Introduction
Headlines love "highest paying states" lists, but raw salary rankings can mislead. A $150k offer in San Francisco might leave you with less spending money than a $110k offer in Denver or Raleigh—once you account for California's income tax, Bay Area rent, and higher everyday costs.
This guide gives you a method, not a one-size-fits-all ranking. You'll learn how to compare states for your specific salary, career field, and life stage—whether you're a remote software engineer, a healthcare worker evaluating relocation, a new grad weighing coastal vs. mid-size city, or a family optimizing for schools and space.
The framework applies whether you're comparing job offers, negotiating remote work terms, or simply curious about where your current income would stretch further.
Understanding the Basics: Pay, Taxes & Cost of Living
Before comparing states, you need a shared vocabulary. Here are the key concepts that drive your real purchasing power:
Nominal vs Real (COL-Adjusted) Salary
Your nominal salary is the number on your offer letter. Your real salary is what that number actually buys in a given location. A $140k salary in one state may feel like $90k in expensive metros or $180k in low-cost areas. EverydayBudd's Cost of Living tool uses city-level price patterns to show this difference.
After-Tax Income (Take-Home Pay)
Your take-home is gross pay minus: federal income tax, FICA (Social Security 6.2% + Medicare 1.45%), and state/local income taxes. Some states add city wage taxes (Philadelphia, NYC, some Ohio cities), disability insurance withholding (CA SDI, NJ TDI), or other payroll programs. Pre-tax contributions to 401(k), HSA, and FSA reduce your taxable income and boost your net paycheck. Use the Salary / Take-Home Calculator to model all these factors.
State & Local Tax Burden
State taxes include income tax (progressive or flat rates), sales tax (0% in OR, DE, MT, NH, AK; 7%+ in TN, WA, CA), and property tax (varies wildly by county). Some states have no income tax but higher sales or property taxes. "Hidden" taxes include car registration fees, real estate transfer taxes, and local surcharges. The Tax Foundation publishes state tax burden rankings.
COL Index / Regional Price Parities (RPP)
The BEA's Regional Price Parities measure price levels across states and metros, with 100 as the national average. Hawaii is ~118 (18% above average), Mississippi is ~87 (13% below). Big metros can be far above their state's average—San Jose is ~128 while California overall is ~113.
Salary-to-COL Ratio
A simple way to compare: divide your after-tax monthly income by the COL index (with 100 as baseline). A ratio of 1.0 means you're at the national average; 1.10 means 10% more purchasing power; 0.90 means 10% less. Aim for ≥1.05 to feel a noticeable upgrade, ≥1.15 for a significant lifestyle improvement.
Break-Even Salary
This is the salary you'd need in State B to maintain your State A lifestyle. EverydayBudd's Cost of Living tool calculates this when you switch "from city A to city B"—essential for negotiating remote salary adjustments or evaluating relocation offers.
Step-by-Step Method: Ranking States for Your Salary
Follow these six steps using EverydayBudd tools to compare states apples-to-apples.
Choose Base Salary and Filing Status
Start with your current salary, a concrete job offer, or a target salary for your role. Choose your filing status (Single, Married Filing Jointly, or Head of Household) and estimate pre-tax benefits: 401(k)/403(b) contributions, HSA/FSA, commuter benefits. These affect your taxable income and take-home pay.
→ See the 2025 Tax Brackets Guide to understand how brackets affect your take-home.
Compute State-Specific Take-Home Pay
Use the Salary / Take-Home Calculator for each candidate state. Include state income tax, city wage taxes (if applicable), and state-specific payroll programs like California SDI or New Jersey TDI. Model your typical pre-tax benefits and W-4 settings.
Layer on Housing and Core Costs
Renters: Research realistic rent for your bedroom count and neighborhood tier, plus utilities and parking.
Buyers: Use the Mortgage Calculator to model PITI (principal, interest, taxes, insurance), PMI/MIP if applicable, and HOA fees. Property tax rates vary dramatically by county.
Add other recurring costs: groceries, utilities, internet/mobile, transportation (car payment, insurance, gas, parking—or transit passes), health insurance premiums and out-of-pocket, childcare/school, and basic entertainment. The Cost of Living tool has city presets you can customize.
Compare Using Two Views
Net Surplus View: After-tax income – total monthly expenses = your discretionary surplus. This is the most important metric for most people.
Purchasing Power View: Salary-to-COL ratio for each state/city. Values above 1.0 mean you're outpacing the national average; 1.10+ is typically a noticeable upgrade.
Run "What If" Scenarios
Model variations: remote vs on-site salary, roommates vs solo, one car vs two vs car-free, different neighborhoods in the same metro, 15-year vs 30-year mortgage. Save your top scenarios as screenshots or spreadsheet notes to compare later.
Shortlist States and Cities
Keep the 3–5 options where your monthly surplus and career fit are strongest. Remember that state averages hide huge city-level variation—Austin vs rural Texas, Denver vs Colorado Springs, Miami vs Jacksonville. The clusters in the next section are directional patterns, not definitive rankings.
Find Where Your Pay Goes Furthest
Run your salary through the Take-Home calculator for several states, then layer in housing and living costs to see your real monthly surplus.
State Cluster Snapshot: How States Tend to Line Up
States fall into rough clusters based on typical patterns in BLS wage data and BEA/Census cost data. These are directional patterns, not a definitive top-50 ranking.
| Cluster | Who It Often Benefits | Examples | Key Trade-offs |
|---|---|---|---|
| High nominal pay, high cost & tax | Tech, finance, biotech professionals seeking coastal megacities and unique industry hubs | CA, NY, MA, WA, NJ, CT, MD | High salaries and strong networks, but expensive housing, taxes, childcare; savings depend on lifestyle discipline |
| No-income-tax, mixed housing/insurance | Workers with flexible location who want simplicity in state income tax | TX, FL, TN, NV, WY, SD, WA* | No wage tax but watch homeowners/auto insurance, property tax pockets, hurricane/wildfire zones |
| Balanced COL with solid wages | People seeking good surplus in mid-sized metros or fast-growing cities | CO, NC, GA, AZ, UT, OH, WI, MN | Growing housing costs in hot metros, but many regions still offer strong surplus |
| Lower-cost states with modest wages | Early-career workers, remote employees, or retirees optimizing for low housing and everyday costs | IA, IN, KS, MO, OK, AR, AL, MS | Smaller job markets in certain industries; check specific city for wages and amenities |
| Special cases and hybrids | Those who can navigate unique state tax/cost structures | IL, PA, OR, HI, AK, LA | High property taxes but low income taxes, or vice versa; large intra-state differences—model at city level |
*WA has no income tax but enacted a 7% capital gains tax on gains over $270k. Model at city level—Seattle vs Spokane costs are very different.
Scenario Playbook: Realistic Moves & Trade-offs
Here are four common scenarios with illustrative numbers. Use these as a framework—then run your own specifics in EverydayBudd tools.
Remote Engineer: CA → CO → TX
Profile: Mid-level software engineer, fully remote, $140k salary.
Compare: Bay Area (high taxes + $3,500 rent) vs Denver ($2,200 rent, 4.4% state tax) vs Austin ($1,900 rent, no income tax but 2%+ property tax if buying).
Key insight: Texas may win on monthly surplus, but confirm your employer's remote pay policy—some index by location. Denver offers a middle ground with outdoor lifestyle.
Healthcare Worker: NY/NJ → NC/GA/TX
Profile: Nurse or allied health professional earning $85k, considering Sun Belt hospitals.
Compare: NYC-area high rent and state tax vs Charlotte or Atlanta (lower housing, moderate state tax) vs Houston or Dallas (no state tax, reasonable rent near medical centers).
Key insight: Even a 10–15% pay cut can net higher surplus. Factor in shift differentials and check childcare costs near hospitals.
New Grad: Coastal vs Mid-Size City
Profile: Starting salary of $75k, first job out of college.
Compare: Living alone in a coastal city ($2,800 studio) vs roommates in Chicago ($1,200 share) vs solo in Raleigh or Phoenix ($1,400).
Key insight: Coastal cities offer stronger networks and faster salary growth for some careers—but starting with 6 months of savings is easier when rent is 25% of take-home instead of 45%.
Family Move: Schools + Housing + Childcare
Profile: Dual-income couple ($180k combined) with two kids, considering move from HCOL to MCOL.
Compare: Boston ($3,800 rent, $3,500/mo childcare) vs Raleigh-Durham ($2,200 rent, $2,000 childcare) vs Columbus OH ($1,700 rent, $1,600 childcare).
Key insight: Childcare costs drop dramatically outside top-10 metros. Research school districts—some mid-COL cities have nationally-ranked public schools.
Advanced Strategies: Negotiation & Optimization
Salary-to-COL Targeting
Use your salary-to-COL ratio as a negotiation "sanity check." If the new city has 20–30% higher housing costs than your current location, ask for a proportional salary adjustment. Show the employer data from BEA RPP or EverydayBudd tools to back up your ask.
Remote-Work Optimization
If you can work remotely, confirm your employer's location-based pay bands before relocating. Some companies index salaries by metro tier; others pay flat national rates. Also verify state tax residency rules—your domicile state will tax your income, and some "convenience of employer" states may withhold based on HQ location.
Pre-Tax Levers
Maximizing 401(k), HSA, and FSA contributions is especially valuable in high-tax states. Pre-tax savings reduce taxable income and can move part of your income into lower federal and state brackets—a double benefit.
Housing Arbitrage
Live one county over, or choose exurbs/suburbs along good transit corridors. Property tax and insurance rates can differ significantly across county lines. Use the Mortgage Calculator alongside Cost of Living to model specific zip codes.
Insurance Math (Sun Belt Caution)
No-income-tax states in the South and Gulf Coast often have higher homeowners/auto insurance premiums due to hurricanes, floods, and litigation costs. Florida's home insurance crisis means coastal homeowners may pay $10,000+ annually. Factor these premiums into your total monthly budget.
Relocation Packages & Incentives
When negotiating relocation to a higher-cost area, ask for: sign-on bonuses (often $10k–$30k), relocation stipends (movers, flights, temporary housing), mortgage buydowns or closing cost credits, and cost-of-living adjustments (COLAs). Discount one-time bonuses over 2–3 years when comparing to ongoing salary differences.
City Wage Taxes & Surcharges
Even no-income-tax states may have cities with local payroll programs. Examples: Philadelphia wage tax (~3.75% residents), NYC local tax (~3.9% top rate), some Ohio cities (1–2.5%). Always model at the city level, not just state.
Common Mistakes to Avoid
- Comparing gross pay only. Ignores taxes, pre-tax benefits, and cost of living. Instead, compare after-tax surplus in specific cities.
- Using state averages for a premium metro. Austin is not "Texas average"—city-level costs are what you'll pay. Run numbers for your target city.
- Forgetting insurance and property tax. Especially in coastal/Sun Belt states, these can add $500–$1,500/month. Model total housing cost, not just rent or mortgage payment.
- Assuming no-income-tax states always win. Housing, insurance, and property tax can flip the result. Texas property taxes often exceed 2% of home value.
- Not stress-testing ±10–15% swings. Rent increases, insurance hikes, and unexpected medical costs happen. Run pessimistic scenarios before committing.
- Ignoring career path and networking. A lower-cost city with fewer jobs in your field may hurt long-term earnings. Balance surplus with industry concentration.
Frequently Asked Questions
Frequently Asked Questions
This guide is educational only, not tax, financial, or legal advice. For personalized guidance, consult a qualified professional.
Conclusion & Action Checklist
There is no single "best state." The right choice depends on your salary, your field, your family situation, and your risk tolerance. But with a repeatable method—comparing after-tax income, realistic costs, and monthly surplus—you can make a data-informed decision instead of guessing.
- Pick 4–6 realistic states/cities based on your industry and lifestyle goals.
- Run salary and take-home scenarios for each state using the Salary / Take-Home Calculator.
- Layer in housing, insurance, and transportation using Cost of Living & Mortgage tools.
- Compare monthly surplus and salary-to-COL ratio; drop states that don't beat your current baseline.
- Negotiate relocation or remote offers using data-backed ranges, not guesses.
- Re-run the model when offers or employer policies change.
Ready to Compare States Side by Side?
Run your salary through multiple states, add realistic costs, and keep the locations with the best monthly surplus.
Related Tools & Guides
References
- Bureau of Labor Statistics (BLS) — Occupational Employment & Wage Statistics (OEWS); state and metro wage data
- Bureau of Economic Analysis (BEA) — Regional Price Parities (RPP) for state/city price levels
- U.S. Census Bureau (ACS) — Median household income and housing cost data
- Tax Foundation — State income tax, sales tax, and property tax rankings
- State Departments of Revenue — Official state tax rate schedules and local wage tax references
Created by the EverydayBudd City Insights Team. Data referenced from BLS, BEA, Census, and Tax Foundation.
Educational only—not personalized tax, financial, or legal advice.