High-income earners in cities like New York City, Chicago, and San Francisco are increasingly exploring more affordable areas, such as Miami, to stretch their salaries further. To determine the potential savings of such a move, Smarter Offers compared the cost of living and tax rates between these cities for individuals earning between $150,000 and $650,000.
Key Findings:
- Savings in Miami: High earners can save up to $200,000 per year by relocating to Miami. For instance, someone making $650,000 in Manhattan could save $195,000 annually in Miami, while a high earner in San Francisco could save just over $150,000.]
- Tax Rate Differences: San Franciscans can potentially reduce their tax rates by up to 11 points by moving to Miami. In addition, the cost of living in Miami, which is 23% higher than the U.S. average, offers a significant discount compared to the 83% higher cost of living in San Francisco. New Yorkers can save around 10 points.
- Limited Gain for Chicago Residents: Relocating from Chicago to Miami may not yield substantial financial benefits. While high earners in Chicago would save an average of four points in taxes, the lower cost of living in Chicago (5 points lower than Miami’s) puts them at a disadvantage, resulting in only a 1% gain in salary from the move.
- Tax Increase at Higher Salaries: Moving from a $200,000 to a $250,000 salary would result in the highest incremental tax increase, with an effective tax rate jumping over 1% in all cities. The highest incremental increase is 1.85% in NYC between $200,000 and $250,000. Moving from a $250,000 salary to $300,000 also leads to a significant incremental tax increase in each city.
- Cost of Living Considerations: Manhattan’s cost of living is 137% higher than average, compared to 23% higher in Miami. Apart from tax benefits, this cost difference can result in substantial long-term savings. San Francisco’s cost of living is 83% higher than average, while Chicago’s is 17% higher.
Summary
Moving from high-cost cities to Miami can provide significant financial advantages, particularly in terms of cost of living and tax rates. While the impact varies depending on the starting location, individuals should consider both factors when making a decision. It’s also important to factor in upfront moving costs and consider consulting a financial advisor for guidance.
You May Also Like
South Florida Real Estate Market: April 2023 Stats
Decoding the Factors Behind High Mortgage Rates
Realtors, are you tired of typing up offers? Let Smarter Offers do it for you!