I'd definitely keep in mind that those are after-tax figures, though. At the higher income levels, CA+Federal taxes hover around 50%. So, roughly double that rent difference to get the salary offset needed.
When comparing alternatives you want to look at marginal rate. Above $82k, your marginal tax rate is: 24% federal income + 6.3% social security + 1.45% medicare + 9.3% California + 1.5% San Francisco for a total of 43%. This is not the same thing as paying half your income in taxes, but it is paying (nearly) half the additional income in taxes.
50% is a high estimate, good for budgeting though. With property taxes, vehicle registration fees (aka taxes), school fundraising (aka taxes), tolls (also tax), health insurance (a tax if it’s mandatory), and other fees for dealing with government, you get pretty close to 50%.
The only way to beat this is to make a significant portion of your income via capital gains, that’s one big advantage of the real estate business, various loopholes exist to let you minimize taxes (like 1031 exchanges) on increases in your net worth.
What’s the 1.5% SF tax here ? Never heard of it. Isn’t SSN and Medicare only apply to 100k of income ? Also, you have deductions for mortgage, state taxes, property taxes that lower your tax liability quite a bit. I would be surprised if anyone paid more than 30% effective tax rate on their income
Sorry, I meant marginal tax rate, since we’re looking at the diff. At the $300k level, that’s around 35% Federal, and 11.3% CA. CA also has a relatively high 9% sales tax, and I believe SF proper has some special taxes as well.
From what I've seen I think it's around 38-40% state+federal when you reach about $200-300k then about 50% by $1m annual income... Might be better or worse this year with the new tax bill, not sure.
> Might be better or worse this year with the new tax bill, not sure.
Much better for those who can arguably restructure their salary as business income (e.g., real estate developers, some contractors), then they only get a 15% tax. Far worse for those who cant make that argument and live in high tax states like NY, CA, and many others.