The Opportunity Cost of Staying in New York: What $1,000,000 a Year Really Costs You

Short answer: A New York City household earning $1,000,000 a year pays roughly $103,000 in combined state and city income tax, every year. In Texas, that number is zero, because Texas has no state income tax and no city income tax. But the tax you stop paying is only the start of the math.

Invest that annual saving at a conservative 6%, and it compounds to about $1.36 million in ten years, $3.8 million in twenty, and $8.2 million in thirty. The tax bill is the deposit. The compounding is the account.

(This is general information, not tax advice. Please run your own numbers with your CPA.)

Let's run one specific household, all the way through

I am a numbers person, so instead of talking in generalities, let me run an actual scenario start to finish. Every figure below is exactly what our relocation calculator returns, so you can reproduce it yourself: select New York City, enter $1,000,000 of income, married filing jointly, and set the return to 6%.

Here is our household: they live in Manhattan, they earn $1,000,000 a year, and they file jointly.

Step one: what they actually pay New York

This is the part that surprises people who only think about the state rate. A New York City resident pays two income taxes, not one.

-New York State income tax on $1,000,000: about $64,613

-New York City resident income tax (the piece people forget): about $38,760

-Combined: about $103,373 a year, or roughly 10.3% of income

That city tax is the quiet one. New York City stacks its own resident income tax, reaching about 3.876% at the high end, right on top of the state tax. It is the reason a Manhattan earner and someone an hour up the Hudson can make the same income and owe meaningfully different amounts. Move out of the five boroughs and the city tax disappears. Move to Texas and both disappear.

Step two: in Texas, that number is zero

Texas has no state income tax and no city income tax. So for this household, the entire $103,373 a year stops going out the door. That is not a one-time event. It repeats every single year they live in Texas.

Now, here is where most people stop thinking, and where they leave the real money on the table. They see "$103,000 a year saved" and think, great, nice raise. True. But that is the deposit, not the account. The question we actually care about is: what does that recurring saving become once you put it to work?

Step three: invest the savings, and let it compound

Take that $103,373 a year and invest it at a deliberately conservative 6%, compounded, adding the year's savings at the end of each year. Here is what it grows into:

-10 years: about $1,362,532

- 20 years: about $3,802,620

- 30 years: about $8,172,446

Read that again. The same income, the same career, the same life, just lived in a state that does not tax it, turns into more than $3.8 million of additional wealth over twenty years, and north of $8 million over thirty. Not because anyone earned more, but because the money that used to go to Albany and City Hall got to compound instead. That is the opportunity cost of staying, and it is far larger than the tax table alone ever makes it look.

Why I think about it this way

Before real estate, I spent sixteen years in finance, a good chunk of it as a statistical arbitrage trader. The first thing that world teaches you is that idle capital has a cost. A dollar paid in tax is not just gone, it is a dollar that never got the chance to compound. So when a client asks me how much they will save by moving, my honest answer is that the annual number is the boring part. The interesting number is what that saving becomes over a decade or three of compounding. That is the lens we bring to every relocation: a move like this is a capital allocation decision, and most agents will not treat it like one. They will show you a lifestyle. We will show you the math.

A few honest caveats, because I would want them

-This is income tax only. If you buy a home in Austin, Texas property tax (around 1.8%) is higher than New York City's (around 0.9%), so net that out. The calculator does it for you when you enter a home budget. Even after the offset, the income and city tax savings dominate at this income level.

-The brackets are estimates, using marginal New York rates. I did not model New York's high-earner benefit recapture, which would actually make the New York tax bill larger, so if anything these savings are conservative.

-6% is an assumption, not a promise. Markets do not move in a straight line. Use whatever rate you and your advisor believe in. The calculator lets you change it, and you will see the compounding number move with it.

-None of this is tax advice. Residency rules matter and New York scrutinizes departures. Confirm the specifics with your CPA before you act.

Run your own version

Change the income, change the filing status, change the return rate, change the horizon, the calculator will recompute the whole picture, including the one-time tax you would avoid on a stock or business sale if you have a liquidity event coming. It will not replace your CPA, and it is not meant to. It will tell you whether this is a conversation worth having. If it is, we would love to run your real numbers with you.

We are delighted to be your guides to Austin and Austin real estate, and always happy to nerd out on the numbers with you. Contact us for a personalized, complimentary analysis.

Cheers, Jen and the team

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Frequently asked questions

How much income tax does a $1 million earner pay in New York City?

About $103,000 a year for a household filing jointly: roughly $64,600 in New York State income tax plus about $38,800 in New York City resident tax. In Texas, both are zero, since Texas has no state or city income tax.

Why is living in Manhattan more expensive than the rest of New York, tax-wise?

Because New York City residents pay a city income tax (up to about 3.876%) on top of the state income tax (up to 10.9%). Outside the five boroughs there is no city tax. Both disappear in Texas.

What is the "opportunity cost" of staying in New York?

It is what your tax savings would become if invested instead of paid. For a $1 million NYC household saving about $103,000 a year, invested at a conservative 6%, that compounds to roughly $1.36 million in ten years, $3.8 million in twenty, and $8.2 million in thirty. The tax you stop paying is just the beginning.

Does moving from New York actually pencil out after Texas property taxes?

Yes, at high incomes, by a wide margin. Texas property tax (~1.8%) is higher than New York City's (~0.9%), so on a home purchase you net that out, but it is a fraction of the income and city tax you stop paying. The calculator shows the full picture, including the property-tax offset.

*This article is general information, not tax, legal, or investment advice. Tax outcomes and investment returns depend on your specific situation and are not guaranteed; consult a qualified CPA and financial advisor. New York rates per the NYS Department of Taxation and Finance and the NYC resident tax schedule; figures use marginal brackets and are deliberately conservative. All scenario figures match the Berbas Group relocation calculator (New York City, $1,000,000 income, married filing jointly, 6% return).*

See the full guide to relocating here.

*Jen Berbas is the team lead of the Berbas Group in Austin, Texas, and a contributor at Inman. A former statistical arbitrage trader, she brings an investment-minded, data-driven approach to helping high earners relocate and buy in Austin. [berbasgroup.com](https://www.berbasgroup.com/)*

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