Given its stature and history, it may not surprise many that Washington, D.C., continues its standing as one of the most coveted places to reside in the United States. However, the allure comes with a hefty price tag, as the nation’s capital boasts a median gross rent of $1,668, an average mortgage of $2,569, and an overall annual cost of living exceeding $78,800.
These financial considerations underscore the significant impact of location on the affordability and desirability of a region.
Examining the broader financial landscape, a new study by SmartAsset sheds light on the varying value of a $100,000 income across different U.S. cities, including the District of Columbia, factoring in federal, state, and local taxes, along with the local cost of living premiums. SmartAsset officials said they utilized its paycheck calculator to apply federal, state, and local taxes to a $100,000 annual salary. The remaining amount was adjusted for the local cost of living using the Council for Community and Economic Research data, considering factors such as housing, groceries, utilities, transportation, and miscellaneous goods and services. The cost-of-living index data was averaged across 2023.
Washington, D.C.: Balancing Prestige and Cost
Despite its allure, the study’s findings highlight the financial burden Washington, D.C. imposes. The city’s high median gross rent, average mortgage, and overall cost of living contribute to a notable strain on residents’ wallets.
For those earning a $100,000 income, the study reveals the city’s overall average cost of living and how taxes significantly impact the purchasing power of that income, emphasizing the importance of strategic financial planning.
National Disparities: A Deeper Dive
As SmartAsset delved into 72 of the largest U.S. cities, a stark contrast in the value of a $100,000 income emerged. The study adjusted income for federal, state, and local taxes, as well as local cost of living, offering insights into the adequate purchasing power of individuals across the nation. Among the key findings, El Paso, Tezas, emerged as the city where a $100,000 income stretches the furthest, thanks to no state or local income taxes and a 12% cost of living discount, resulting in an effective purchasing power of $88,840.
On the flip side, Manhattan, New York, showcases the challenges of high living costs and taxes, with a $100,000 income worth a mere $30,914, the lowest among the cities analyzed.
Baltimore residents face the highest income taxes, potentially losing up to 32.7% of their income to federal, state, and local taxes at the $100,000 income level.
Meanwhile, four California cities—San Francisco, Los Angeles, San Diego, and Oakland—make the top 10 cities where a $100,000 income is worth the least after adjusting for taxes and cost of living.
Top 10 Cities Where $100,000 Goes Furthest:
El Paso, Texas: $88,840
Oklahoma City, Oklahoma: $87,585
Memphis, Tennessee: $86,960
Corpus Christi, Texas: $86,383
San Antonio, Texas: $85,625
Lubbock, Texas: $85,065
Tulsa, Oklahoma: $84,507
Jacksonville, Florida: $83,878
Houston, Texas: $82,986
St. Louis, Missouri: $82,614
Top 10 Cities Where $100,000 Is Worth the Least:
Manhattan, New York: $30,914
Honolulu, Hawaii: $39,148
San Francisco, California: $40,997
Brooklyn, New York: $43,376
Los Angeles, California: $47,762
Washington, D.C.: $48,734
Queens, New York: $49,978
San Diego, California: $50,082
Boston, Massachusetts: $50,109
Oakland, California: $51,237
