The Most Expensive American Cities For High Earners
An annual income of $250,000 won’t put you in the top 1% of earners, but it will get you close to it. That’s because only 7% of households in the United States earn $250,000 per year1. How far that income truly goes in a given city largely depends on the tax environment and cost of living of the area. For example, a $250,000 salary in uber-expensive cities like New York and San Francisco is worth less than $83,000 after accounting for taxes and the cost of living.
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To gauge how much $250,000 is actually worth in different parts of the country, SmartAsset compared the after-tax income in 76 of the largest U.S. cities and then adjusted those figures for the cost of living in each place.
Key Findings
In New York City and San Francisco, $250K is worth just short of $83,000 after factoring in taxes and cost of living. NYC, Honolulu and San Francisco offer the lowest real value of a high income salary. Residents are taxed roughly 6 percentage points more in taxes at this income level as compared to a $100,000 salary.
On average, people making $250K per year pay 34% in taxes. Meanwhile, taxpayers who make $100,000 in these 76 cities are subject to a rate that’s nearly 5 percentage points lower (29.33%).
Portland, Oregon is least favorable to high income earners. Portland has the highest increase of taxes from a $100,000 salary to a $250,000 salary. Between these salary levels, the effective tax rate jumps 7.47% to 41%.
High earners may be able to take advantage of lower tax rates by moving. In some cases, a $250K earner can be taxed less than a $100K earner. There are 21 cities where those earning $250K per year in one city have a lower tax rate than those who earn $100,000 in 35 other cities. Most of these are in places with no state income tax, including Seattle and Spokane, WA; Plano, Austin and Dallas, TX; Miami and Orlando, FL; Reno and Las Vegas, NV; and Nashville, TN.
Where $250k Goes the Furthest
1. Memphis, TN
People earning $250,000 per year in Memphis can look forward to an after-tax income of approximately $175,558. Thanks to no state income tax in Tennessee, a $250,000 salary is taxed at a rate of just 29.77%. Comparatively, those with a $100,000 salary enjoy a slightly lower tax rate of 25.48%. After factoring in the city’s cost of living, a $250,000 salary holds an estimated value of $203,663.57– highest across the 76 cities we studied.
2. El Paso, TX
A $250,000 income in El Paso is worth $200,180 after accounting for taxes and the cost of living. Like Tennessee, Texas doesn’t levy a state income tax, so a person making $250,000 per year is taxed at at rate of 29.77%. While per capita income in El Paso is $25,670, just 5% of households earn over $200,000 per year2.
3. Oklahoma City, OK
Someone making $250,000 in the capital city of Oklahoma will have $164,221 after taxes. But thanks to Oklahoma City’s low cost of living, which is nearly 17% lower than the national average, that take-home pay is actually worth $197,381. The median home value in Oklahoma City is $190,900, and only 4% of homes are valued between $500,000 and $1 million2.
4. Corpus Christi, TX
Like in El Paso, a $250,000 income in Corpus Christi is taxed at a rate of 29.77%, leaving an individual with $175,558 after taxes. But the low cost of living in this Gulf Coast city means that take-home pay is worth $196,593. That can go a long way in Corpus Christi, where the median home is valued at just $157,400 – about 20% less than a typical home in Texas2.
5. Lubbock, TX
Only 7% of households in Lubbock earn more than $200,000. After accounting for taxes and the cost of living, a $250,000 income is actually worth $196,373. Texas Tech University, Covenant Health System and the corporate headquarters of United Supermarkets are the largest employers in this West Texas city3.
6. Houston, TX
With nearly 2.3 million residents, Houston is the largest of the 10 cities at the top of our rankings. After factoring in taxes and the cost of living, an annual income of $250,000 in H-Town is actually worth $191,239. While the per capita income in Houston ($35,578) is slightly higher than the state average, 27% of households earn over $100,000 per year – 9% of whom make more than $200,0002.
7. (Tie) San Antonio, Fort Worth, Arlington, TX
A $250,000 income is worth the same amount in three Texas cities: San Antonio, Fort Worth and Arlington. After accounting for taxes and the cost of living in each place, a quarter-million-dollar income is worth $188,772.
10. Jacksonville, FL
A $250,000 income in Florida’s largest city is worth $186,169 after accounting for taxes and the cost of living. Like Tennessee and Texas, the Sunshine State doesn’t levy a state income tax. As a result, a person with a $250,000 income is subject to a 29.7% tax rate. Zooming out further, over 26% of households earn more than $100,000 per year in Jacksonville and only 5% make more than $200,0002.
Where the Real Value of a $250k Salary is Lowest
New York, NY: $82,421.28
Honolulu, HI: $82,672.04
San Francisco, CA: $82,776.26
Los Angeles, CA: $101,634.75
Long Beach, CA: $101,634.75
Washington, DC: $101,865.06
San Diego, CA: $105,151.29
Oakland, CA: $105,222.67
Boston, MA: $108,991.33
Seattle, WA: $115,346.91
Data and Methodology
For this study, we used SmartAsset’s paycheck calculator to apply taxes to an annual salary of $250,000. This online tool calculates your take-home pay per paycheck for both salary and hourly jobs after taking into account federal, state and local taxes. We then adjusted the remaining amount for the local cost of living in 76 of the largest cities in the U.S. using data from the Council for Community and Economic Research. The cost of living takes into account the price of housing, groceries, utilities, transportation, and miscellaneous goods and services. Cost of living index data is for the third quarter of 2022.
Financial Tips for Six-Figure Earners
Manage your tax liability. There are a number of tactics you can use to lower your eventual tax bill. Maxing out your 401(k) with pre-tax contributions will lower your taxable income by $22,500 in 2023. If you’re enrolled in a high deductible health plan, you’re also eligible to make a $3,850 tax-deductible contribution to a health savings account ($4,150 in 2024). Lastly, consider harvesting the losses in your investment portfolio to offset some of your capital gains.
Consider a backdoor Roth IRA. Your income may be too high to qualify for Roth contributions, but a legal loophole known as the backdoor Roth IRA allows you to work around those income limits. Simply contribute to an IRA on a pre-tax basis and then convert that account into a Roth version. You’ll have to pay income taxes on the money you convert, but those funds will grow tax-free from there. Plus, Roth accounts aren’t subject to required minimum distributions (RMDs), potentially helping you save money on taxes in retirement.
Work with a financial professional. A financial advisor can help you build a holistic financial plan that incorporates your income, savings, investments, insurance policies and more. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
1Average, Median, Top 1%, and all United States Household Income Percentiles, DQYDJ. April-March 2022
2U.S. Census Bureau, 1-Year American Community Survey, 2021.
3City of Lubbock Comprehensive Financial Report, 2022.
Questions about our study? Contact us at press@smartasset.com
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