New research has shown that Portland, Oregon imposes the heaviest tax burden on high earners out of any major city in the United States. A new analysis from SmartAsset, a consumer-focused financial information provider, looked at tax rates in the 76 largest US cities. It found that someone earning $250,000 in Portland pays taxes at a rate of 41%, while a person making $100,000 pays taxes at a rate of almost 34%. This amounts to a hike of 7.5%, which is the largest increase in the country for those who earn more.
The analysis also found that on average, people making $250,000 pay 34% in taxes, while those making $100,000 pay almost 5 percentage points less. In cities such as Houston, Tampa and Nashville, someone earning $250,000 can expect to be taxed at a lower rate than those making $100,000 in cities such as Baltimore and Philadelphia. Differences in taxes and the cost of living have become even more pertinent since remote and hybrid work options have opened up. Nowadays, white-collar workers have more options to relocate to cities where their paychecks can stretch further.
However, higher taxes in cities such as Portland go towards investing in important things such as education, health, human services, public safety and infrastructure. They may see less funding in states with lower taxes. This means that while states like Florida and Texas don't have income taxes, they might make up for the revenue loss in other ways, such as higher property or sales taxes.
Those living in expensive cities such as New York and San Francisco face the challenge of paying for high housing costs and expenses with $250,000 salaries that, after taxes and adjusting for the cost of living, only have the purchasing power of about $83,000. In comparison, the purchasing power of a $250,000 salary after adjusting for taxes and cost of living in less-expensive Portland is around $120,000.
SmartAsset used its paycheck calculator to conduct the analysis. It took into account federal, state and local taxes for a single taxpayer with an annual salary of $250,000 and no additional withholdings. The firm then adjusted the post-tax figure for the local cost of living in the 76 largest US cities using data from the Council for Community and Economic Research.