Step 1 — Allocate gross income to categories. The BEA RPP framework breaks personal consumption into the following weights (from the Consumer Expenditure Survey, 2023 metro-area data, adapted to a mid-to-upper-middle household):
- Housing — 32% (rent or mortgage + property tax). This is the category that drives 60-80% of the cross-metro variance.
- Transportation — 12% (vehicles, fuel, insurance, transit).
- Groceries / food — 8%.
- Healthcare — 8% (premiums + out-of-pocket; varies by employer / Medicare).
- Utilities — 5% (electric, gas, water, internet).
- Miscellaneous goods & services — 20% (apparel, entertainment, personal care, household supplies).
- Taxes (state + local income) — 15% (computed separately from your stated gross).
Step 2 — Apply RPP index to each category. The BEA publishes a national average of 100 and a separate index for each metro. San Francisco's housing RPP is ~190; Austin's is ~110. So a $32,000 housing budget in SF becomes $32,000 × 110/190 = $18,526 in Austin to buy the same housing.
Step 3 — Recompute taxes at the destination. The tool uses the actual marginal state income-tax rate for the destination, plus any local tax (NYC, Philadelphia, Detroit, San Francisco payroll). Taxes do not move with RPP; they move with state code.
Step 4 — Sum to equivalent gross. Total all the destination-adjusted category dollars, gross up for the destination tax rate, and that is the equivalent gross income required.
Equivalent gross formula: EquivGross = (sum of destination category costs) / (1 − total marginal tax rate at destination)
Caveat on housing weight. If you currently own your home and the destination requires renting (or vice versa), the housing-weight assumption breaks. The tool reports a "housing-only" equivalence number to let you eyeball the housing-driven part separately.