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Is Canada More Expensive Than the U.S.? A Cost Comparison

Canada is a top immigration destination because of the nation’s efforts to attract talented individuals worldwide. The government wants these people to make a life in Canada so they can contribute to the value of the country’s socio-economic life.

This push for new immigrants led to Canada’s prosperity over the years. Now, citizens and permanent residents share some of the world’s highest living standards.

This raises the country’s profile among prospective immigrants looking to make a new life in North America. A prominent question this creates is whether the cost of living in Canada is affordable to maintain such a high quality of life.

When it comes to the top country to relocate, Canada stands on top alongside the U.S., but this also comes with more questions. One such query is whether Canada is more expensive than the U.S.

To find out, we’re going to closely examine the cost of living in Canada vs. the U.S..

Housing Costs

The housing costs between both nations are significant in answering the question: is Canada is more expensive than the U.S.? When it comes to the average rent costs in Canada, rent prices in the U.S. are 25.25% higher.

In large cities, the housing costs in Canada are steep. Average rent for a one-bedroom apartment in Toronto is  $1,850 per month, whereas Vancouver renters would spend approximately $2,034.

While Canadians may have lower rent compared to the U.S., the cost of home ownership is typically 7.4% higher, making buying a home in America easier.

Healthcare Costs

People in America pay more for healthcare than those in Canada, and they can also incur unexpected or sudden costs. In the U.S., various private insurers have different reimbursement rules, copays, and deductibles.

Alternatively, all Canadians have access to a publicly funded program. All funding and payments for this program come from the Canadian federal government.

The average healthcare costs in the U.S. are more expensive than in Canada. Americans on average pay approximately $12,914 per person, whereas Canadians pay approximately $6,500 per person.

Grocery Costs

The cost of food plays an essential role in the overall costs of living in Canada and the U.S. When comparing grocery costs, Canadian prices can be slightly higher than those in America.

For many people, however, this difference is slim. If we compare grocery shopping in Edmonton, Alberta, with prices in Rochester, New York, food can be up to 17% cheaper in Edmonton.

As with anywhere, seasonal produce and import fees can affect these prices.

Transportation Costs

Transportation expenses can vary depending on factors such as gas prices and public transit fares. In Canada, the cost of gas tends to be higher than in the U.S. because of taxes and a weaker Canadian dollar.

Gas prices are approximately 17% more expensive in Canada, but buying a car in the U.S. can be up to 31.7% more. The added expenses associated with owning your car, like insurance and maintenance, are generally the same in both countries.

When considering public transportation, many major cities in Canada have extensive public transit systems. A single ticket on public transit can be around 15% in Vancouver compared to Seattle. You can get significant savings when buying monthly passes, making Canada’s public transit more budget-friendly.

Taxation Costs

Personal Income Tax

The personal income tax in both countries is based on different premises and reflects different factors. Using the average data of Canada and the U.S. can be problematic because wealth inequality skews the data on both ends.

For example, lower-income Canadians typically pay less taxes than lower-income Americans. However, wealthy Americans are better off than the wealthy population in Canada.

Federal Income Taxes

Federal income tax brackets in the U.S. range from 10% to 37%. In Canada, they range from 15% to 33%.

The 10% tax bracket is for Americans with an income of $11,600 or less. This jumps to 12% when earning more than $11,600 and 22% for anyone earning more than $47,150. Canadians pay 15% in federal taxes on income up to $55,867 in Canadian dollars.

State vs. Provincial Income Taxes

Comparing the state and provincial taxes throughout each country can be problematic. Each state in the U.S. has its own tax laws regarding deductions and credits. Some states don’t have any state income tax, but all Canadian provinces and each territory implement an income tax.

Conclusion

After considering all these factors, on average, it’s cheaper to live in Canada than it is in the U.S. If you can quickly calculate currency and unit conversions that come with calculating these costs, most things are cheaper in Canada.

Of course after knowing all of this, there are some things that are expensive in Canada compared to the U.S. such as gas, food, and some taxes. There are also some areas in Canada that are more expensive to live in than parts of the U.S.

However, with a birds-eye view of everything put together, Canada is a more affordable option.