How We Calculate: Methodology & Data Sources

Tax Calculation Methodology

We apply each country's official income tax brackets, social security rates, and applicable deductions to calculate net (take-home) pay from gross salary. Our tax engine processes:

• Progressive income tax brackets (federal, state, and local where applicable)
• Mandatory social security contributions (employee and employer portions)
• National insurance and pension contributions
• Standard deductions and personal allowances
• Tax credits and personal allowances

Official Tax Data Sources by Country

We source tax rates directly from government authorities:

Update frequency: Tax rates are updated when governments publish new fiscal year rates. We update all 45+ supported countries for each fiscal year and when major tax law changes are enacted.

Cost of Living Data

Instead of relying on a single data provider, we combine cost-of-living indices from multiple independent sources into a composite index. This reduces the bias inherent in any single dataset and produces more accurate city-level comparisons.

Data Sources

We aggregate data from the following providers, each with its own methodology and contributor base:

How the Composite Index Works

For each city, we collect the cost-of-living index from every available source and compute a trimmed composite:

1. Collect all available indices for the city (typically 2-5 sources).
2. Outlier trimming: if 3+ sources exist and one deviates by more than 10% from the leave-one-out average, it is dropped.
3. Average the remaining values to produce the final composite index.

All indices are normalized to the same scale (New York City = 100) before merging. The composite index is used for all cost-of-living calculations, comparisons, and rankings across the site.

Sub-indices (Rent, Groceries, Restaurants, Purchasing Power) remain sourced from Numbeo only, as we do not yet have multi-source data for individual spending categories.

Categories Covered

Update frequency: Cost-of-living data is refreshed periodically from all sources. When a source publishes updated indices, they are merged into the composite within the next data update cycle.

Currency Conversion

We use recent exchange rates from FloatRates, a trusted financial data provider, to convert salaries between currencies. Our system uses mid-market rates (the midpoint between buy and sell prices) to provide neutral, unbiased conversions.

• Update frequency: Exchange rates are updated daily during trading hours
• Rate type: Mid-market spot rates (not bank transfer rates)
• Coverage: All major currencies plus 150+ global currencies

Important note: We use mid-market rates. Actual transfer rates may differ due to bank fees, spreads, and transfer service charges. For large transfers, consult a foreign exchange specialist.

Data Limitations & Disclaimers

While we strive for accuracy, our calculations have inherent limitations:

Tax Calculation Limitations

• Standard employment only: Calculations assume W-2 employment (US) or PAYE (UK). Self-employed, contractor, and freelance tax situations are not supported
• Standard deductions: We use standard deductions. Itemized deductions (mortgage interest, charitable donations, medical expenses) are not calculated
• Simplified scenarios: We assume single filer with no dependents unless otherwise specified. Married filing jointly, head of household, and dependent credits require manual adjustment
• Regional tax coverage: US state taxes are included for major states, but some local city taxes and Canadian provincial variations may not be fully captured

Cost of Living Limitations

• City-wide averages: Data represents city averages. Neighborhoods within cities vary significantly (Manhattan vs. Brooklyn, Central London vs. Outer London)
• Lifestyle assumptions: Calculations assume moderate lifestyle. Luxury vs. budget living can differ by 50%+ from averages
• Crowdsourced data quality: Numbeo data is user-contributed. Quality varies by city (major cities have more data points, smaller cities may have limited samples)

Currency & Timing

• Exchange rate volatility: Currency rates fluctuate daily. Results are point-in-time estimates, not long-term guarantees
• Transfer fees not included: Actual money transfer involves fees (wire fees, FX spreads) which can reduce effective exchange rates by 1-5%

Methodology Review & Updates

This methodology page was last reviewed on February 2026. Tax rates reflect fiscal year 2025-2026 brackets for all supported countries. We update our methodology when new fiscal year rates are published or when major tax law changes occur.

To report data errors or suggest methodology improvements, contact us at hello@shouldimove.co.