(Bloomberg) -- People who make $650,000 a year in New York can save more than $250,000 moving to Austin, thanks to the lower taxes and cheaper cost of living in Texas.
That’s according to a new study from financial information provider SmartAsset, which looked at how much people with six-figure salaries in New York, San Francisco and Chicago can save if they leave for Austin, which has drawn a flood of new residents in recent years. The results were similar to a recent examination the firm published on savings available to high earners who leave for Miami.
But turns out, the savings are bigger in Texas. Those with a $650,000 salary who leave San Francisco for Austin, can save $212,000, the study found.
The numbers are not as eye-popping for people leaving Chicago, mostly because the cost of living there is much lower than San Francisco and New York. Someone earning $650,000 a year in the Windy City saves $76,362 by moving to Austin.
SmartAsset looked at single tax filers earning between $150,000 and $650,000 annually in New York, San Francisco and Chicago and they took into account federal, state and local tax data. They also analyzed data to account for cost of living premiums in each city. Unsurprisingly, the study found that the savings slide along with income. Still, people making $150,000 a year in San Francisco and New York stand to benefit significantly from an Austin move.
Austin, the Texas capital, gained a reputation early in the pandemic as a tech-fueled boom town as families and young professionals took advantage of remote work and looked to relocate to lower cost cities in the Sun Belt.
New York and Austin have the most drastic differences in cost of living, according to the report. Costs are 122% higher than the US average in NYC, but more or less in line with the national average in Austin.
Effective tax rates for high earners range from 37% to 45% in New York, while their counterparts in Austin are taxed at rates of 27% to 35%.
The effective tax rate for people in San Francisco making $650,000 a year is 46%, with the city costing 83% more than the US average.
To contact the author of this story:
Natasha Solo-Lyons in New York at [email protected]