What is a $100,000 salary in New York City really worth?

After taking into account taxes and inflation, it shrinks to an annual income of only $35,791, new study finds

Times Square in New York City. Residents earning an annual income of $100,000 lose more than half of their salary to taxes and inflation. Getty Images
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An annual salary of $100,000 might be considered a major career milestone by many employees — but how far that six-figure income goes depends on where you live, a new study by US personal financial adviser SmartAsset has found.

Unfortunately for workers in New York City, the Big Apple takes a big bite out of their take-home pay, with a salary of $100,000 shrinking to $35,791 after taxes and taking into account the high cost of living, according to SmartAsset's analysis on how far an income of $100,000 goes in 76 of the largest cities in the US.

New York City ranked last in the study, followed by other expensive cities such as Honolulu, where workers earning $100,000 a year take home $36,026, San Francisco with $36,445 and Washington DC at $44,307.

“I think it’s intuitive: $100,000, a six-figure income — it feels like this big milestone, but it also feels very different depending on where you live,” Susannah Snider, a financial planner and managing editor of financial education at SmartAsset, told Bloomberg.

“But to really break it down city by city reveals some of the quirks in what a difference where you live makes — and how the tax landscape of where you live really impacts what a six-figure salary feels like.”

SmartAsset used its paycheque calculator to apply federal, state and local taxes to an annual salary of $100,000 and then adjusted the remaining amount for the local cost of living using data from the Council for Community and Economic Research for the third quarter of 2022, the company said.

Global economic uncertainty — compounded by the Russia-Ukraine war, a supply-chain crunch and the rising cost of living — caused inflation to jump to record levels.

In the US, the world’s largest economy, inflation reached a 40-year high of 9.1 per cent in June last year.

Since March last year, the US Federal Reserve has increased its benchmark rates eight times to bring inflation down to a target range of 2 per cent.

Last month, inflation cooled slightly after falling to 6.04 per cent, US government data showed.

Inflation and economic uncertainty remain the top concerns for most US consumers in 2023, a January survey by data news website PYMNTS and LendingClub found.

Fifty-one per cent of respondents to the survey who earn more than $100,000 reported living paycheque to paycheque in December 2022, it added.

“Living paycheque to paycheque has become a reality for growing numbers of US consumers, including those at the highest income levels,” it said.

Meanwhile, an annual salary of $100,000 goes furthest in Memphis, Tennessee, where it is worth $86,444 after subtracting taxes and adjusting for the cost of living, SmartAsset said.

Cities in Texas dominated the top 10 list because residents pay no state income tax and the cost of living is lower, the data found.

“Seven out of the 10 cities in our top 10 are located in Texas,” SmartAsset said.

“After deducting taxes and adjusting for the cost of living, a $100,000 salary on average is worth $77,885 across the 10 Texas cities that we analysed in our study.”

The city of El Paso, in west Texas, was ranked second in the list, with a salary of $100,000 translating into an annual take-home pay of $84,966, followed by Corpus Christi at $83,443 and Lubbock, where the cost of living is just 89.4 per cent of the national average, on $83,350, SmartAsset said.

Oklahoma City has the lowest cost of living at only 83.2 per cent of the national average, the lowest out of all 76 cities in the SmartAsset study.

A $100,000 salary is worth $84,498 in Oklahoma City after adjusting for the cost of living, it said.

In contrast, the cost of living in New York City is 128 per cent above the national average, driven by high rents and slowing wage growth, according to compensation software and data company PayScale.

Updated: March 16, 2023, 12:00 PM