which includes expenses like housing, food, and transportation, is important for those considering relocation or comparing economies. This article compares the cost of living between Canada and the United States across various spending categories.

Overall Cost Comparison

Living in Canada is generally slightly more affordable than in the United States. U.S. living expenses are approximately 10% higher, especially for healthcare, housing, and education. For example, a single person’s average monthly cost without rent is $1,005 USD in Canada, compared to $1,171 USD in the U.S. A family of four faces estimated monthly costs of $3,593 USD in Canada versus $4,160 USD in the U.S.

Costs vary significantly by city and individual spending habits in both countries. Some comparisons show Canada’s overall cost of living is 18% less expensive than the United States. The U.S. ranks as the 10th most expensive country globally, while Canada ranks 17th.

Key Spending Categories

Housing

Housing costs are substantial in both Canada and the U.S., but rental prices are generally higher in many U.S. cities. The average median rent for a one-bedroom apartment in a U.S. metropolitan area was $1,876 USD as of June 2022. In Canada, monthly rent for a one-bedroom in Vancouver ranges from $1,600-$1,950 USD, and in Toronto, $1,480-$1,800 USD. Smaller Canadian towns may offer more affordable rent, $1,000 USD per month.

In 2022, the average home price in Canada was over $30,000 higher than in the U.S., despite Canadians having a lower median income. The average home in Canada costs $617,000 USD, compared to $445,000 USD in the U.S., a difference of $172,000 USD. This disparity is influenced by factors like population density and lower interest rates in Canada, which increase demand.

Groceries and Food

Food costs in Canada are typically slightly higher than in the United States. For example, a pound of chicken breast costs $4.47-$5.47 USD in Canada, compared to $4 USD in the U.S. A pound of potatoes costs $1 USD in Canada and $2 USD in the U.S., while rice is $1.26-$1.54 USD in Canada and $1 USD in the U.S.

Dining out can be slightly less expensive in Canada; a dinner for two in Vancouver ranges from $80-$98 USD, compared to $75 USD in the United States. Overall, groceries are generally 10–20% cheaper in the U.S., especially in suburban areas.

Transportation

Transportation costs, including fuel, public transit, and car ownership, are similar between the two countries. Gasoline prices in Canada are typically 20-25% higher than in the United States, averaging $5.36-$6.56 USD per gallon. This difference is largely due to taxes; prices become similar when taxes are excluded.

Public transportation for inner-city travel tends to be more expensive in Canada, with a single bus ticket costing $2.40 USD, compared to an average of $1.52 USD in the United States. A monthly public transit pass in Toronto or Vancouver can cost $150 CAD, while New York City offers a monthly pass for $130 USD. Car insurance premiums in Canada can be $1,500 per year, while U.S. drivers might pay $1,100 per year.

Utilities

Average utility costs for an 85m2 apartment (electricity, heating, cooling, water, garbage) are $151 USD per month in Canada and $211 USD in the United States. Internet services (60 Mbps+, unlimited data) cost $63 USD per month in Canada and $71 USD in the U.S.

Healthcare

Healthcare systems differ significantly, impacting costs. Canada has a universal healthcare program funded through taxes, covering most medical services and emergency care with minimal out-of-pocket expenses. In the U.S., the healthcare system is largely privatized, leading to higher costs for insurance and treatment. The average annual healthcare premium in the United States for single-person coverage is $7,911 USD. Out-of-pocket healthcare expenses are nearly 50% higher in the U.S. compared to Canada.

Education

The cost of higher education generally differs between the two nations. University tuition fees in Canada are typically lower than in the U.S. For example, the mean cost of tuition and fees at a public institution in the United States is $10,662 USD. In Canada, public university tuition fees for undergraduate programs can range from $15,000 to $35,000 CAD per year.

Other Goods and Services

General consumer goods, clothing, and entertainment costs contribute to the overall cost of living. Entertainment, for instance, may be slightly cheaper in the U.S.

Income Levels and Affordability

While the United States generally has a higher nominal average salary, the income difference between the U.S. and Canada is not always as substantial as it appears. In 2021, the median income in the United States was $70,784 USD, while Canada’s was $68,400 CAD ($50,348 USD). This disparity can influence perceived affordability, as higher wages may offset higher costs.

Purchasing power parity (PPP) offers a more accurate comparison of living standards by accounting for the cost of living and inflation. When adjusted for PPP, the gap between U.S. and Canadian salaries narrows, with U.S. wages at $80,526 USD and Canadian wages at $63,398 USD. This indicates that while Americans may earn more, their higher expenses can reduce effective purchasing power. For example, the average after-tax salary covers living expenses for 1.4 months in Canada, compared to 1.8 months in the United States.

Disposable income is also affected by tax structures. Canada has a progressive tax system where higher earners pay a larger share of income taxes, ranging from 15% to 33% federally. U.S. federal income tax brackets range from 10% to 37%, and some states also impose income taxes. Despite potentially higher taxes in Canada, government-provided services, particularly healthcare, contribute to a different financial landscape for residents.

Regional Variations

The cost of living is not uniform across Canada or the United States; significant variations occur within each country. These internal differences can sometimes be more pronounced than the overall national distinction. Large cities typically have higher living expenses compared to smaller towns or rural areas.

In Canada, Vancouver and Toronto consistently rank among the most expensive cities. Vancouver’s high costs are largely driven by its housing market, with average home prices exceeding $1 million CAD and one-bedroom apartments averaging $2,500 CAD per month. Toronto also experiences high housing costs, with average home prices $1.1 million CAD. Conversely, cities like Saint John, New Brunswick, and Winnipeg, Manitoba, offer more affordable living, with average home prices $300,000 CAD and lower rental costs.

Similarly, in the United States, major metropolitan areas like San Jose, New York City, and Boston are among the most expensive. San Jose, California, has monthly expenses 74% above the national average, and New York City’s living expenses are 71% higher. San Francisco maintains high median home prices exceeding $1.3 million USD, with one-bedroom apartments starting at $3,000 USD per month. In contrast, Detroit, Michigan, is one of the most affordable cities, with monthly expenses averaging $1,640 USD, 23% below the national average. Other affordable U.S. cities include Cleveland, Ohio, and Dayton, Ohio.