Your 150k/year engineer is going to net about 100k, dropping it to 135k/year will have a net of about 90, so round numbers call it a 10k "loss" after taxes on income.
So if they save 1k/mo in expenses, they are ahead 2k a year net. I've made moves before that shifted my monthly expenses far more than that.
It's not obvious there aren't win-win version of this.
Try this with an income tax estimator. You need FICA, state, local, federal etc. people often underestimate all of this when they are tossing tax rates around.
Effective tax rate for a single earner of 150,000 in NYC with no extra deductions is a bit over 32%.
Remember that the before-tax delta here gets applied at the marginal rate, so it's always going to be knocked down a fair bit for higher earners; the net impact will be smaller.
Anyway I assumed above leaving NYC for somewhere else in NY.
It's easy to come up with scenarios where you might actually take home more with the pay cut (e.g. SF, CA -> Houston, TX). Housing costs there would be way lower (less than 1/2?).
There’s a myth about California’s sky high taxes. Looking at the overall tax burden (sales, property, income, etc) as a percent of income, CA doesn’t really even crack the top 10 states.
Your 150k/year engineer is going to net about 100k, dropping it to 135k/year will have a net of about 90, so round numbers call it a 10k "loss" after taxes on income.
So if they save 1k/mo in expenses, they are ahead 2k a year net. I've made moves before that shifted my monthly expenses far more than that.
It's not obvious there aren't win-win version of this.