Expat cost of Living in California and living guide 2021

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What is the expat cost of living in California? That will be the topic of this article alongside discussing other aspects such as taxes.

Nothing written here should be considered formal tax, financial, legal or any other kind of advice advice, and is for entertainment purposes only.

Nevertheless, we hope the information is helpful for you, if you are planning to live in California.

For any questions, or if you are looking to invest as an expat, you can contact me using  this form, or use the WhatsApp function below.

The best time to review your situation is often when you are moving to a new country.


Expat cost of Living in California and living guide 2021 4

When a person moves to another country, there are certain important aspects that should be taken into consideration such as Banking, Taxation, Crime Rate, Salaries, Health Care, Education, and most importantly, the Cost of Living.

Just so that expats don’t have to search for this type of information on various websites, we are providing all the above-mentioned data in this article. 


There is no specific requirement of describing California’s currency, as almost all of us are familiar with the ‘United States Dollar’, which is represented as ‘USD’ or simply ‘$’. 

The frequently used banknotes in California are:

  • $1
  • $5
  • $10
  • $20
  • $50
  • $100

Sometimes, people might also come across with some of the rarely used banknotes such as ‘$2’ (still printed), ‘$500’, ‘$1,000’, ‘$5,000’, and ‘$10,000’ (discontinued, yet a legal tender). 

Additionally, the $100,000 is never circulated among the general public but is only used for intragovernmental transactions.

The coins that we can see while living in California are:

  • 1¢ (1 cent)
  • 10¢
  • 25¢

We can also come across some rare coins and commemorative coins such as 50¢, $1, ½¢, 2¢, $2.50, $3, $5, $10, and $20.


Instead of just looking at the banking process and operational procedure in California, we will have a look at the overall banking data of the United States of America.

Anyhow, we will discuss some of the best bank accounts available for individuals in 2021, depending on their particular banking needs.

As we know, opening a bank account must be one of the major financial aspects, that should be taken care of when moving over to another country. 

The USA happens to be the home for some of the exquisite as well as large banks in the world. There are smaller banks too. 

Opening a bank account – Now, we will discuss the process of opening a bank account in the United States as an expat/non-resident. 

Just to mention it before itself, the process of opening a bank account might be a bit hard for the non-residents, in contrast to the process for residents. Nonetheless, it is not that much complicated either, moreover, it is a straightforward process.

In simple terms, all you need to do is gather the necessary documentation and approach the branch of a selected bank. By doing so, you can be able to open a bank account within a timespan of as low as a few minutes.

In general, the types of banks that most people see while living in the USA are mentioned below.

  • Retail Banks
  • Commercial Banks
  • Credit Unions
  • Savings and Loans Banks

Retail banks provide financial/banking services for individuals as well as small businesses. 

Commercial banks are the specific banks that offer services to companies and the general public.

Credit unions are non-profit financial institutions, which allow individuals to borrow money at comparatively lower interest rates.

Finally, Savings and Loans banks offer services related to various types of savings accounts and home loans.

When you decide to deposit your money in a financial institution in the United States, it is suggested that you make sure that your preferred option is insured by FDIC (Financial Deposit Insurance Corporation) or NCUA (National Credit Union Administration). 

When the financial institution selected by you is insured by any one of these, your account would be offered protection for an amount of up to $250,000.

Even though the process of opening a bank account is rather simple for non-residents like we discussed, some banks might require additional documents when compared to what is usually necessary.

Moreover, opening an account online can be a real issue for expats in the US. This is due to the requirement of particular identification and immigration details. 

The documents that are required for this purpose are not standard, and therefore, are hard to be processed online. In some cases, because of this issue, the online request for opening a bank account can be denied.

Even if the documents are processed easily, the time taken for opening an account online might take more time. Hence, it is better to open a bank account by physically approaching a bank, when you are an expat.

The documents required by non-residents for opening a bank account in the United States are as follows:

  • Identity Proof
  • Address Proof
  • Social Security Number
  • Taxpayer Identification Number

Some banks might even ask individuals to provide the details regarding their source of income. This can be done by submitting an employment contract or other documents similar to that.

Each bank has its own set of rules and regulations, therefore, it is better to get familiar with all the details by contacting the bank prior to opening an account. 

Best Banks in California (2021) – Given below are some of the best banks available in California in 2021, depending on the specific banking needs of an individual.

  • ‘BBVA Compass Bank’ for the best free checking account.
  • ‘Tri Counties Bank’ for best low checking balance.
  • ‘Wells Fargo’ for having the best branch access and ATM access.
  • ‘Bank of Hope’ for best savings accounts.
  • ‘Citizens Business Bank’, which is best for small businesses.


California State Income Tax – The income tax rates in California on the basis of the taxable income are provided below.

Taxable Income MarginTax Rate (2021)
Up to $8,9321% of the income
$8,933 to $21,1752% of the amount exceeding $8,932 plus $89.32
$21,176 to $33,4214% of the amount exceeding $21,175 plus $334.18
$33,422 to $46,3946% of the amount exceeding $33,421 plus $824.02
$46,395 to $58,6348% of the amount exceeding $46,394 plus $1,602.40
$58,635 to $299,5089.3% of the amount exceeding $$58,634 plus $2,581.60
$299,509 to $359,40710.3% of the amount exceeding $299,508 plus $24,982.88
$359,408 to $599,01211.3% of the amount exceeding $359,407 plus $31,152.48
More than or equal to $599,01312.3% of the amount exceeding $599,012 plus $58,227.85

There is also mental service tax with a tax rate of 1% on the taxable income of more than $1 million. 

People, who are residents, part-year residents, or non-residents must file a California state tax return when they fall under the criteria given below.

  • People who are required to file a federal tax return.
  • People who earn income from a source based in California during that particular tax year.
  • People having an income, which is more than the thresholds for gross income and adjusted gross income, as determined by the state.

Tax Residency (California state tax) – there are three types of scenarios, which determine you as a tax resident for the California state tax. These scenarios will help in letting you know the details regarding the portion of income that’ll be taxed.

  • Residents:

Residents would be taxed on all types of income, whether it is from the sources outside of California or inside the state.

People are considered as tax residents when they meet the following criteria in California:

  • Individuals that spend more than 9 months in California in a specific tax year.
  • Individuals, who have been assigned to work in the state of California for a long period or unspecified period.
  • Individuals who want to explore California, who do not have any immediate plans for leaving the state.
  • Individuals, who are in California for an unspecified period of time in order to recover from an illness.

Individuals, who were residents of California and went to other states for pursuing education, won’t become non-residents automatically. Similar to this, a student from any other state won’t just become a resident of California by attending school or college in California.

  • Part-Year Residents:

Individuals would be considered as part-year residents if they become non-resident for a specific period in a particular tax year. This would apply to the people who relocated to California from any other state.

People who are part-year residents are expected to pay the California state tax for the time period, which they spent in California. 

Along with that, individuals should also pay the state income tax on the income that has been derived from the sources in California, while on a non-resident basis.

  • Non-Residents:

Non-Residents would be subject to the California State tax on the income obtained with the help of sources located in California. 

To be precise, people who don’t even live in California would have to pay the California state tax on the following types of sources in California.

  • Services offered in California.
  • Rent obtained from the real estate properties, which are located in California.
  • Sale or transfer of a real estate property, which is in California.
  • Income acquired from a business, trade, or profession existing in California.

People would be considered as non-residents when they move to any other state on the basis of an employment contract. For this, they should not be present in California for a time period of 546 consecutive days.

This exception will be denied in the cases described below:

  • when a person has more than $200,000 worth of intangible income during the time when the employment contract was going on. 
  • When a person stays for more than 45 days in California during that employment contract.
  • When the government thinks that a person is not present in order to avoid taxation.

Deductions – California’s standard amount for deduction is as follows:

  • $4,601 for single people
  • $9,202 for married people or people in a registered domestic partnership, or people filing their taxes jointly. This can also apply to a person who is the head of his/her family or is a widow/widower.

On a federal level, the majority of deductions are limited, or won’t be allowed in California. 

Anyhow, there is a tax exemption credit for individuals and the people depending on them, a tax exemption credit for people who are living in rented accommodation, a credit for single parents/divorced parents, and finally, for the people who have dependent parents.

California Sales Tax – The California State level sales tax, which when combined with the local sales tax can be around as high as 10.25% in some of the cities, while the average is 8.66%.

The average local sales tax rate on the other hand is around 1.41%, which can be as high as 2.5%.

California State Excise Tax – There is an additional excise tax on certain types of products in California. For example, there can be an additional 33% tax when a person buys fruits from a vending machine.

Like most other states in the US, California also has an additional tax on products such as cigarettes and gasoline. 

California Property Tax – California has some of the lowest rates when it comes to property tax, which is 0.74% as of 2020.

The maximum tax that can be levied is limited to 1% on the overall value of the property and based on anything there cannot be an increase of more than 2% compared to the previous year. 

People living in properties, which qualify as their primary residence will have a reduction of $7,000 on the taxable value.

Capital Gains Tax – This is one of the major drawbacks when it comes to paying taxes in California. 

California has the world’s second-highest capital gains tax rate, which is a combined rate of 32.3%. 

To make the situation even worse, some people might be required to pay an additional 20% of the federal long-term capital gains tax.

California Inheritance and Estate Taxes – Well, this can be a relief as there are no inheritance and estate taxes in California. 


Coming to the educational institutions located in California, there are public, NPS, and private schools.

Being one of the most populous states in the US, there are a lot of students pursuing their education in California. 

One of the main universities that gained a lot of reputation in California is the ‘University of California’, with 10 major branches. 

There are some universities and colleges such as California State University, Stanford University, Loyola Marymount University, The University of Southern California, The University of San Francisco, Santa Clara University, etc.


Most of the health insurance plans in California are regulated by the California Department of Managed Health Care (DMHC) or the California Department of Insurance (CDI).

More than one-third of the people living in California are covered by Medi-Cal, which happens to be the federal medical aid program in California, which is handled by the California Department of Health Care Services.

There are some people who even opt for private health insurance, which includes self-funded plans as well. 

Crime Rate:

California, unfortunately, isn’t one of the safest places considering the crime rate. Given below are the crime statistics and other relevant data. 

The crime rate per 1,000 residents is 27.72%, which consists of 23.31% property crimes and 4.41% violent crimes.

To give a number, on a total of 1,095,445 crimes in California, 921,114 crimes are property-related, and 174,331 crimes are violent.

As for the violent crimes in California (for 1,000 residents), murders are 0.04%, rapes are 0.37%, robberies are 1.32%, and assaults are 2.67%.


The average annual salary of an individual in California is $112,000, while the average monthly salary is around $9,300.

The lowest average annual salary is $28,200, while the highest average can be around $498,000.

It has been estimated that a person’s salary could become double their actual salary after gaining 10 years of experience in a particular field. 

However, not only in California but all over the United States, employees can expect an 8% increment rate in their salaries for every 16 months.

California has a wide variety of job opportunities for people moving there as expats. If California was a country, it would be having the world’s fifth-highest GDP, which is even higher than countries such as the UK.

Some of the significant sectors that contribute a lot to the development are trade, agriculture, and tourism. Not only that, but Southern California is known for industries such as entertainment, television, and music production.

California is also the hub for some of the world’s famous and largest tech companies such as Apple, Facebook, Google, and many more.

Even though the wages in California are significantly higher than a majority of the states in the US, these wages mean nothing considering the high amount of taxes and expensive costs of living.

Cost of Living:

By considering any of the statistics or data related to California, the cost of living is considerably higher than in many other states of the USA.

Just because of the cost of living, most people have moved out of California compared to people who have moved in. It is the first time to happen like this considering the data obtained from the past 25 years.

Housing – In March 2020, the average cost of buying a normal house in California was approximately around $600,000, which is 88% expensive compared to the national average cost, which is $320,000.

On average, the monthly rent for a double-bedroom apartment is around $1,900, which 55% higher than the country’s average of $1,200.

However, to present you with a general idea of the housing costs depending on the city, we have provided you with a table consisting of various cities and their prices.

CityBuying a House (avg)Rent (avg)
San Francisco$1,297,500$4,200
Los Angeles$816,500$2,800
San Diego$800,750$2,400

Utilities – For some of the major utilities such as electricity and phone bills, people living in California usually pay a bit higher than people living in most other states of the US pay. 

Even though we saw that Bakersfield has some of the lowest costs when it comes to prices related to Housing, they would eventually have to pay 43% higher for utilities comparing what people living in the US pay on average.

While people living in Bakersfield pay that much, people living in cities such as Orange County pay less than 6% of the national average concerning utilities.

Groceries – The costs involved with buying groceries in California are 5% to 33%v higher than the national average in the US. 

Cities such as Modesto can be the best to buy groceries as the costs are only 5% higher. Cities such as Oakland might be pricey as the cost of groceries is 33% higher.

Transportation – Transportation also costs a lot in California, i.e., 27% to 45% higher than the average transportation costs in the United States. 

The city with the lowest gas prices is Modesto while the city with the highest is San Francisco. 

Health Care – San Francisco again comes at the highest considering the transportation costs in Californian cities, which is 30% higher than the average national costs. 

The city with the lowest costs related to Health Care is Stockton, which is only 2% higher than the national average costs in the United States. 

Other Goods and Services – Some other costs involving restaurants, clothes, entertainment, etc., are also a bit higher in California. 

However, the costs of such types of goods and services can be 11% lower than the national average in some places, while it can be 33% higher than the national average in some other places.

For example, if we take Orange County, the cost of ordering a pizza is 5% higher, getting a haircut is 23% higher, and buying a shirt would cost 36% higher than most other cities in the US.

Final Word:

California can be an excellent place for people to move concerning the fact that it has some of the highest salaries, the best education system, a good healthcare system, etc.

But, however, people who want to move there must also consider the disadvantages such as higher tax rates, higher cost of living, higher crime rate, etc.

We are not saying that you shouldn’t move there keeping these factors in mind, we just want to suggest that you take all the aspects into consideration before moving there.

By doing so, you can be fully prepared on how you can deal with all the aspects of living in California, especially the negative ones.

That being said, if you are looking for advice related to your investments or want to acquire the services of a personal wealth manager, you can avail of the best financial solutions offered by us by clicking here.

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Adam is an internationally recognised author on financial matters, with over 239 million answers views on Quora.com and a widely sold book on Amazon

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