Tech-worker relocation and state tax delta simulator
Quantify the take-home pay, cost-of-living adjustments, and multi-decade investable surplus when moving between high-tax states (CA, NY) and no-income-tax tech hubs (TX, WA).
RSUs are taxed as ordinary wage compensation at vest.
Relocation Net Impact
* Note: Investable surplus (after 401(k)) represents residual unencumbered annual cash flow remaining after taxes, annual rent/housing, and baseline cost-of-living adjustments, with elective pre-tax 401(k) retirement contributions already deducted from gross pay.
Future value of investing annual relocation surplus at 7% return
How the model works
Every step evaluates verifiable statutory tax schedules and cost-of-living formulas with visible mathematics.
1Federal Income Tax (2026 Statutory Brackets)
Federal taxable income equals gross ordinary income (base salary + cash bonus + vested RSUs) minus elective pre-tax 401(k) contributions (capped at $24,500) and the standard deduction ($16,100 Single, $32,200 Married Filing Jointly):
Tax_fed = Progressive(max(0, Gross - 401k - StdDed), Brackets_2026)Evaluated progressively across 10%, 12%, 22%, 24%, 32%, 35%, and 37% marginal brackets.
2FICA Payroll Taxes & Medicare Surcharges
Social Security tax applies at 6.2% up to the statutory 2026 wage base of $184,500. Medicare applies at 1.45% uncapped, plus a 0.9% Additional Medicare surtax above $200,000 (Single) or $250,000 (MFJ):
FICA = min(Wages, $184,500) * 0.062 + Wages * 0.0145 + max(0, Wages - Threshold) * 0.009FICA withholdings apply directly to earned wages and cannot be sheltered by elective 401(k) contributions.
3State & Local Income Taxes
State tax rules model statutory tax regimes across major tech centers:
CA = Progressive(Taxable, 1%-12.3%) + 1.3% SDI + 1% MentalHealth(>$1M)New York evaluates state brackets (4% to 10.9%) and optional NYC resident tax (3.078% to 3.876%). Washington levies 0% wage tax (+ 0.58% WA Cares Fund). Texas levies 0% income or payroll tax.
4Cost of Living & Purchasing Power
Annual living expenditure isolates direct rent/housing outlays from goods and services consumption:
Total_COL = (Monthly_Rent * 12) + ($32,000 * City_Index / 100)Investable annual surplus evaluates to Surplus = Net_TakeHome - Total_COL, quantifying unencumbered free cash flow after elective 401(k) contributions.
5Equivalent Salary Derivation
The equivalent salary derives the exact gross compensation in the destination state needed to preserve identical residual surplus:
Surplus(Salary_equiv, Taxes_dest, COL_dest) = Surplus_originA root-finding binary search converges to the required dollar compensation within 45 iterations.
6Compounded Wealth Differential Recurrence
Investing the annual surplus delta S = max(0, Surplus_dest - Surplus_origin) * shareInvested at expected annual return r compounds according to:
FV(t) = FV(t-1) * (1 + r) + S * (1 + r / 2)Assuming a half-year compounding convention for steady periodic savings contributions throughout each calendar year.
Assumptions and limits
To keep the comparative tax mechanics disciplined and mathematically transparent, the model observes deliberate boundary conditions:
RSU vestings and performance bonuses are taxed as ordinary wage compensation under statutory brackets, not preferential capital gains rates.
Reflects 2026 standard deductions ($16,100 Single, $32,200 MFJ), the $184,500 Social Security wage base limit, and statutory marginal tax brackets (Rev. Proc. 2025-32). Pre-tax 401(k) contributions are capped at the 2026 limit of $24,500.
High-tax origin states (such as California and New York) frequently apportion equity vestings based on workdays performed in that state between grant date and vest date. Trailing state apportionment is not simulated.
Washington state levies an excise tax on net long-term capital gains from secondary asset liquidations: 7% on long-term gains above $278,000 (2025 indexed standard deduction; note that DOR indexes it yearly) and 9.9% above $1,000,000. For primary home capital allocation, compare with our RSU-to-Housing Opportunity Cost Calculator.
Does not model Alternative Minimum Tax (AMT) from incentive stock options (ISOs), state tax credits, itemized deductions exceeding standard allowances, or real estate property tax assessments when purchasing rather than renting.
Frequently asked questions
How does state relocation affect vested RSUs vs unvested stock grants?+
RSUs that vest while resident in a state are taxed as ordinary wage income based on physical work allocation. Many high-tax states (such as California and New York) tax RSUs proportionally based on the work days performed in that state between grant and vesting, even after moving.
What is the equivalent salary calculation?+
The equivalent salary is the gross compensation required in the destination state to produce the exact same residual investable surplus after destination taxes, housing, and adjusted non-housing living expenses.
Does Washington state tax tech equity compensation?+
Washington does not levy an income tax on wage income or RSU vesting. However, Washington imposes an excise tax on net long-term capital gains: 7% on long-term gains above $278,000 (2025 indexed standard deduction; note that DOR indexes it yearly) and 9.9% above $1,000,000 when shares or assets are subsequently liquidated after vesting.
Related Resources
RSU-to-Housing Opportunity Cost Calculator
Model whether to sell vested tech equity for a home down payment or keep capital compounding.
Year-End Tax Optimization Checklist
Review multi-state W-2 reporting, retirement limits, and equity vesting before year-end.
Compound Interest Mechanics & Systems Guide
See the mathematical proof of how recurring monthly cash additions compound over time.
Net Worth Tracker
Track your unencumbered balance sheet and measure how relocations accelerate capital accumulation.
Low Overhead: Structural Friction and Fee Drag
Eliminate structural drag and recurring overhead so more capital flows into working assets.