People who make $650,000 a year in New York can save more than $250,000 moving to Austin, thanks to the lower taxes and cheaper cost of living in Texas.
That’s according to a new study from financial information provider SmartAsset, which looked at how much people with six-figure salaries in New York, San Francisco and Chicago can save if they leave for the Texas capital, which has drawn a flood of new residents in recent years. The results were similar to a recent examination the firm published on savings available to high earners who leave for Miami.
But turns out, the savings are bigger in Texas. Those with a $650,000 salary who leave San Francisco for Austin can save $212,000, the study found.
The numbers are not as eye-popping for people leaving Chicago, mostly because the cost of living there is much lower than in San Francisco and New York. Someone earning $650,000 a year in the Windy City saves $76,362 by moving to Austin.
SmartAsset looked at single tax filers earning between $150,000 and $650,000 annually in New York, San Francisco and Chicago and took into account federal, state and local tax data. They also analyzed data to account for cost-of-living premiums in each city. Unsurprisingly, the study found that the savings slide along with income. Still, people making $150,000 a year in San Francisco and New York stand to benefit significantly from an Austin move.
Austin gained a reputation early in the pandemic as a tech-fueled boomtown as families and young professionals took advantage of remote work and looked to relocate to lower-cost cities in the Sun Belt.
New York and Austin have the most drastic differences in cost of living, according to the report. Costs are 122% higher than the U.S. average in NYC but are more or less in line with the national average in Austin.
Effective tax rates for high earners range from 37% to 45% in New York, while their counterparts in Austin are taxed at 27% to 35%.
The effective tax rate for people in San Francisco making $650,000 a year is 46%, with the city costing 83% more than the U.S. average.