H1B Visa Compensation: The Bottom Line

A quick review of an H1B visa database revealed that in 2018 the median salary for an H1B visa position in San Francisco is $110,000.  Those numbers don’t reflect benefits or other add-ons that can affect total compensation, but they do give a starting point for evaluating the financial reality of working in the US with an H1B visa.

It’s Not All About the Money

First, it has to be acknowledged that many H1B visa applicants are not coming to work in the US to make their fortune.  Most understand that while salaries may be higher than in their home country, there are also higher costs of living in the US.

Many are motivated simply by the chance to live and work for a few years in the US, and then return home with more experience in their profession.  Others may be hoping to obtain permanent residency through the green card process, so working with an H1B visa is one available pathway.

However, there are those that want to earn and save money by working for a higher salary than is available in their own country, so it is worthwhile to take a look at the numbers to see if that is possible.

How Much Can You Save?

If you use the $110,000 salary as a starting point, then the first thing you have to look at is taxes.  If you are earning money in the US then you must pay taxes the same as any citizen. Most H1B visa workers would also become tax residents and pay the same tax rates as US citizens.

Using the new 2018 tax rates and personal deduction amounts, a single taxpayer with no dependents would pay around $26,000 in income taxes and social security on a salary of $110,000.  So, that leaves after tax income of $74,000. That probably still looks pretty good to an IT worker from India which accounts for over 70% of H1B visas in the US.

But then you have to look at the cost of living in San Francisco, one of the most expensive cities in the US.  You have to take your monthly paycheck of around $6000 and cover all of your expenses. Rent will be your biggest outlay, unless you are willing to share with one or more roommates.  Simple studio apartments in the Bay Area can run $2-3000 per month, plus utilities, and one-bedroom apartments are $3-5000 per month.

Even if your employer provides you with medical insurance and occasional on-site meals, you will still have transportation costs, food, clothing, utilities, personal items and entertainment.  Assuming that all adds up to $1500 per month (using public transportation) plus the median studio rent of $2500, you will have $2000 per month left over. You could save more or less, depending on your lifestyle and other expenses, but if you are married or have children then you probably won’t be able to save much at all.

Will Wages Increase Soon?

If the H1B bill gets passed that raises wage levels, then the median salary would also rise so it would be easier to save money.  Nonetheless, it does appear that the ability to save money is not really the main justification to leave your home country and work in the US.  

The work and life experience are probably the chief motives for most H1B workers, and of course you are able to have a decent standard of living in one of the world’s most interesting regions if you live in the Bay Area.

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  • October 3rd, 2018
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