A Taxing Situation: Time To Make A Move?

Posted: Jul 05  |  By: Nondas Davis

I recently spoke with an attorney candidate who was considering a corporate associate position at an AmLaw 100 firm in Miami. The candidate lived in NYC and was making $210,000 in her current role. The Miami offer was $155,000. The candidate, like most candidates, was focused on comparing the salaries of the two positions, and, on the surface, the Miami opportunity looked like a huge pay cut. But, when you factor in the amount of state taxes the associate is currently paying in NY, plus a lower cost of living in Miami, the Miami offer is actually a raise for the candidate.  As shown in the image below from CNN’s cost of living calculator, $210K in NYC is the equivalent of a salary of $101K in Miami.

 

salary in miami

Most job seekers are like the candidate above and concerned with finding the most lucrative position but often overlook how taxes and cost of living impact the quoted salary for a position. In order to really compare competing compensation packages for positions in different states, job seekers must consider the applicable tax rates of the states in which the positions are located as well as whether the state has an income tax.  Jobs in states that have the highest tax burdens are automatically going to mean less take home pay in your pocket. Positions located in areas with low tax burdens and low cost of living mean an instant boost to your paycheck!

For your reference, here are the states with the highest and lowest tax burdens for 2014 as well as the states without a state income tax.

Highest Tax Rates Lowest Tax Rates No Income Tax
New York Wyoming Alaska
California Alaska Florida
Nebraska Nevada Nevada
Connecticut Florida South Dakota
Illinois South Dakota Texas
Wisconsin Washington (State) Washington (State)
Vermont Texas Wyoming
New Jersey Delaware
Iowa North Dakota
Maine New Mexico

Sources:  States Without an Income Tax; What US States Have the Highest and Lowest Taxes?

Additionally, I recommend using a cost of living calculator to evaluate the salaries in two markets.  Finally, check out the following jobs we have available in tax friendly states and contact us to hear more about how you can make more money just by moving!

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