Tech hubs where software engineers take home the most money

This is where software engineers make the most money after expenses and taxes. And, the top four aren’t in the Bay Area.

Find the tech hubs

The cities classified as “tech hubs” for this analysis were chosen because of their high percentage of software engineer jobs within their respective job markets. In these places, typically 1–3% of all employees in the city are software engineers. This number may seem low but considering the magnitude of jobs in certain industries, like the retail workforce, it’s actually quite high.

Using the city data from MapTitan Match, the tech hubs, in descending order of software engineer concentration, are:

Because of varying demand and cost of living, software engineers in these cities have both very different incomes and very different costs.

Make the largest salary

Of the eight tech hubs, here is a ranking based on the typical lower-bound salaries. 75% of the software engineers make this much or more:

  1. Seattle, WA ($108K)
  2. San Francisco, CA ($107K)
  3. San Jose, CA ($100K)
  4. Portland, OR ($86K)
  5. Austin, TX ($82K)
  6. Denver, CO ($81K)
  7. Raleigh, NC ($79K)
  8. Pittsburgh, PA ($64K)

There’s a huge difference between the typical salaries in Seattle and Pittsburgh. This disparity can be explained by very different costs of living, the availability and quality of talent, and the types and sizes of employers. Another factor is the experience of employees. A population with more high-level software engineers who are further along in their careers will skew the average upwards because they naturally command higher salaries.

Considering these salaries to be typical, a higher or lower top line doesn’t always equate to a higher or lower bottom line because of the differences in expenses and taxes throughout the country.

Take home the most money

After subtracting local, state, and federal taxes and subtracting the average person’s expenses for necessities like housing, food, transportation, healthcare, and utilities (each adjusted for cost of living), we get the average annual take-home income. Now our list has a new order:

  1. Seattle, WA ($45K)
  2. Austin, TX ($42K)
  3. Raleigh, NC ($36K)
  4. Denver, CO ($34K)
  5. San Jose, CA ($31K)
  6. Portland, OR ($29K)
  7. Pittsburgh, PA ($26K)
  8. San Francisco, CA ($24K)

While Seattle stuck to the #1 spot (and we’ll see some caveats with this result soon), San Francisco dropped from second to now last in our list, which was the largest negative difference. Conversely, Raleigh increased four places, showing how the Research Triangle Park region has a beneficial ratio of salaries to expenses.

It’s also worth noting that while Silicon Valley and the Bay Area is a global tech center, featuring many of the world’s most valuable companies, software engineers’ salaries get eaten up by higher costs of living and California’s nationally-high income taxes. Let’s dive in to the varying expenses in these cities first and then we’ll take a look at taxes.

Evaluate your expenses

Here are the most expensive and least expensive cities in each category compared to the national average:

Housing

Most expensive: San Francisco (+265.1%)
Least expensive: Raleigh (-16.6%)

Food

Most expensive: San Francisco (+25.2%)
Least expensive: Austin (-9.7%)

Transportation

Most expensive: San Francisco (+38.7%)
Least expensive: Austin (-9.1%)

Utilities

Most expensive: Seattle (+27.9%)
Least expensive: Portland (-23.2%)

Healthcare

Most expensive: San Francisco (+26.2%)
Least expensive: Pittsburgh (-7.3%)

This individual analysis helps us learn for our own cases. For instance, if you want to live in a house or apartment farther from the office, thus requiring a longer commute, maybe Austin is a better fit for you because of lower transportation costs. Similarly, if you frequently utilize healthcare services, maybe Pittsburgh is the right choice (not yet factoring in healthcare quality, which is a topic for another article).

After this breakdown, and even before taxes, we can start to see the final list order coming together and why San Francisco moved down and Austin and Raleigh moved up. Taxes are another fixed expense that also really affect your bottom line though.

Consider taxes

Washington

Seattle may be in the #1 spot in this research but there are special considerations to make depending on your lifestyle. While the state of Washington doesn’t have a personal income tax, sales taxes and property taxes are some of the highest in the country. These taxes will further lower your take-home income if you shop frequently or own a house (and they certainly contribute to rent prices). In fact, Seattle was the #3 most expensive of the eight cities for housing costs.

California

On the other hand, California has some of the highest sales and income taxes in the country, but lower property taxes. A lot of the high housing costs then come from demand, speculation, and other factors.

Texas

Texas is overall a very tax-friendly state and there’s no state income tax. This fact combined with lower cost of living is why Austin moved up three spots on the list.

Colorado

Colorado has low property taxes and low state sales taxes but there’s a small catch. Sales taxes often accumulate after adding in local contributions making the advantage slim or in some cases, being a disadvantage when the total becomes more costly than average.

Oregon

Oregon’s income tax rate is one of the highest in the country but property taxes are at about the median. However, Oregon does not impose a sales tax.

Pennsylvania

The income and sales taxes in Pennsylvania are lower than in other similar states. There’s one exception though: gas is taxed at the highest national rate.

North Carolina

Finally, North Carolina’s taxes are fairly average and in some settings, lower than average, like for property tax. Sales taxes largely depend on how much the local governments levy.

Learn for your own situation

While a higher salary figure is certainly exciting, it’s important to consider the underlying “real” salary. That is, how much money you actually have available to save and spend for yourself. These values differ widely just factoring in where that salary was earned, even if the job roles are nearly identical.

These calculations were performed using MapTitan’s city data. With a free MapTitan account, you can see your estimated salary and discretionary income (calculated automatically based on your job role) in over 120 locations across America. Take a look and leave a comment about the things you’ve learned!


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