Employees working in expensive US cities such as Honolulu, New York and San Francisco need an annual salary of more than $300,000 to bring home $100,000 after paying taxes and adjusting for the higher cost of living, a study by US-based personal financial adviser SmartAsset found.
Workers in these three cities who earn $300,000 a year are taxed at a rate of 40.5 per cent or higher, while the cost of living is up to 86 per cent above the national average.
This means that employees would have to earn more than $300,000 to bring home the “new” $100,000, according to SmartAsset’s analysis of annual salaries in 76 US cities.
The company adjusted the annual salaries for taxes and cost of living to determine the yearly income it takes to feel like $100,000 across the US.
“Six-figure salaries have long been seen as a milestone for gauging success. But when accounting for taxes and cost of living in America’s largest cities, those six figures will feel much smaller,” Anja Solum, a data journalist at SmartAsset, said.
“Ultimately, to have the purchasing power of $100,000, you will have to earn a substantially higher salary.”
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 nine times to bring inflation down to a target of 2 per cent.
Last month, inflation fell to 5 per cent on an annual basis, 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 from 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.
To take home $100,000 in Honolulu, Hawaii, workers need to earn at least $312,400 pre-tax, SmartAsset said.
The cost of living in Honolulu is 86 per cent above the national average, the research found.
Living costs in Honolulu are affected in part by the reliance on imports for energy, goods and services, it added.
New York City residents need to earn at least $312,000 to get the six-figure feeling, the data found.
“The nation’s most populous city requires a lot of resources to maintain and upgrade its infrastructure and meet the demands of roughly 8.5 million residents and 61 million projected tourists for 2023,” the research said.
To take home $100,000 in New York City, this translates to about 41 per cent in combined federal, state and local taxes and a cost of living that is 83.6 per cent higher than the national average.
Similarly, workers in San Francisco need to earn slightly more than $300,000 pre-tax to take home $100,000.
With a median household income that is nearly double the national average, living in San Francisco costs a disproportionate 82.8 per cent more than the national average — partly because of the city’s close ties to tech entrepreneurship in Silicon Valley, according to SmartAsset.
Meanwhile, workers in Memphis, Tennessee, need the lowest pre-tax annual salary to bring home a six-figure equivalent: $117,100.
The low cost of living in Memphis — 13.8 per cent below the national average — plays a big part in this, as does the lack of state income tax. Memphis homes also cost less than half the average price across the US, the data revealed.
A six-figure paycheque is also much easier to achieve in Texas, according to SmartAsset’s analysis, as the cost of living in many of its cities is lower than the national average and residents don’t pay a state income tax.
An income of $119,300 will net workers in El Paso $100,000 after taxes and cost adjustments.
“Although taxes account for roughly 26.5 per cent of that gross amount, with El Paso’s low cost of living [12.3 per cent below the national average], the purchasing power of the $87,700 post-tax amount will be $100,000,” SmartAsset said.
Similarly, residents of Oklahoma City need to earn a gross income of $120,300 to bring home $100,000 after tax deductions.
While the combined federal, state and local taxes deduct roughly 30 per cent from a worker's salary in Oklahoma City, the below average cost of living helps to compensate this, according to the analysis.
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New Zealand 266 for 9 in 50 overs
Pakistan 219 all out in 47.2 overs
New Zealand win by 47 runs
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UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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Starring: Daniella Weiss, Ari Abramowitz
Rating: 5/5
The specs: 2018 Volkswagen Teramont
Price, base / as tested Dh137,000 / Dh189,950
Engine 3.6-litre V6
Gearbox Eight-speed automatic
Power 280hp @ 6,200rpm
Torque 360Nm @ 2,750rpm
Fuel economy, combined 11.7L / 100km
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How to donate
Text the following numbers:
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Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
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UAE currency: the story behind the money in your pockets
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White hydrogen: Naturally occurring hydrogen
Chromite: Hard, metallic mineral containing iron oxide and chromium oxide
Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
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Engine: 1.4L, four-cylinder turbo
Transmission: Six-speed auto
Power: 142hp at 4,900rpm
Torque: 200Nm at 1,850rpm
Fuel economy, combined: 6.5L / 100km
COMPANY PROFILE
Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
