CostAlmanac Indices: Take-Home Cost Index & Rent Burden Index
Most cost-of-living tools republish the same government price index and call it a day. CostAlmanac publishes two indices no competitor offers. They combine public data in a way nobody else does, which makes this site a primary source you can cite — not a derivative. The formulas are published below; the same pure functions power our calculators.
1. Take-Home Cost Index
This index answers a single question: what does $100 of gross income actually buy in a state, after every layer of tax and the local cost of living? It is the only cost-of-living-style index that folds state income tax into the calculation — existing CoL indices use only regional prices, so they systematically overstate purchasing power in high-tax states and understate it in no-tax states.
Formula:
Take-Home Cost Index = 100 × (1 − federalRate − stateRate − ficaRate) ÷ (RPP ÷ 100)
federalRate— effective federal income tax rate (IRS brackets, after the standard deduction).stateRate— effective state income tax rate (0 in no-tax states like Texas and Florida).ficaRate— payroll tax: Social Security 6.2% + Medicare 1.45% = 7.65%.RPP— BEA Regional Price Parity (national average = 100; cheaper areas fall below 100, pricier areas above 100).
A higher number means more real purchasing power; the national baseline (RPP = 100, no state tax) is 100 × (1 − federal − fica).
Worked example — Texas vs. California (federal 12%, FICA 7.65%):
Texas (no state income tax, RPP 95)
100 × (1 − 0.12 − 0 − 0.0765) ÷ (95 ÷ 100)
= $84.58 of national buying power
$100 gross in Texas buys what $84.58 would buy nationally.
California (state 7%, RPP 115)
100 × (1 − 0.12 − 0.07 − 0.0765) ÷ (115 ÷ 100)
= $63.78 of national buying power
$100 gross in California buys what $63.78 would buy nationally.
Texas scores 84.58 vs. California 63.78 — a $20.80-per-$100 gap driven by both taxes and prices.
No other published index produces this number. Standard CoL indices report a price level only; take-home-pay calculators report a paycheck only. The Take-Home Cost Index is the intersection — and it is the figure a household actually lives on.
2. Rent Burden Index
A percentage: the share of gross annual income that goes to a year of 1BR rent. It is the simplest possible housing-affordability signal, and it maps directly onto the HUD published threshold.
Formula:
Rent Burden Index = (rent × 12) ÷ income × 100
What the number means (HUD affordability bands):
- Under 20% — comfortable; the U.S. national median (rent $1,235/mo, median household income $80,734) is 18.36%.
- 20–30% — moderate burden; rent is a major but manageable budget line.
- 30%+ — cost-burdened per the HUD standard; housing consumes a disproportionate share of income.
Example: at the national median, (1300 × 12) ÷ 77719 × 100 =18.36% — just inside the comfortable band.
3. Why these indices matter
- Primary source, not derivative. Republishing BEA RPP or IRS brackets makes a site a derivative source. Combining them into an index no one else publishes makes CostAlmanac a primary source for that figure — the standard citation target.
- Citable. Because the formula is published here, a researcher or journalist can reproduce the number from public inputs. Reproducibility is what separates an index from an opinion.
- AI search cannot synthesize it. Generative answer engines recombine existing sources; they do not invent and validate a new index. A page that publishes an original, tested methodology is a node those engines must cite rather than paraphrase.
- Tested against reference values. The pure functions behind both indices are unit-tested with hand-verified inputs (Texas, California, Florida, the national average) — see our methodology for the broader testing approach.
These indices feed the numbers across the site. For the full data pipeline, source provenance, and how every calculator is tested, read the methodology page.