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

While California has consistently been a dream location to live for numerous people, it is one of the top states in the U.S. that is losing a great number of residents. Though, as people leave California, more people arrive. But, for those that are leaving, where are they heading to? One of the top states for relocation is Nevada, highly desired for its lower taxes, more affordable housing prices, and growing job market. However, how do these two states stack up in terms of cost of living?

The cost of living index in Nevada is 110.5, meaning it is nearly 11% more expensive to live in Nevada than the national average (100). California, on the other hand, has a cost of living index of 149.9, so it is quite a bit more expensive than both Nevada and the national average. The median price of a home in Nevada is $358,400, which is about 23% higher than the national average of $291,700. Meanwhile, the median home price in California is $684,800 – a staggering 91% more than Nevada.

Aside from median housing prices, let’s take a look at how the cost of living compares in Nevada vs. California.

When you consider the fact that the median home price in Nevada is around $358,000, it is significantly more affordable to buy a home here than in California. In fact, you’re looking at spending almost double the amount for a home in California, with a median home price of close to $700,000.

In the last couple years, the housing market in Nevada has tightened and home prices are rising. This has resulted in those with deeper pockets to not only offer cash for homes, but often offer to pay well above a home’s listing price. With a limited inventory, competition has increased as well and regardless, the situation spells bad news for entry-level buyers. Despite the struggle to secure a home in Nevada, prices still remain more affordable than California.

The median home price in California hit a record high in May of 2021 and the state is still in an affordable housing crisis. For this reason, California residents are leaving urban areas for more rural locations and even heading to Nevada in search of cheaper homes.

It’s important to note that most of Nevada’s population lives in two cities: Las Vegas and Reno. The total population of Nevada state is around three million people, will approximately two million in Las Vegas and around 500,000 people residing in Reno. The remainder of the population is scattered throughout small towns across the state.

Though, the median home price even in Las Vegas, the most populous city in Nevada, is only $334,000. Whereas, in Los Angeles, the median home price is almost three times higher – over $880,000. While housing prices in Nevada may be higher than other states in the U.S., it is still almost 100 percent more affordable to buy a home in Nevada than California.

With a statewide average rent of $1,107, Nevada is one of the more affordable states for renters. However, your actual rate will depend on the city you live in Nevada and as the state continues to grow, certain areas are seeing rental prices steadily rise.

The location with the most expensive rent in Nevada is a small section of North Las Vegas, with a median rent of $2,144. Whereas, the cheapest rent in the state is in Schurz, Nevada outside of Reno – at a median monthly rent of $324.

With that said, refer to the following table for the average rent in some of the major cities across Nevada:

Taxpayers in Nevada get to enjoy one of the most tax-friendly situations in the nation. Whether you’re a doctor, teacher, real estate agent, or entertainer, you do not have to pay any state taxes on your earnings in Nevada. In short, Nevada has no state incomes tax. While you’ll still have to pay federal income taxes, wages, inheritances, winnings, and capital gains are all devoid of income taxes at the state level.

California, on the other hand, has what’s known as a progressive income tax. This means that lower earners will pay lower rates and higher earners will pay higher rates. The state has ten total income tax brackets, beginning at 1% and increasing to a top marginal rate of 13.3%. California’s top marginal rate is the highest in the nation, though it only pertains to taxpayers that make more than $1 million of taxable income.

The statewide sales tax rate in Nevada is 6.85%, the seventh-highest in the country. However, when you take all of the local sales tax rates into account this can raise the sales tax to as much as 8.375% depending on the location. For example, the sales tax in Clark County is 8.375% because of the additional 1.525% county rate.

Sales tax in California works similarly to Nevada but they have the highest minimum sales tax rate in the nation, at 7.25%. Though, only a quarter of California’s cities have this sales tax rate. Instead, most have much higher rates because of the numerous additional county and city sales taxes. For instance, Los Angeles County’s sales tax is 9.5% but if you head over to Culver City, the sales tax rises to 10.25%.

Nevada property taxes vary based on the home’s assessed value, as well as the local tax rates. The average effective rate in Nevada is 0.53%, which means that average homeowner pays annual property taxes that are equal to 0.53% of their home’s market value. Of course, your rate will vary based on your county, as Nevada’s average county rates range from 0.44% to as much as 1.04%. With these numbers in mind, the median amount of property taxes paid in the state of Nevada is approximately $1,695.

As far as California property taxes go, the average effective rate is 0.73%. This means that the average homeowner will pay property taxes that are equal to 0.73% of their home’s market value. Proposition 13 was passed in 1978 which set the maximum allowable property tax in the state at 1% and also limited increases in assessed value to 2% each year. This law has helped keep California property taxes lower than the national average.

Whether you live in Nevada or California, transportation expenses are another factor that influences cost of living. Transportation expenses include things like gas prices, vehicle purchase prices, bus fares, and other public transportation costs. Nevada’s transportation costs are about 17% higher than the national average.

However, with California’s transportation cost index of 133.1 and Nevada’s transportation cost index of 116.7, these expenses are more affordable in Nevada than California.

The median household income in Nevada is $55,434, which is pretty on par with the U.S. median household income of $57,652. When compared to California, however, California residents earn about 21% more than Nevada residents – with California’s median household income of $67,169.

However, the unemployment rate in California is higher than Nevada. California’s unemployment rate is 8.2%, while Nevada’s unemployment rate is 7.6%. Regardless, both states have rates that are far above the national average of 6.0%.