By Veeno Dewan
The debate over whether it is cheaper to live in Canada or the United States has continued since Canada formally became the Dominion of Canada in 1867. Comparing the cost of living in the U.S. versus Canada is challenging due to many variables and contradictions. This becomes especially evident when looking at differences in areas such as taxation, housing, healthcare, education, consumer goods, the economy, and transportation. These systems are organized differently in each country, with each yielding unique trade-offs, advantages, and disadvantages.
Areas where Canada is cheaper.
• Healthcare and Childcare:
The clear winner here is Canada, with its universal, taxpayer-funded healthcare system run by the government. Canadian taxpayers support a free-at-the-point-of-service healthcare system. There are no co-pays or deductibles for basic medical services, unlike in the US. In fact, America has the highest healthcare costs in the world, taking up a larger share of its GDP than other nations. In Canada, while some medical services require payment, most are free.
In contrast, America’s healthcare costs are significantly higher, with the average person spending $12,914. Canadian residents, by comparison, pay an average of $6,500. US citizens are also more likely than Canadians to pay out of pocket for healthcare.
Canada provides much more affordable childcare options than the US, with many provinces offering subsidized programs. The ultimate goal is to have a low nominal fee for all children.
• Education:
Public universities in Canada are more affordable for domestic students than many of their U.S. counterparts, especially private universities. The U.S. leads the world in the most expensive university costs, while Canada ranks lower globally.
Where is the US cheaper?
• Housing:
The US is more affordable. Shelter costs tend to be significantly higher in major Canadian cities compared to many American cities, especially when purchasing a home. The average property in Canada is about 19% more expensive than US residences. (2025 figures) British Columbia is the most expensive Canadian province for buying a home, while California is the priciest US state for homeowners. However, although housing is cheaper in the US, property taxes in many parts of America are higher than in Canadian cities. Additionally, rental rates are often lower in the US, depending on the location, with larger cities typically being more costly than in Canada.
• Taxes:
Taxes are generally lower in the US, but the costs of private healthcare can offset this. Canada’s top federal tax rate is 33%, while the wealthiest American citizens can face rates as high as 37%. However, the US offers significantly more tax benefits than Canada for both individuals and businesses. A wide range of US tax deductions, exclusions, and credits can lower the taxable income or directly reduce the final tax owed, helping individuals and companies save money.
• Consumer goods, Gasoline, and Groceries:
Because of its larger economy and population, the US has lower prices for many groceries, consumer goods, gasoline, and utilities. Vehicles, air travel, and general services are also more affordable in the US due to its population density. This encourages competition, reduces prices, and benefits consumers.
In contrast, Canada’s smaller population, vast distances between dispersed towns and cities, result in higher prices for groceries, consumer goods, and transportation. Canada also imports fruit, vegetables, and other groceries from the US, which further increases the cost of living.
Regarding gasoline, the US has several refineries and supply chains that help keep prices low. Canada imposes various taxes and levies on fuel, making it more expensive. In particular, British Columbia has the highest gasoline prices in North America.
Consumer goods are also more affordable in the US, where a larger population creates a vast domestic market. Additionally, the availability and variety of consumer goods are much greater in the United States than in Canada due to economies of scale. There is also a wider selection and lower prices when buying vehicles in the US.
Tangibles that make the difference. What to consider.
The average cost of living in Canada compared to the US varies based on several factors. In most cases, it’s about 10% more expensive to live in the US, despite its lower tax environment. Lower taxes have a trade-off: US citizens often spend more on private health insurance and pay more out-of-pocket for medical treatment and many social services. This likely offsets any savings from lower taxes. Other factors influencing whether the US or Canada is cheaper to live in include:
• Income:
Average salaries in the US are higher than in Canada. This can offset the higher cost of living in the US and might boost purchasing power for some. As of 2025, the monthly net salary (after tax) in Canada is C$3,973, while in the US, it is C$5,926. (According to Numbeo.com.)
• Location (Where you live):
The overall cost of living also varies greatly across different regions or cities within each country. Major urban centers in both countries, such as New York City in the US and Toronto or Vancouver in Canada, tend to have higher living costs compared to smaller cities or rural areas.
• Lifestyle:
Along with income, lifestyle choices also influence which country is more affordable: the US or Canada. What you value most will shape your overall cost of living. For example, if you prioritize public services and social programs, Canada will likely be cheaper. If you value higher salaries and private services, the US might be a better option.
Sources: Government of Canada, Statistics Canada. Canadian Consumer Price Index, Goldenvisa services, Investopedia, Janine Rogan, Vikki Velasquez, Swanwealth, Living in Canada vs USA, Numbeo.com.
