Where is it cheaper to live, buy a house or even buy groceries? Which parts of Canada are the most expensive, and which of the USA are? Ultimately, both countries are quite expensive to live in, but which one will give you the most for your money?
Living Standards in Canada and the US
When it comes to living standards, both countries have good ones. That being said, there are differences between the two. The first one is healthcare.
The USA is one of the most expensive countries in the world for healthcare, even with health insurance. In Canada, healthcare is structured a bit differently. If you are a Canadian citizen or permanent resident, then healthcare is paid for with your taxes, and you do not have to pay for individual visits.
Taxes and Tax Brackets in the US Vs Canada
Whether you pay taxes in the US or Canada, how much you pay depends on your tax bracket. While each state and province has its own rates, both countries also have federal rates. These are the Canadian Federal rates for tax deductions in Canadian dollars:
| Taxable Income Amounts | Marginal Tax Rate |
| On the portion of the income from $0 – $55,867 | 15% |
| On the portion of income, that’s $55,867 – $111,733 | 20.5% |
| On the portion of income that’s $111,733 – $173,205 | 26% |
| On the portion of income that’s $173,205 – $246,752 | 29% |
| On the portion of income, that’s $246,752 plus | 33% |
Here are the US Federal rates:
| Tax Rate | Amount for Single Filers |
| 10% | $11,600 or less |
| 12% | $11,601 to $47,150 |
| 22% | $47,151 to $100,525 |
| 24% | $100,526 to $191,950 |
| 32% | $191,951 to $243,725 |
| 35% | $243,726 to $609,350 |
| 37% | $609,351 or more |
That said, these amounts change in the US when you file jointly or are considered the head of the household. They’re also in USD, which looks a bit different in the Canadian market based on the value of the Canadian dollar.
These rates are only for income. Each state or province decides property taxes based on the value of your home. Both US residents and Canadians pay these amounts where they live.
Finding a Job in the USA vs Canada
The difficulty in finding a job in the USA or Canada really depends on your status. It is much harder for an immigrant than it is for someone who was born in that country. For this reason, it is much more difficult to get a job in Canada than it is in the USA.
This is because many Canadian companies prefer Canadian work experience. If you are an immigrant who did not emigrate with a Canadian job offer, you likely don’t have one. This is not the case in the US, where it is much easier to obtain a job.
As a citizen of either country, the average Canadian or American doesn’t have too much difficulty finding a job, and there is equal job security in either country, as long as you have some experience, are a skilled worker, or have some education under your belt. The economies are relatively equal,l so there isn’t a huge difference in this regard.
Jobs in the US vs Canada
When it comes to getting a job in Canada or the US, both offer great positions with a good quality of life. That said, there are some downsides to working in both countries.
The difference between working in the US and in Canada is that there are more overtime hours in Canada. In Canada, there’s less focus on working overtime, and some parts of the country are even starting to introduce 4-day workweeks. You can still get great health benefits in the US, but you’re likely to get more vacation time, paid travel, and paid maternal and paternal leave. In the US, though, tax rates do tend to be a bit cheaper. Ultimately, though, both countries have a great job market.
Which Country is More Beautiful?
In this category, Canada is ranked as number 2 in the world, whereas the US is ranked at number 9. The reason for this is that Canada has so many diverse landscapes. There is so much natural beauty that is home to so many different animals. It really doesn’t matter where you go; there will be someplace to see. Like Lake Louise in Alberta, Whistler Blackcomb in BC, or even just the landscapes in the Maritimes. There is so much to be seen when you’re paying attention.
What Are Salaries in the US vs Canada?
While the differences aren’t large between earning amounts in Canada and the US, Americans actually have higher average salaries than Canadians. The average salary for Americans is $56,690, and it is about $43,867 in Canada. These are both in USD. The main difference, though, is that you do rely on post-secondary education to get a higher-paid position in the US. In Canada, there are more Canadians earning above the average income who do not have any post-secondary education.
There are a few reasons why salaries are higher in the US. These are;
- higher operating costs
- supply and demand
- cost of living
- venture capital culture
All of these factors give the US an advantage in having a higher average salary. The operating costs in Canada are much higher than those in the United States. This is mostly due to the fact that there are different taxes and regulations in each country.
That being said, the cost of living is lower in Canada, which does account for some of the salary. The US’s higher salary will make up for some of that. The US is also much larger, so it has a broader range of supply and demand. Lastly, the US has a much higher VC culture, mostly because there is a much larger population. This means there are more startups hiring more employees.
Housing Costs in Canada Compared to the US
Currently, the price of housing in Canada is over double that in the US. It has steadily increased since 2020 by more than 30%. Interest rates in Canada have now spiked to help combat the housing prices; it is going to take a while to make the housing prices much less affordable than anywhere else.
In the US, housing prices have gone up around 27%, ultimately forced by inflation, in the same time period that housing prices in Canada increased a lot. They are not nearly as expensive as the Canadian housing market, but they are still higher than normal.
The reason for these increases has a lot to do with the pandemic. This resulted in a lot of people working from home or needing more space. This caused a lot of buying and selling in the market. Pair that with a lack of housing, and the result is a major spike in housing prices.
The rental market is also more expensive in Canada than it is in the US. It is roughly an average difference in rent of $100 per month between Canada and the US. This is relative,e though. It ultimately depends on where you are in each country.
Cost of Living: Canada Vs the US
While the US does tend to have higher salaries, it’s actually cheaper to live in Canada. Here are some examples of how the cost of living is lower.
| Scenario | Cost in the US | Cost in Canada |
| Rent | $1,702 | $1,774 |
| Utilities | $429.33 | $348 |
| The annual cost of food | $5,259 | $3,564 |
| Annual car insurance | $2,014 | $2,000 |
| Health insurance monthly | $600 | $0 |
As you can see, it’s slightly cheaper to live in Canada than in the US, but ultimately, the total cost will depend on where you live in each country.
Areas of the USA that are more Expensive
Just like any other Country, there are some places that are more expensive to live in than others. In the US, some of these places are:
- New York
- San Francisco
- Honolulu
- California
The main reasons for this are the cost of housing and other things like transportation or food. Where you live really affects these things. Places with denser populations, closer to city centers, and popular travel destinations tend to be much more expensive than smaller,r less popular cities. Usually, the farther from the city center you are, the cheaper it is.
Which areas of Canada are more Expensive?
In Canada, this is the same premise. More populated cities like Toronto and Vancouver are much more expensive to live in than smaller places in more rural areas. Luxury activities cost slightly more in major cities. An example of this is going to a restaurant. In Canada, restaurants can be quite expensive,e no matter where they are located, but even more so in high-traffic areas.
The common thing for all of these places is that the cost of housing is high. This is because there is a great demand for housing, so the prices keep increasing. Since housing prices in Canada are already extremely high, many Canadians are starting to avoid these expensive cities for more rural areas. Because of this, the prices in these areas are increasing as well, but they are still not as expensive as in major Canadian cities.
Ultimately, the cost and living standards aren’t only going to vary in the country that you live in, but also where you live in that country. Things like monthly gym membership costs, the education system, living costs, housing costs, social benefits and even consumer prices are all impacted by this.
Employment Insurance Benefits: US Vs Canada
Another thing to consider when comparing the cost of living in the US and Canada is Employment Insurance benefits and how they work in each country.
EI Canada
In Canada, Employment Insurance is available when you’re unable to work due to no fault of your own. It’s also a federal program, so you don’t need to apply to your province. Instead, you apply to the federal government, and the rates are the same for everyone.
If you’re on sickness benefits in Canada, you can get up to 26 weeks of pay. For regular benefits, you can get up to 45 weeks based on the province that you live in. However, these aren’t the only benefits you can get through federal EI. You can also get benefits for:
- Caregiving
- Maternity leave
- Parental leave
With the EI Caregiver benefits, you can still receive up to the maximum amount of EI, which is $668 per week. You can get up to 35 weeks when you’re caring for a critically ill child under the age of 18 and up to 15 weeks for adults. When you’re caring for someone in end-of-life care, you can get up to 26 weeks.
When it comes to maternity benefits, you can get up to 15 weeks, with the amount maxing out at $668 per week. That said, you can also choose to go on parental benefits. With these benefits, you have two choices. You can choose 12 months or 18 months. With the 12-month parental benefit, you still get the maximum. However, with the 18-month benefit, the maximum you can get is $401 per week.
That said, when you apply, it’s important to remember that what you can get for benefits is based on your annual income. Benefits are 55% of your annual income, up to the maximum of $63,200 per year. If you make more than this, then you’ll receive the maximum benefit.
Employment Insurance United States
If you’re unemployed due to no fault of your own in the US, then you could be entitled to some benefits through Unemployment Insurance through the United States Department of Labour. This program works differently from the Canadian EI program.
In the US, the Unemployment Insurance program is a joint state-federal program that provides benefits to workers. That said, each state has their own separate program with their own eligibility requirements. They all follow the same federal guidelines, though.
The general requirements include:
- Being unemployed by no fault of your own, due to a lack of available work
- Meeting your state work and wage requirements
- Meeting any additional state requirements
Unlike Canada, the US doesn’t offer any sickness, caregiving or maternity benefits through their unemployment program. You can get up to 12 weeks through the Family and Medical Leave Act for certain sickness situations. Any maternity leave benefits are provided through the employer if they offer them.
How Do You Compare Costs Across Currencies?
The simplest way to compare costs and consumer price index differences across currencies is to use the purchasing power parity. This theory states that exchange rates are in equilibrium when an identical basket of goods costs the same in both currencies. While this theory still accounts for the exchange rate impact, it also avoids doing a complex currency conversion when comparing. Some examples of this are the Big Mac Index and the Numbeo comparison.
The Country With the Cheaper Childcare
When we look at childcare costs comparison between the US and Canada, we see that daycare fees in Canada are cheaper than in the US. This is largely due to the $10 a day subsidized fee for regulated childcare. There is no price cap for childcare in the US, making it significantly more expensive.
What is the Actual Cost of US Health Insurance?
When you’re comparing the costs of health care in the US versus Canada, Canada is significantly less than the US due to universal health care. In the US, many choose to help cover the cost of their healthcare using health insurance.
For the average healthcare plan, the cost is around $625 per month. When it comes to the out-of-pocket medical maximum, it’s $10,600 for individuals and $21,200. This can help with hospital costs as well as prescription drug costs.
Even though the $625 is the average amount, this can be more or less dependent on:
- deductibles and copays
- employer-sponsored coverage
- Medicare eligibility
- Medicaid programs
- Social security benefits
Are Groceries More Expensive in Canada?
Overall, groceries seem to be generally higher than those in the US. However, the exact item and exchange rate make a large difference. In fact, packaged food in both Canada and the US is very similarly priced. However, eggs, dairy, produce and poultry are much more expensive in Canada. This has a lot to do with the dairy supply management system as well as the other supply management systems.
With a simple grocery basket comparison, the consensus is that groceries do cost less in the US. Another factor that impacts this is the fact that there is more grocery store competition in the US. In Canada, there isn’t a lot of variety in stores, which reduces the amount of competition that there is.
How Easy is it for Canadians to Work in the US?
Due to specialized trade agreements, it’s much easier for Canadians to work in the US than for those from other countries. The fastest and easiest option is the TN Visa. If you work in one of 64 designated professions, you can apply directly at a US port of entry with a job offer letter. You can usually get approved on the same day.
If you choose to stay in the US after your work permit, then you will have to go through the green card process. This is more permanent than just meeting the work permit requirements and can even lead to dual citizenship.
If you just want to stay in the US for a portion of the year, you need to meet the snowbird residency rules. This means that you can generally stay in the US for up to 6 months without a visa. You can also continue with cross-border tax filing since you won’t be required to file in the US. That said, you do need to go through the IRS Substantial Presence Test to avoid being classified as a US citizen.
RRSPs vs. 401 (k) s and IRAs
All three of these options are retirement accounts, but they work a bit differently. RRSPs, for starters, are Canadian and defer the tax you pay until you retire. You have a maximum limit you can put in every year and there are penalties when you go over.
401 (k)s are employer-sponsored in the US and have a flat contribution limit every year. Any unused room with these accounts can’t be carried over like it can with an RRSP. There’s also a 10% penalty if you withdraw before the age of 59.5. When you look at 401 (k) versus RRSP, RRSPs are more flexible because they can be individual or with an employer.
IRA accounts in the US are individual retirement accounts. They have a lower annual limit than 401 (k)s, and the limit does not increase from year to year. If you use it before the age of 59.5, there is a 10% penalty.
States in the US That Don’t Have Income Taxes
In the US, there are 9 states that do not have income taxes. These are:
- Alaska
- Florida
- Nevada
- New Hamshire
- South Dakota
- Tennese
- Texas
- Washington
- Wyoming
It’s important to note that these are state income-tax-free states, not tax-free states. There’s still a sales tax by state. Some of these states still have capital gains treatment, and there are also estate tax differences.
Filing Income Taxes,s Cross-Border and Departure Taxes
When you leave Canada, you’re required to file a part-year Canadian T1 tax return that records your worldwide income up to your departure date. That is also commonly known as a departure tax. Certain items like RRSPs, Canadian real estate, cash and personal items under $10,000 are exempt from this tax. This is generally due by April 30 of the year after you move.
Retirement and Long-Term Care Costs in the US Vs Canada
Doing retirement costs comparisons between the US and Canada shows that it’s actually more expensive in the US. This is the same with long-term care costs. A large part of this is the costs of healthcare. Even with Medicare, many medical costs are not covered. The universal health care in Canada covers a majority of these costs.
When it comes to long-term care costs, there are more subsidized options in Canada. The non-subsized options are often more affordable than those in the US, too. In Canada, they can go as high as $5,000 per month, whereas the costs can be around $10,900 per month in the US.
Final Thoughts
When it comes to comparing costs from the US to Canada, there are so many different costs to consider, including:
- Post-secondary tuition fees
- Student loan balances
- Gasoline price comparisons
- Electricity rates
- Home heating costs
- Internet and mobile plan pricing (cell phone bill comparisons)
- Alcohol pricing differences
- Vehicle purchase prices
- Auto insurance by state
- Public transit availability
- Commute times
- Crime rate comparisons
- Paid sick leave
- Statutory holidays
- Unionization rates
- Minimum wage comparisons
- Life expectancy
- Moving expenses
All of these things will impact not just your cost of living, but your overall quality of life as well. This is also something that you should factor in when deciding where you want to live.
