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How much buying power does a California paycheck have?

April 2, 2026

Californians sacrifice a good deal by living in a state with a sky-high cost of living that eats into generous salaries.

Is it a worthwhile trade-off?

My trusty spreadsheet attempted to gauge this buying-power debate by looking at estimates of state incomes and two key expenses — the overall cost of living and state taxes.

Let’s start with the “price parity” report from the federal Bureau of Economic Analysis. This is an annual deep dive into comparable consumer costs in each state. Unfortunately, the data takes time to create, so the latest report is for 2024.

By this math, California is the priciest place to live in the nation, with costs that run 10.7% above the American norm. Following the Golden State are Hawaii, at 10% above par, New Jersey at 8.8%, and New York at 7.9%.

Where are the U.S. bargain spots? The cost of living in Arkansas is 13.1% lower than the typical American’s cost of living. Then comes Mississippi at 13%, and Iowa and Oklahoma at 12.2% below.

And what about California’s two main economic rivals? Texas life costs 2.9% less than average, ranking No. 24. Florida? 3.4% above the norm, 10th highest.

Who’s making what

Next, ponder what bosses pay by state as measured by average per capita income in the year ended in 2025’s third quarter, also from the BEA.

California’s $89,500 income ranked third-highest among the states and was 19% above the national average of $75,500. Topping the Golden Stare were only Connecticut ($97,900) and Massachusetts ($96,000). No. 4 was Wyoming ($89,100), followed by New York ($88,100).

The lowest incomes were found in Mississippi ($54,300), West Virginia ($57,300), and New Mexico ($60,700).

Note that $71,800 in Texas ranked 26th, while $75,000 in Florida ranked 17th.

The tax man’s cut

Let’s think about the Institute on Taxation and Economic Policy tracking of tax rates, which estimates what folks across the nation pay in state and municipal levies as a share of family incomes.

This calculation shows that the middle 20% of Californians pay 10.4% of their income for state and local taxes. That’s the 20th-largest burden among states and just below the nation’s 10.5%.

The highest tax burdens were in Hawaii at 14.2%, New York at 13.3%, and Illinois at 12.8%. The smallest burdens were in Alaska at 5.4%, New Hampshire at 6.7%, and Wyoming at 7.4%

As for California’s big rivals, Texans get a 9.9% effective rate, ranking 28th, while Floridians pay 9.5%, ranking 38th.

Bottom line

Now, everyone’s personal finances are different.

Remember, this tabulation targets typical people, making typical money, with typical expenses paying typical taxes.

So contemplate my buying-power yardstick, which adjusts paydays for state-level differences in expenses and taxes.

That math added up to a common Californian getting $71,600 a year. Is that good?

Well, the Golden State ranked 13th best among the states.

However, the state’s buying power was only a slim 3% above the nation’s $69,200.

Best bets

Want to live in the most lucrative spot, by this math?

Try Wyoming. It had the highest cost/tax-adjusted income at $90,200. Then came Connecticut at $84,900 and Massachusetts at $82,800.

And avoid Mississippi. It was the nation’s bottom at $56,000, followed by West Virginia at $58,000, and Hawaii at $58,700.

Note that the big rivals trailed California. The $68,300 in Texas ranked No. 24. Florida? $68,000 was 25th.

You could argue that California’s status as the nation’s most populous state suggests that 39 million people think the hefty paychecks are worth the lofty costs.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Orange County Register

News Details

How much buying power does a California paycheck have?

Who’s making what

The tax man’s cut

Bottom line

Best bets

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