A married couple with two children earning $120,000 in New York City could increase their real take-home pay by 27% — more than $23,000 annually — by relocating to Nashville, according to a new report published by the Manhattan Institute in May 2026. The analysis, which includes an interactive tax calculator covering all 50 states and the District of Columbia, demonstrates that not just the wealthy but also low- and middle-income Americans stand to gain significantly from crossing state lines. The report examines how combined federal, state, local, and payroll taxes interact with regional cost-of-living differences to shape households' actual purchasing power.
The data reveals substantial variation in tax burdens and real income across locations. The New York City couple earning $120,000 faces a total tax bill of $32,693 — 25.3% of their total compensation — when federal income tax, payroll taxes, state income tax, city income tax, and New York's paid family leave contributions are combined. Their take-home pay of $96,487 translates to just $85,690 in purchasing power after adjusting for New York City's 12.6% higher cost of living. In Nashville, even if the wife loses her $20,000 part-time job in the move, the family's purchasing power would climb to $92,534 — nearly 8% higher despite the income drop. A single worker making $60,000 in Los Angeles sees similar gains: moving to Orlando would lift his price-adjusted after-tax income by nearly 18%, adding over $600 monthly to his budget. The report finds that even the lowest earners can see increases exceeding 10% by relocating, while the highest earners may gain over 30%.
The report documents how the migration pattern from high-tax to low-tax states has intensified since 2020. The trend became more acute following the Covid-19 pandemic, when remote work arrangements allowed many employees to relocate while keeping their jobs and companies chose to reduce office space or move operations entirely. According to the analysis, Americans are also increasingly sorting themselves by political preferences, with tax policy serving as one driver of these choices. The report notes that while most coverage has focused on multimillionaires moving from places like New York City to Palm Beach to avoid income taxes, the financial incentives extend far down the income ladder.
The mechanisms behind these gains involve both direct tax savings and cost-of-living adjustments. States without income taxes — such as Florida, Tennessee, and Texas — eliminate one layer of taxation entirely, while places like New York City impose three separate income levies: federal, state, and municipal. The effective marginal tax rate for the New York City couple reaches 36.3%, meaning more than one-third of each additional dollar earned goes to taxes. Beyond the tax wedge, housing and everyday goods cost substantially less in many low-tax jurisdictions. Nashville runs 3.7% cheaper than the national average, while New York City sits 12.6% above it — a 16.3 percentage-point spread that compounds the direct tax savings. The report's interactive tool models 2026 tax law across 384 metropolitan areas, incorporating federal brackets, state deductions, child tax credits, earned income credits, and state-specific payroll programs for disability and paid family leave.
The report's tax calculator allows users to compare any two locations and see precisely how much they'd gain or lose by moving at various income levels and household compositions. The tool accounts for itemized deductions, mortgage interest, property taxes, and charitable contributions, and it adjusts wages by local price levels to show real purchasing power. For households considering relocation, the message is clear: tax differentials combined with cost-of-living gaps can shift real income by double-digit percentages, turning a lateral career move into a significant raise without changing jobs or salaries.