What Is The Cost Of Living In Kentucky Vs. California?

Jessica Stone
by Jessica Stone

While California has long been considered a dream place to live for many people, as of 2021, more Californians than ever before are leaving the state. Despite is breathtaking coastline, pleasant year-round weather, and employment opportunities, California is known for being expensive.

For this reason, many are opting to move to Kentucky from California to enjoy the state’s cheaper taxes, minimal traffic, conservative views, and overall lower cost of living. Kentucky also boasts a wonderful collection of natural attractions and parks, including the world’s longest cave system – Mammoth Cave National Park. But, when you compare Kentucky and California, how do these two states stack up in terms of cost of living?

The cost of living index in Kentucky is just 83.6, meaning it is about 16% more affordable to live in Idaho than the national average (100). California, on the other hand, has a cost of living index of 149.9, so it is significantly more expensive than both Kentucky and the national average. Kentucky’s median home price is $165,900, which is close to 76% more affordable than the national average of $291,700. Meanwhile, the median home price in California is $684,800 – a staggering 313% higher than Kentucky.

Aside from median housing prices, let’s explore how the cost of living compares in Kentucky vs. California.

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Housing Market in Kentucky vs. California

When you consider the fact that the median home price in Kentucky is $165,900, it is considerably more affordable to buy a home here than in California. You will also be paying well below the national average. In some cases, you may end up paying quadruple the price for a home in California with the state’s median income approaching $700,000.

A combination of low inventory and slowly climbing mortgage interest rates is influencing a sales boom in Kentucky’s housing market. The demand for homes is widespread, with multiple offers rolling in and houses spending very few days on the market. While the median home price in Kentucky is around $170,000, the statewide average home price has been over $200K for twelve consecutive months.

Although buyers are keeping a close eye on rising mortgage rates, there is still a major demand for properties. Since the start of the pandemic, real estate values have increased by around 25 percent across the nation. While it may be the ideal time to sell a home in both Kentucky and California, competition is stiff and asking prices are higher than normal.

California has been experiencing an affordable housing crisis for many years, which was only exacerbated by the pandemic. This has caused more Californians than ever to leave the state in search of more affordable housing, with many making their way to Kentucky. Although home prices are up in Kentucky, it is still almost four times cheaper to buy a home in Kentucky than California.

Home Prices in Kentucky vs. California Comparison

Median home prices ultimately come down to the specific city and county that you live in a particular state, and this is the case for both Kentucky and California. The table below highlights some of the major cities across Kentucky and California, along with their associated median home prices:

City Median Home Price
Los Angeles, CA$883,400
San Francisco, CA$1,471,200
San Diego, CA$812,100
Louisville, KY$206,900
Lexington, KY$238,800
Florence, KY$225,900

As is evident in the table above, more affordable housing is a major advantage to living in Kentucky over California. Generally speaking, the price that you pay for a home in Kentucky (regardless of what city you live in) will be below the national average. The opposite is true for California, as no matter where you settle in the state you’ll likely pay well above the national average for a home.

Rent Prices in Kentucky vs. California

There are twenty-one states in the country with average rents below $1,000 a month. With an average monthly rent of just $763, Kentucky has the fourth-lowest rate in the country. Though, there are cities in Kentucky that have average rental prices above $1,000 per month – particularly the major cities like Louisville and Lexington.

States with lower rental rents tend to have lower costs of living, and this rings true for Kentucky. With that said, examine the following table for the average rent in some of the various cities across the state of Kentucky:

City Average Rent
Louisville, KY$1,059
Lexington, KY$1,028
Florence, KY$1,034
Covington, KY$1,172
Jeffersonville, KY$938
Ft. Mitchell, KY$881

By contrast, rental rates are usually higher in the states that have higher incomes. The states with the top five highest average rents in the U.S are also among the top ten highest-earning states. With a statewide average rent of $1,503, California has the second-highest rent in the country. Though, like Kentucky, rental prices vary based on where you live in the state. Some cities in California – such as San Francisco – have the highest recorded average rental rates in the country.

Examine the following table for a more detailed look at the average rental prices you can expect in some of California’s major cities:

City Average Rent
Los Angeles, CA$2,518
San Francisco, CA$3,102
San Diego, CA$2,433
Long Beach, CA$2,333
Santa Clarita, CA$2,306
San Bernardino, CA$1,575

Taxes in Kentucky vs. California

There are some noteworthy differences between the taxes in Kentucky versus the taxes in California, described in detail below.

State Income Tax

Instead of having a progressive tax system that involves higher rates for higher income levels, Kentucky has a flat income tax. Regardless of your income, the state income tax that you pay in Kentucky is 5%. Before 2018, the state had income tax rates ranging from 2% to as much as 6%. Another unique aspect of Kentucky’s tax system is that the state has local income tax rates that are collected by both counties and cities. This local income tax ranges from 0.01% to 2.50% of residential incomes.

California, on the other hand, has a progressive state income tax. The state has ten income tax brackets total, ranging from 1% for the lowest income earners to 13.3% for the highest income earners. California’s top marginal rate is the highest in the nation, but only applies to those that make over $1 million in taxable income.

Sales Tax

Because of Kentucky’s local occupational tax system, there are no local sales tax rates in the state. This means that the state’s 6% sales tax rate is the only sales tax you’ll pay, regardless of where you live in Kentucky. However, most goods and services in Kentucky are subject to this rate.

California also collects a sales tax on goods and services purchased in the state. The state is known for having the highest minimum sales tax rate in the country, at 7.25%. Unlike Kentucky, California does collect additional city and county sales taxes. For this reason, most cities in California have much higher sales taxes than the base rate. For example, the sales tax rate in Los Angeles County is 9.50%, but the sales tax rate in Glendale (located in Los Angeles County) is 10.25%.

Property Tax

Kentucky has some of the lowest property tax rates in the country. Homeowners pay an average effective property tax rate of 0.83% (annual taxes as the percentage of their home value). However, this rate may be significantly lower or higher depending on where you live in Kentucky. For example, county rates range from as much as 1.17% in Campbell County to as low as 0.51% in Carter County.

As far as property taxes go in California, the state has an average effective rate of just 0.73%. This is lower than both Kentucky and the national average of 1.07%. Passed in 1978, Proposition 13 established the maximum allowable property tax rate in California at 1% and also limited the increase in assessed home value to 2% each year. This law has helped keep property taxes in California below the national average.

Taxes in Kentucky vs. California Comparison

StateIncome TaxSales TaxProperty Tax
Kentucky5.00% (state income tax)
0.01% – 2.50% (local income tax)
6.0%0.83% (average effective rate)
California1% – 13.3%7.25% – 10.50%0.73% (average effective rate)

Transportation Costs in Kentucky vs. California

Another important factor to consider when determining the cost of living in Kentucky vs. California is transportation costs. These costs include expenses such as gas prices, new vehicle purchase prices, public transit passes, bus fares, and additional public transportation costs. The transportation costs in Kentucky are about 11% lower than the national average, likely due to the substantially more affordable gas prices.

Additionally, with California’s transportation cost index of 133.1 and Kentucky’s transportation cost index of 89.1, these expenses are almost 50% more in California compared to Kentucky.

Cost FactorKentuckyCalifornia
Gallon of gas$2.35$3.48
Monthly public transit pass$40.60$67.11
Taxi trip in downtown (approx. five miles)$13.08$17.42
New Volkswagen Golf$21,074$23,327

Entertainment & Miscellaneous Costs in Kentucky vs. California

Cost FactorAverage Price in KentuckyAverage Price in California
Monthly local gym membership$27.04$47.20
Movie ticket$10.42$12.93
Pack of cigarettes$5.73$9.22
Domestic beer (1 pint)$3.50$5.83
Cappuccino (mid-range area)$3.99$4.39
Pair of running shoes$76.90$77.14
Fast food combo meal$6.67$8.29

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Kentucky vs. California: Which is More Expensive?

When you consider cost of living index, Kentucky is below the national average and California is almost 50% higher. However, when you compare these two states together, Kentucky is about 44% cheaper to live in than California. The cost savings in Kentucky is contributed to lower utilities, housing, transportation, healthcare, and food and grocery costs.

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Jessica Stone
Jessica Stone

Jessica considers herself a home improvement and design enthusiast. She grew up surrounded by constant home improvement projects and owes most of what she knows to helping her dad renovate her childhood home. Being a Los Angeles resident, Jessica spends a lot of her time looking for her next DIY project and sharing her love for home design.

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