:max_bytes(150000):strip_icc()/GettyImages-2180448349-47096c4b2519407399a83ce452175c26.jpg "Uncover the True Annual Earnings Boost You Didn’t Know You Had")
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Key Takeaways
- Remote work can unlock thousands of dollars in hidden annual value.
- The costs you avoid by no longer commuting, including the time saved, add up quickly, as do other savings, like not eating out for lunch.
- Tax breaks and location flexibility also provide additional savings opportunities.
If you work remotely, there’s a good chance you’re quietly getting a raise you’ve never counted on—the savings you accumulate can add up. This includes less time wasted on commuting to work, as well as more opportunities to live and work the way you want.
The Direct Financial Savings
The most obvious “raise” remote workers get is the money they stop burning on getting to the office. According to Clever Real Estate, the average commuter spends $8,466 per year on their commute, including $867 on fuel and $410 on vehicle maintenance.
Office taxes that remote workers can also avoid are purchased lunches, impulse coffees, dry cleaning, and a pricier wardrobe. One estimate found that the average worker saves $6,000 per year if they work remotely part-time, and $12,000 per year if they work remotely full-time. If you make the nationwide median salary of $63,180 a year, this can quickly add up to a double-digit after-tax increase, even before you begin to discuss time.
Fast Fact
Working from home may also change how you spend your money. A study out this month from the National Bureau of Economic Research found that remote workers pay higher prices on groceries, use fewer deals, and shop more frequently. The researchers calculated that working from home increases grocery bills by about 1%, an effect concentrated in married households where shopping responsibility shifted to the spouse now working from home.
The Time Dividend
The average one-way commute in the U.S. takes 27.2 minutes, which is almost an hour each day. LendingTree crunched the numbers using earnings data and found that the value of this lost time is $9,470 per year. In some locations, the average worker pays about double that in lost time, because their average commute is longer and their average wage is higher. In Bridgeport, Connecticut, it’s $18,472 per year. In San Francisco, it’s $18,175 per year.
However, many remote workers are using this saved time for their jobs, not side hustles or other income-generating activities. In fact, the National Bureau of Economic Research found that in the U.S., the typical remote worker is devoting 40% of the time they save not commuting (on average, it’s 22 minutes of the 55 minutes they don’t commute per day) to their primary or secondary job. The workers with the secondary jobs have the right idea—otherwise, you’re arguably wasting an opportunity to use that time to earn more.
According to the researchers, the remaining time, on average, goes toward leisure, 34%, and caregiving, 11%.
Important
Even if you value your time at a modest hourly rate, turning just a fraction of that saved time into freelance work, professional upskilling, or a side hustle can mimic another few percentage points of “pay,” pushing your real compensation well past your official salary band.
Tax and Location Advantages
Remote work also opens the door to tax and geography advantages that office-bound workers often can’t access.
In the U.S., W‑2 employees can’t deduct home‑office expenses, but some self‑employed workers and contractors can, as long as they follow IRS rules. This reduces your taxable income, saving you money on taxes. Some employers also offer pre‑tax commuter benefits for hybrid days, which can reduce overall tax drag on required trips.
In addition, as a remote worker, you might be able to live in a low cost-of-living area while earning a salary that’s based on a headquarters that’s located in a higher cost-of-living market.
How To Calculate Your Own Boost
To see your personal remote-work “raise,” you can build a simple annual tally:
- Total your former commuting expenses. This could include fuel, parking, tolls, transit passes, as well as increased car insurance and increased maintenance.
- Add in lifestyle savings. How much are you spending each week on office lunches, coffees, work clothes, and dry cleaning?
- Put a price on your time. Add up all the hours of commuting you’ll save and multiply them by an hourly rate of your choosing.
- Factor in taxes. Include any deductions that you qualify for as a result of working at home. (Remember, W-2 employees aren’t eligible for the home office deduction, though that may change.)
- Calculate your cost-of-living savings. If you’re able to relocate to a lower cost-of-living area, calculate the difference in your cost of living compared with your previous lifestyle.
Finally, divide your total annual savings by your base salary to get your personal hidden earnings percentage. The number may surprise you.
