Highest Paying States in 2025: Where Pay Goes Furthest
Compare take-home pay and purchasing power by state. Learn a repeatable method to rank states by after-tax income, cost of living, and monthly surplus.
This guide pairs with EverydayBudd's Salary / Take-Home, Cost of Living, and State Tax calculators.
Introduction
Headlines love "top 10 paying states," but raw salary alone can mislead. The real question is: Where does my salary go the furthest after taxes and typical living costs?This guide gives you a clean framework to compare states for net pay and purchasing power, with practical tips for remote and on-site roles.
For most people, the best state is the one where after-tax income – core costs(housing, taxes, transportation, healthcare) leaves the largest monthly surplus for your lifestyle. Use data, not guesses.
Understanding the Basics
Key Terms Explained
- Nominal vs real (COL-adjusted) salary: What the offer says vs what it buys in a given state.
- After-tax income (take-home): Gross pay minus federal + FICA + state/local income tax, adjusted for pre-tax benefits.
- State/local tax burden: No wage tax can be offset by higher sales, property, or insurance costs; progressive-tax states can still net well with moderate housing.
- COL Index / RPP: Price levels vs US average (housing, groceries, utilities, services).
- Salary-to-COL ratio: After-tax income ÷ COL index (higher is better).
- Break-even salary: Income required in State B to maintain State A lifestyle.
Step-by-Step Guide
Mirror these steps in EverydayBudd's calculators for apples-to-apples comparisons.
1) Pick a realistic salary and filing status
Use your offer (or target) and choose Single / MFJ / HOH. Add pre-tax benefits (401(k), HSA/FSA, commuter).
2) Compute state-specific take-home
Calculate federal + FICA and then state/local withholding for each state. Model city wage tax where applicable.
3) Layer on housing and core costs
Renters: bedroom count + utilities. Buyers: use the Mortgage Calculator (rate, taxes, insurance, PMI/MIP, HOA). Add groceries, insurance OOP, transportation, childcare using city presets, then tweak.
4) Compare using two views
- Net Cashflow View: After-tax income − monthly budget = surplus.
- Purchasing-Power View: Salary-to-COL ratio for each state/city.
5) Run scenarios
Remote vs on-site • roommates vs solo • car-required vs transit-rich • 15y vs 30y mortgage • different neighborhoods. Save your top two options.
6) Shortlists to explore (typical patterns)
- High nominal pay (many roles): CA, MA, NY, WA, NJ, CT, MD—strong in tech/biotech/finance but higher taxes/housing.
- Strong take-home on $80k–$150k: FL, TX, TN, NV, WY, SD—no wage tax; watch insurance and housing pockets.
- Balanced COL with solid wages: CO, NC, UT, AZ, GA, OH, WI—often good surplus outside the priciest metros.
Use the tool—city variance inside each state is huge.
Find Where Your Pay Goes Furthest
Model taxes, housing, insurance, and transport by state and city—then compare monthly surplus.
Advanced Strategies
- Salary-to-COL targeting: Aim for states/cities where after-tax ÷ COL ≥ 1.10 to feel an upgrade.
- Remote-work optimization: If permitted, live in a low-tax/low-COL state while earning a national-market salary. Confirm pay indexing and employer tax rules.
- Pre-tax levers: In high-tax states, maximizing 401(k)/HSA/FSA both lowers taxes and boosts cashflow.
- Housing arbitrage: Live one county over (lower property tax/insurance) while keeping the same job market.
- Insurance math (Sun Belt caution): Home/auto premiums can offset "no income tax" gains—model total costs.
- Relocation packages: Trade sign-on, closing-cost credits, or temporary rate buydowns when moving to high-cost states.
- City wage taxes & surcharges: Some no-income-tax states still have local payroll programs—model them.
Common Mistakes to Avoid
- Comparing gross pay only (ignores taxes/benefits/COL).
- Using state averages for a premium metro (city-level costs are what you pay).
- Forgetting insurance/property tax in coastal/southern states.
- Assuming no-income-tax states always win—housing/premiums can flip the result.
- Not stress-testing ±10–15% swings in rent/rates or a surprise expense.
Frequently Asked Questions
Frequently Asked Questions
Conclusion & Next Steps
You don't need a generic "top 10" list—you need a method. Model take-home pay, add state-specific costs, and pick the state where your monthly surplus and career fit are strongest.
Action Items
- Plug your offer into the Salary / Take-Home calculator for 3–5 states.
- Add housing, taxes, insurance, transportation in the Cost of Living tool.
- Compare salary-to-COL ratios; keep cities with the highest surplus.
- Negotiate relocation using data-backed numbers (rent, taxes, premiums).
- Re-run when a final offer arrives; verify paycheck withholding/W-4 rules by state.
Related Tools & Guides
Ready to Compare States?
Run side-by-side comparisons, then shortlist cities with the best monthly surplus.
References
- Bureau of Labor Statistics (BLS): Occupational Employment & Wage Statistics; 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 indicators
- Tax Foundation & State Departments of Revenue: State income tax structures and local wage tax references
- CFPB / HUD / FHA / Insurance Commissioners: Housing/closing costs, PMI/MIP rules, and state insurance insights