A troubling new study reveals that in California’s major cities, earning an after-tax salary of $100,000 feels more like earning $66,000 due to the heavy tax burden and the high cost of living.
According to research by Consumer Affairs, among the eight largest cities, many six-figure earners are finding it hard to live comfortably.
The study identifies two cities in the Bay Area and five in Southern California that rank similarly when considering tax rates across the 100 largest U.S. cities.
- San Francisco
- Oakland
- New York City
- Five Southern California cities tied for fourth place:
- Irvine, Anaheim, Santa Ana, Long Beach, Los Angeles
- Honolulu, Hawaii
- San Jose
Researchers noted that in these cities, a $100,000 salary effectively translates to less than $66,000 in adjusted after-tax purchasing power—over $20,000 less than the city with the highest purchasing power.
Interestingly, in certain regions, a million-dollar salary might barely cover basic living expenses, according to the findings.
The researchers commented, “Achieving a $100,000 salary doesn’t guarantee a substantial net income.” They pointed out that variations in take-home pay largely depend on local and state tax rates.
They also highlighted that beyond taxes, housing costs and everyday expenses can significantly diminish take-home pay.
It’s worth noting that many of these cities appear on the Consumer Affairs Agency’s ranking of the priciest places to live in America.
Researchers emphasized that in some locations, high living costs and taxes can make six-figure salaries feel negligible. The combined effect of these costs creates a noticeable gap between what residents earn and their actual purchasing power.
While most cities benefit from low local taxes, New York is unique in facing both state and local taxes, unlike the other nine cities, which typically only have high state taxes.
Curious about where $100,000 stretches the furthest? Laredo, Texas, stands out as a city where such salaries can yield nearly $90,000 in take-home pay due to the absence of local or state taxes and a lower cost of living.
