At one time, a six-figure salary pretty much guaranteed a comfortable life, even in more expensive cities. But nowadays, more Americans are feeling the squeeze.
While inflation has cooled from its pandemic peak, wage growth isn’t keeping pace with inflation, and Americans are faced with higher costs for housing, healthcare and education amid an environment of tariffs and high interest rates.
A study by Professpost found that the value of a $100,000 salary very much depends on where you live [1]. The study compared 30 U.S. cities by modeling after-tax income and adjusting for local prices.
The verdict? “In 2025, $100,000 can provide comfort or barely cover the basics, depending on where you live.”
Here’s where you’ll get the most bang for your buck.
The study’s calculations took into account the standard federal income tax deduction ($15,750 for single filers), payroll taxes including Social Security and Medicare, state and local income taxes, sales taxes and a cost of living adjustment, making “a dollar in Houston directly comparable to a dollar in New York.”
Southern and Midwestern metros “dominate the top of the list,” according to the study. Memphis, TN, is the city where your dollar stretches the furthest, followed by four Texan cities: El Paso, San Antonio, Fort Worth and Houston.
In all 30 cities, federal income tax and payroll taxes were the same. But Tennessee and Texas citizens don’t have to pay state or local income taxes, which makes a big difference. Compare that to Portland, where state taxes add up to $8,456.
In Texas, the cost of living is 5% lower than the national average, according to RentCafe [2]. Housing is 16% lower and groceries are 3% lower, though utilities are 1% higher.
Perhaps not surprisingly, New York City, San Francisco and Los Angeles were all in the bottom five of the Professpost study. In New York City, a combination of high taxes and steep living costs leaves a “$100k salary feeling closer to $60k nationally” [1].
The study found that for those who prioritize “lifestyle and financial breathing room,” then Southern and Midwestern cities are among the best choices. For those looking for career opportunities in coastal hubs, “the trade-off is clear: a six-figure salary doesn’t stretch as far as it used to.”
Read more: Rich, young Americans are ditching stocks — here are the alternative assets they’re banking on instead
Living in one of these states could make it easier to afford a comfortable lifestyle, but it’s not always possible to just pick up and move to another city (and there are costs to moving, too).
And it won’t help you retire any earlier if you have poor spending and saving habits.
No matter where you live, there are actions you can take to make the most of your income (considering that the real median household income was $80,610 in 2023, according to the U.S. Census Bureau from 2023, the latest available) [3].
Many financial experts suggest starting with a budget, taking into account your total household income and expenses, including housing (insurance, utilities and property taxes), food, transportation, health insurance and personal costs such as child care. It should also leave room for savings and investments.
There are a few different budgeting frameworks to choose from, like the 70/20/10 rule in which you set aside 70% of after-tax income for expenses, 20% for savings and investments and 10% for debt payments and/or donations. A variation on that framework is the 50/30/20 rule needs, wants and savings/debt repayment).
Several budgeting apps or online tools are available to help, or you may want to work directly with a financial planner.
Build an emergency fund if you don’t already have one (about three to six months of living expenses) and start paying down high-interest debt, such as payday loans and credit card debt.
Debt repayment methods include the snowball method (eliminating debts from smallest to largest, making minimum payments on all except the smallest one until it’s paid off) and the avalanche method (paying off the debt with the highest interest rate first, then repeat).
If you’re struggling, you may be able to negotiate a settlement, repayment plan or debt consolidation plan with your lenders.
From there, your extra money can be directed toward savings and investments. Take advantage of any employer-sponsored retirement savings plans, such as a 401(k), especially if your employer matches a percentage of your contributions.
Also consider tax-advantaged accounts.
A tax-deferred account means you don’t pay taxes on your contributions, but you’ll pay taxes on future withdrawals (typically when you have a smaller income in retirement). Tax-deferred accounts include traditional individual retirement accounts (IRAs) and 401(k)s.
A tax-exempt account means you make contributions with after-tax dollars, so withdrawals in retirement aren’t taxed. These accounts include Roth IRAs and Roth 401(k)s.
In 2025, the 401(k) annual contribution limit is $23,500 (for employee contributions) and $70,000 (for combined employee/employer contributions). If you’re 50-59 or 64+, you can make a catch-up contribution of up to $7,500 and, beginning this year, those 60-63 can contribute an extra $11,250.
IRA contributions are capped at $7,000 in 2025 for those under the age of 50 and $8,000 for those 50+.
You could also invest a portion of your income in a variety of investment vehicles, such as stocks, bonds, exchange-traded funds or even commodities. Many financial experts recommend diversification (not putting all your eggs in one basket) to protect your assets, particularly during times of economic volatility.
This doesn’t guarantee protection against a loss, but spreading your investments across asset classes, industries and geographies can help to reduce risk. So, if one investment is performing poorly, the idea behind diversification is that this investment could be offset by other, better-performing investments.
If you’re budgeting, saving and investing but still can’t make ends meet, then you just might want to consider a move to a cheaper locale — or reconsider where you want to spend your golden years.
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[1]. Professpost. “Best & worst cities for a $100k salary in 2025 (After taxes + cost of living)”
[2]. RentCafe. “Cost of living in Texas”
[3]. U.S. Census Bureau. “Income in the United States: 2023”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.