Six-figure incomes can leave households with less discretionary income than families earning $80,000

Six-figure earners in high-cost coastal regions can have less discretionary income than middle-class families earning $80,000 in low-tax areas. This happens because federal, state, and local taxes take 40% to 45% of the gross income of any household earning six figures. In a $200,000 household, the after-tax income is $110,000 to $120,000. For a couple making $150,000 in cities like San Francisco or New York, housing costs range from $3,500 to $4,500 per month. These housing expenses total $54,000 per year, leaving $38,000 for the rest of the year. The household is left with $38,000 to $66,000 for food, transportation, transportation, insurance, healthcare, and childcare. High-cost coastal areas leave six-figure earners with less discretionary income than a middle-class family earning $80,000 in a region with little taxation.