Portland, Oregon, may penalize higher earners more than any other large US city, according to a new report.
Earners who make $250,000 a year in Portland pay taxes that are 7.5% higher than those making $100,000. That’s the steepest hike in the country, according to an analysis of the 76 largest US cities by SmartAsset, a consumer-focused financial information provider.
“You could say Portland ‘penalizes’ high earners the most,” Jaclyn DeJohn, SmartAsset’s managing editor of economic analysis, said in an email.
On average, people making $250,000 pay 34% in taxes, according to SmartAsset, almost 5 percentage points higher than those making $100,000. In Portland, those making $250,000 are taxed at a rate of 41%, while those making $100,000 are taxed at almost 34%. That means someone making $250,000 in Portland will pay over $100,000 in taxes.
Where Higher Earners are Hit Hardest | US cities where the tax rate jumps most between $100,000 and $250,000
So-called “high earners, not rich yet,” or HENRYs, have been the subject of conversation for decades, cast by Fortune magazine in 2003 as the set pulling in $250,000 to $500,000 per year but faced with taxes and expenses that make it difficult to build wealth.
Now, though, differences in taxes and cost of living across the US are especially salient as remote and hybrid work opens up more choices for white-collar workers to relocate to cities where their paychecks stretch further.
In over 20 cities — such as Houston, Tampa and Nashville — someone earning $250,000 could see a lower tax rate than those making $100,000 in cities like Baltimore and Philadelphia.
Higher taxes in cities like Portland go to support investments in education, health and human services, public safety and infrastructure — which may see less funding in states with lower tax rates. And while states like Florida and Texas don’t have an income tax, they often make up for that revenue loss in other ways, like levying higher property or sales taxes.
For residents contending with formidable housing costs and expenses in pricey cities like New York and San Francisco, a $250,000 salary has the purchasing power of only about $83,000 after accounting for taxes and adjusting the remaining amount for the local cost of living. By comparison, in less-pricey Portland, the purchasing power of a $250,000 salary after adjusting for taxes and cost of living comes out to about $120,000.
To conduct the analysis, SmartAsset used its paycheck calculator to account for 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 76 of the largest cities in the US using data from the Council for Community and Economic Research.
This article was provided by Bloomberg News.
