Top 15 Cities Where High Earners Lose Major Buying Power
Start Slideshow
High earners make up a small segment of U.S. households — just 7% earn $250,000 per year — but how far that income stretches largely depends on the tax environment and cost of living of a particular city, according to new research from SmartAsset.
In a couple of large cities, high-earning households still have more than $200,000 to spend after taxes and cost of living are taken into account. This is roughly three times the purchasing power of high-earners in the most expensive cities. It will come as no surprise that the most expensive cities are located on the East and West Coasts.
SmartAsset researchers found that people living in the 76 cities they studied who make $250,000 per year pay 34%, on average, in taxes. Meanwhile, taxpayers in those cities who earn $100,000 are subject to an average rate of 29.3%.
High earners who have the option to relocate may be able to take advantage of lower taxes. The research identified 21 cities where those who make $250,000 per year have a lower tax rate than residents in 35 other cities who earn $100,000.
Most of the lowest effective tax rates on $250,000 are in cities with no state income tax. For the study, researchers used SmartAsset’s paycheck calculator to apply taxes to an annual salary of $250,000. This online tool calculates take-home pay per paycheck for both salaried and hourly jobs after accounting for federal, state and local taxes.
They 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.
See the gallery for the 15 cities where high earners have the least buying power, according to SmartAsset.
Start Slideshow 
