Where high earners lose the most to taxes and cost of living
The San Francisco skyline at dusk.
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 year. 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.
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.
- 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 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 the lowest effective tax rates on $250K 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
A table listing U.S. cities according to their purchasing power, accounting for taxes and the cost of living.
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 year.
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 million.
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 Texas.
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 city.
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 $200,000.
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 $200,000.
Where the Real Value of a $250k Salary is Lowest
A map showing the 10 U.S. cities where $250,000 is worth the most after taxes and cost-of-living adjustments.
- 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
A scatterplot chart comparing the taxes and cost of living in various U.S. cities.
This study 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. The study 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.