One of the many drivers for many internationals to work in America on H1B or L1 Visa is the monetary benefits and savings they can make. The big question is how much money can you save in America ? What are the typical expenses ? How much is the cost of living in USA ? Let me shed some light on these and give you some numbers for getting a high level idea.
In general, the net amount of money you can save is the total amount of money that you make minus the taxes and total amount of expenses that you incur for living. While you may make more money, you need to factor in taxes as well that a state can have to come up with nex expenses.
- Net Savings = Income – ( Taxes + Expenses )
Let’s first look at the expenses that you would typically incur as an international on H1B or L1 visa.
Cost of Living in USA on H1B or L1 Visa ?
The below expenses are based on a big assumption that “You are married and living with your spouse, renting your own apartment” and you are being conservative and not living an extravagant life with high end cars and expensive house rented.
Cost in USD ($)
Additional Notes on expenses
|Rent ( double bed)|
|This can vary a lot by location you live. In bigger cities, this could be around $2500 to $3500 USD, depending on size and options. In smaller cities, this could be like about $800 or less.|
|Typical car down payment, if you buy a decent small size car on loan. This can go up to $600 or more, if you go for BMW or more expensive cars.|
|Car insurance varies a lot by driving record and place you live. You may pay double or more, if you live in big cities.|
|Average, if you have less commute. It can vary a lot by your travel. If you commute in high traffic cities, this can be as much as $250 USD.|
|If you have family plan with mobile carrier. This also can vary.|
|All the vegetables, snacks, etc. for cooking food. This may be more, if you cook more at home and your own country dishes…|
|Electricity + Cooking Gas + Water. This varies by region, in cold places, make sure you take where heat is included.|
|Calling home and others in home country. This can be less now a days with WhatsApp and FaceTime|
|This varies by your food habits. Assuming you take a lunch box to office, this is just for eating out in weekends or occasionally.|
|Movies, shopping, other misc. expenses|
|This again varies. If you buy lot of clothes and other items, it will be very high.|
|Health Insurance (Optional)|
100 to 200
|This is optional as many of the decent employers give health insurance, so I will not add this expense for total calculations. This can be high as well, if you want a really good plan.|
You can even save more or spend more based on your lifestyle. I have not included any expenses related to your travel, buying clothes, other home setup things like Sofas, dining tables, chairs, etc. Also, if you have kids, you will encounter some more expenses, which are not included in above.
Taxes you pay in US as H1B or L1 Visa holder
Taxes are a big part of your overall salary, you would end up paying anywhere around 35% as well depending on the state you live in and your status as single or married.
For example, If you make about $60,000 USD per year in USA, which is $5000 per month (Gross Salary). For instance, if you live in a state like Wisconsin, your take home Net Salary would be $3,600 per month ( approximate). See below from actual Payslip from Wisconsin state for someone making $5000 USD per month.
You can use something like ADP Pay Check Calculator to get an idea of Net Income that you will get after paying taxes. You can enter approximate numbers to get an idea. You can also read Taxes for Non-immigrant Visa Holders in USA to understand more.
Now that we know the Taxes and Expenses, let’s look at the savings.
How much can you save – Approximate Savings in State like WI ?
Based on above numbers, it comes out to below
|Gross Salary ( Per month)||$5000|
|Net Salary ( after taxes, per month)||$3,600|
All the above numbers are highly indicative and can vary based on state. Also, the take home or net salary varies by state with state taxes.
How can I estimate cost of living for other Cities or States in USA as H1B holder ?
There are two key things that you can look at to estimate the cost of living and how much you can save. As you can see from the above list, the biggest expense is Rent. If you check rental cost in a new city, you will get an idea. Also, next thing is to look at taxes in that state, once you have both of these, then you can use the numbers in above two tables and come up with your own living expense cost for any city in USA. In short, you need the below.
- Rental Expense – How much is the average rent in a city
- Taxes – How much are the state related taxes
The other expenses are pretty similar all across the US, except some insurance related things, factor in that aspect.
It is important that you understand the baseline savings that you can make, when you work on H1B Visa or L1 visa. Just looking at 60,000 USD per year, without considering taxes and your expenses, will give you wrong perceptions about savings and your financial planning.
Did I miss any expenses ? How are your expenses living in US ? Share your thoughts in comments.
You can also read Cost of living in USA as Student on F1 Visa