The remote work revolution changed where people work. Now it is changing what they earn. As companies settle into permanent hybrid and remote policies, a critical question keeps surfacing: should you accept a pay cut to work remotely from a lower cost-of-living city?

The answer depends on the numbers—and they are more nuanced than most people think.

The State of Remote Salary Adjustments in 2026

Roughly 40% of US tech companies now apply some form of geographic pay differential for remote employees, according to compensation data from Glassdoor and Levels.fyi. The most common approach is tiered pay bands, where your salary is adjusted based on the metro area you live in.

Companies like GitLab and Buffer have published their geographic pay frameworks publicly. The adjustments typically range from 0% (no cut) to 25% below the headquarters benchmark. For example, a software engineer earning $180,000 in San Francisco might be offered $140,000–$155,000 for the same role performed from Austin or Denver.

However, a growing number of companies—including Airbnb, Spotify, and several well-funded startups—have adopted location-agnostic pay. They pay the same base regardless of where you sit. This trend is gaining ground, especially for senior and specialized roles where talent is scarce.

The Math That Actually Matters

A pay cut sounds bad in isolation. But the question is not "will I earn less?" It is "will I keep more?"

Consider a senior developer earning $190,000 in San Francisco. After California state income tax (roughly 9.3% at that bracket), federal taxes, and San Francisco's notoriously high housing costs (median one-bedroom rent: $3,200/month), their effective disposable income is around $85,000–$95,000 per year.

Now take that same developer working remotely from Austin at $155,000. Texas has no state income tax. Median one-bedroom rent in Austin is about $1,500. Their effective disposable income is roughly $90,000–$100,000—equal or better, despite the $35,000 pay cut on paper.

The takeaway: a 15–20% salary reduction paired with a 30–40% cost-of-living drop usually leaves you ahead.

When to Accept a Location Adjustment

Taking a geographic pay cut makes financial sense when:

  • The cost-of-living difference exceeds the salary cut. If you are moving from New York to a city where housing is 40% cheaper but your salary only drops 15%, you win.
  • You gain tax advantages. Relocating from a high-tax state (California, New York, Massachusetts) to a no-income-tax state (Texas, Florida, Washington, Nevada) can save $10,000–$25,000 annually on the same gross salary.
  • The role offers strong equity or bonus upside. Base salary cuts sting less when RSUs or performance bonuses remain pegged to the company's headquarters-level comp bands.
  • Quality of life improves materially. Less commuting, more space, proximity to family, or access to outdoor activities are real but harder to quantify benefits.

When to Push Back

Reject or negotiate the adjustment when:

  • The cut exceeds the cost-of-living difference. A 25% salary reduction to move from San Francisco to Seattle—a city that is only marginally cheaper—is a bad deal.
  • You are in a high-demand specialty. AI engineers, machine learning engineers, and senior infrastructure engineers can often command location-agnostic pay because supply is limited. Check what AI engineers earn across cities to confirm your leverage.
  • The company is not offering real flexibility. If they want you in the office two days a week anyway, a "remote" discount is not justified.

How to Negotiate Remote Compensation

Start by benchmarking. Use our salary insights directory to compare what your role pays in both the company's HQ city and your remote location. The gap between those two numbers is your negotiation range.

Frame the conversation around output, not location:

"I understand the company uses geographic bands. I would like to discuss landing closer to the [city] band rather than the [lower city] band, given my experience and the scope of this role. My output and availability will be identical regardless of where I sit."

If they cannot move on base, negotiate these levers instead:

  • Equity grants pegged to HQ-level comp
  • Signing bonus to offset the transition
  • Annual travel budget for in-person team gatherings
  • Home office stipend ($2,000–$5,000 is common)

The Bigger Picture

Remote work is still evolving. The companies that pay location-agnostic salaries tend to attract stronger talent, which creates competitive pressure on those that do not. Over the next few years, expect geographic adjustments to shrink—not disappear, but narrow.

In the meantime, run the math for your specific situation. A headline salary cut that puts more money in your pocket every month is not a cut at all. It is a raise in disguise.

Want to compare salaries across cities? Try our city comparison tool to see how your salary stacks up in different locations.