Remote Pay Cut Tradeoff

When the cut is worth taking

Most tech employees underestimate how much pay cut they can absorb on a major COL move. The intuition "10% cut = 10% worse" misses two compounding effects:

• Tax rate also drops. SF→Austin loses ~13 percentage points of effective tax (37% → 24%). On $200K gross, that's $26K of "found money" that often dwarfs the pay cut.
• Expenses scale linearly with COL. If you were spending 75% of take-home in SF, in Austin you spend 75% of a much-cheaper basket. The expense reduction often offsets a 15-20% pay cut entirely.
• Companies are bad at calibrating cuts. Most use simplistic location tiers; few model the COL × tax interaction precisely. Their offer is often more conservative than the math justifies.

The break-even pay cut is the headline output. For SF→Austin at $200K with standard params, break-even is around 35–40%. Companies typically offer 10–20% — meaning you have 15–25 percentage points of margin. That margin is what funds the higher savings rate.

Math runs locally. Inputs never leave your browser. Source on github.

Real-world scenarios

• Geo-Arbitrage Calculator — same model with no pay cut. Run both tools side-by-side: this one shows what the company's offer is worth; the other shows the theoretical maximum.
• Tech TC Breakdown — decompose your TC into base/bonus/RSU before applying the pay cut. Companies usually only cut base; bonus and equity may be unchanged or differ.
• Promo vs Job Hop — if the cut is too steep, an external offer at a competing remote-friendly company often beats accepting the cut.