Six-figure salaries have long been seen as a milestone for gauging success — the peak between the arduous grind of climbing the income ladder and breathing a deep sigh of relief. Those with a $100,000 salary earn more than double the median individual income for 2021, which might imply financial comfort on first glance. But when accounting for taxes and cost of living in America’s largest cities, those six-figures will feel much smaller.
Ultimately, to have the purchasing power of $100,000, you will have to earn a substantially higher salary. With this in mind, SmartAsset set out to determine the salary it takes to feel like $100,000 across the U.S. To do so, we analyzed annual salaries in 76 cities and adjusted them for taxes and cost of living to find the “new” $100k.
Key Findings
Three cities require $300,000+ to bring home the “new” $100k. Residents of Honolulu, New York City and San Francisco who earn this amount are taxed roughly 40.5% or higher and have a cost of living more than 82% above the national average.
It’s easiest to “make it” in Texas. Salaries in El Paso, Corpus Christi, Lubbock, Houston, San Antonio, Fort Worth and Arlington can be as low as $119,300 while feeling like a true $100,000. Texans at this income level hold onto an average of 5.7 percentage points more of their annual salaries compared to states that charge income taxes, while the cost of living across Texas is generally lower than the national average.
California cities require the highest gross incomes of any state. San Francisco, Oakland, Los Angeles, Long Beach and San Diego all require exceptionally high salaries to feel like $100,000. Those in the Bay Area, for example, require at least $147,000 in salary for middle-class comfort. These Golden State cities command particularly high tax rates and cost of living premiums.
Despite Miami’s high cost of living, low taxes make it more affordable than big cities like Chicago, Sacramento and Baltimore. In general, states with no state income taxes have an edge when it comes to overall purchasing power. States that don’t take a cut of residents’ income taxes include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Places Where You’ll Have to Earn the Most
1. Honolulu, HI
To take home $100,000 in The Big Pineapple, workers need to earn at least $312,400 pre-tax. Net pay works out to $185,999 — roughly 59.5% less than the gross earnings. And while Honolulu, Hawaii is known for its lush mountains and the crystal-clear waters of Waikiki Beach, those beautiful landscapes cannot mask the high cost of living (86% above the national average). Living costs in Honolulu are impacted in part by the reliance on imports for energy, goods and services.
2. New York, NY
New York City residents need to earn at least $312,000 to get that six-figure feel. The nation’s most populous city requires a lot of resources to maintain and upgrade its infrastructure and meet the demands of roughly 8.5 million residents and 61 million projected tourists for 2023. To take home $100,000, this translates to about 41% in combined federal, state and local taxes and a cost of living 83.6% higher than the national average.
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3. San Francisco, CA
With a median household income that is nearly double the national average, San Francisco costs a disproportionate 82.8% more than the national average — partly because of the city’s close ties to tech entrepreneurship in Silicon Valley. San Franciscans need to earn slightly more than $300,000 pre-tax to take home $100,000 of purchasing power.
4. Oakland, CA
Just over the bridge from San Francisco lies Oakland, California, where earners need $245,600 in income before taxes and after adjusting for cost of living to be left with $100,000. The city is 47.3% above the national average when it comes to living costs. Taxes for this income are also in the 40% range. Spillage from the Silicon Valley and San Francisco crowds has played a role in the area’s cost of living.
5. Los Angeles, CA (Tie)
Though Los Angeles requires just $300 less than the No. 4 ranking place, the City of Angels has a cost of living that is 52.5% higher than the national average and taxes that will account for 37.8% of income. Los Angeles appeals to a wide populace because it offers a diverse economy of job opportunities, a melting pot of cultures and an appealing warm climate. But the trade off is that residents in Los Angeles will need to earn $245,300 before feeling like they’ve “made it”.
5. Long Beach, CA (Tie)
Sharing the No. 5 spot with Los Angeles — but with a population that is over eight times smaller — is the coastal city of Long Beach, California. Residents need an income of $245,300 to bring home the equivalent of $100,000 to account for taxes and cost of living. And though the 50% premium on the cost of living is equivalent to neighboring Los Angeles, the average home price of $760,000 is about $130,000 cheaper than in LA, according to Zillow.
7. Washington, DC
Washington, DC is a unique hodgepodge of residents, tourists, government officials, businesspeople and students. This mix generates a lot of demand on businesses, services and space, resulting in a 53.4% cost of living adjustment above the national average. When accounting for combined federal, state and local taxes (roughly 37.3%), residents need an income of $244,700 to bring home a metaphorical six-figures.
8. San Diego, CA
Roughly $235,600 will net San Diego, California residents the equivalent of a barely-six-figure salary after paying roughly 37% in income taxes (federal, state and local) and adjusting for living costs that are 47.4% higher than the national average. San Diego is home to many military bases and hosts millions of tourists each year thanks to its warm climate and many beaches.
9. Boston, MA
Beantown earners will need an income that is equal to $226,600 pre-tax to bring home at least six-figures post-tax. The combination of federal, state and local taxes will account for about 33.8% of this gross pay and living costs will eat up another $49,900. Boston is home to many sports teams and universities, which add extra demand on the upkeep of the city’s infrastructure.
10. Seattle, WA
The northernmost U.S. tech hub, the Seattle metropolitan area is home to Amazon, Starbucks and Microsoft. Seattle proves to be a top destination for Americans with over 733,000 people choosing to make it their home - up 21% between 2010 and 2021. To bring home six-figures as a Seattle worker requires nearly $213,000, despite having the lowest combined federal, state and local taxes of the 16 cities with the highest income thresholds.
Places Where You’ll Have to Earn the Least
1.Memphis, TN
Workers in the Home of the Blues need the lowest pre-tax amount to bring home a six-figure equivalent: $117,100. The low cost of living in Memphis, Tennessee — 13.8% below the national average — plays a big part in this, as does Tennessee’s lack of state income tax. Memphis also has a relatively low barrier to entry to the housing market: With the average home value at $142,399, homes cost less than half the average price across the U.S.
2. El Paso, TX
An income of $119,300 will net El Pasoans a figurative $100,000 after taxes and cost adjustments. Taxes will account for roughly 26.5% of that gross amount but with El Paso’s low cost of living (12.3% below the national average), the purchasing power of the $87,700 post-tax amount will be $100,000. Meanwhile, the median income in El Paso is just shy of $51,000.
3. Oklahoma City, OK
To take home the “new $100,000” after tax deductions, the roughly 688,000 residents of Oklahoma City need to earn a gross income of $120,300. While the combined federal, state and local taxes will deduct roughly 30%, the below average cost of living helps compensate.
4. Corpus Christi, TX
Situated on an inlet of the Gulf of Mexico, Corpus Christi is home to many beaches. It’s also a major U.S. port city, where residents earning $121,600 or more take home roughly $89,300 after taxes. However, when you account for Corpus Christi’s low cost of living (more than 10% below the national average), that net income goes about as far as $100,000.
5. Lubbock, TX
Five hundred miles northwest of Corpus Christi is Lubbock, Texas, where $121,800 is required to “make it” due to overlap in the cost of living and taxes. Residents in Lubbock need to earn $121,800 pre-tax to have $100,000 in purchasing power.
6. Houston, TX
The most populous Texas city, Houston is home to large companies like ConocoPhillips, Halliburton, Sysco and Waste Management. An income of $125,300 will net a resident $100,000 in purchasing power after taxes and cost of living have been considered. Because there are no state taxes, Houston residents can expect a modest 26.7% in tax deductions at this income level.
7.Arlington, Fort Worth and San Antonio, TX (three-way tie)
With identical tax rates and cost of living, these three Texas cities tie for seventh-place, with each requiring an income of $127,000 to feel like the baseline six-figure purchasing power. Cost of living is 7% lower than the national average meaning that the purchasing power of post-tax income is worth $100,000 – higher than it would be in many other states thanks to Texas not charging a state income tax. San Antonio is the second most populous Texas city with over 1.4 million residents, while Fort Worth is home to about 940,000 and Arlington just under 400,000.
10.St. Louis, MO
St. Louis has the highest aggregate tax rate compared to the other cities in this top 10. Taxes will eat up about 32% of your $128,200 salary, but the low cost of living (87% of the national average) helps boost the value of a dollar. In fact, St. Louis consistently ranks as the most affordable city when talking specifically about the cost of living a comfortable lifestyle.
Data and Methodology
For this study, we adjusted $100,000 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 index takes into account the price of housing, groceries, utilities, transportation, and other necessary purchases. Cost of living index data is for metro areas in the third quarter of 2022.
We then used SmartAsset’s paycheck calculator to account for federal, state and local taxes based on downtown zip codes for subject cities for a single taxpayer paid an annual salary with no additional withholdings. Cities were ranked from the highest salary range that is considered middle class ($104,499 to $311,936 in Fremont, CA) to the lowest salary range that would be considered middle class ($23,827 to $71,124 in Cleveland, OH).
Tips for Six-Figure Earners
Max out your retirement accounts. Contributing the maximum amount to your retirement accounts doesn’t just help you save for retirement – it can also help you reduce your tax bill in the current year. In 2023, the IRS allows up to $22,500 in employee contributions to a 401(k) or a similar workplace plan and $6,500 to an IRA. People age 50 and older can add catch-up contributions of $7,500 and $1,000 to their 401(k) and IRA, respectively. These contributions, when made on a pre-tax basis, will reduce your taxable income for the year and potentially drop you into a lower federal tax bracket.
Build your emergency fund. Setting aside three to six months of monthly expenses can give you peace of mind, for surprise situations such as unemployment, housing costs or even help you avoid unnecessary bad debt. Learn more about how an emergency fund can help you manage life’s unavoidable expenses and the best ways to store that money safely.
Work with a finance professional. A financial advisor can help you make the most of your money. 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.
Questions about our study? Contact us at [email protected]
Photo credit: ©iStock.com/Khanchit Khirisutchalual
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