Why the Higher-Paying Contract Isn't
August 2, 2026
Planning tool, not tax advice
Numbers in this post are estimates based on publicly available tax tables. Your actual paystub and tax outcome will vary. Consult a tax professional before making financial decisions about a contract.
Two offers land in your inbox the same week.
One is $3,000 a week in the San Francisco Bay Area. The other is $2,600 a week in Houston. Four hundred dollars a week apart — $5,200 across a 13-week assignment. It doesn't feel like a close call.
Work it through and the Houston contract puts more money in your account. Not marginally. By about $1,100 over the contract, which is a $6,300 swing from what the headline numbers implied.
Nothing here is a trick. The two numbers being compared just aren't the same kind of number.
The figures below are worked examples with realistic values, not scraped from two specific contracts. The rates are estimates to show the shape of the math. Your split, your states, and your housing quote will move every line.
The two offers
Both are 36 hours a week for 13 weeks. What matters is the split, which you have to ask for — see the last section.
| Offer A — Bay Area | Offer B — Houston | |
|---|---|---|
| Weekly package | $3,000 | $2,600 |
| Taxable hourly | $32/hr → $1,152/wk | $30/hr → $1,080/wk |
| Weekly stipends | $1,848 | $1,520 |
Step 1: Tax only the taxable part
Stipends aren't taxed if you maintain a tax home (that's a whole separate question — see Do You Actually Have a Tax Home?). So tax applies to the hourly wage only, and California takes a cut that Texas doesn't.
Offer A, on $1,152 taxable:
- Federal, ~12% → $138
- FICA + Medicare, 7.65% → $88
- California, ~5% → $58
- Tax: ~$284
Offer B, on $1,080 taxable:
- Federal, ~12% → $130
- FICA + Medicare, 7.65% → $83
- Texas, 0% → $0
- Tax: ~$212
Notice what happened. Offer A has the higher wage, but after tax both land at almost exactly $868 of net hourly pay. The entire Bay Area wage premium was consumed by California income tax.
Step 2: Add the stipends back
| Offer A | Offer B | |
|---|---|---|
| Net taxable pay | $868 | $868 |
| Stipends (untaxed) | $1,848 | $1,520 |
| Weekly take-home | $2,716 | $2,388 |
Offer A is still ahead — $328 a week. The $400 headline gap has already shrunk by nearly a fifth, and we haven't touched the biggest variable yet.
Step 3: Subtract what housing actually costs
This is where it turns over. A stipend is not income — it's a reimbursement, and it's only worth what's left after you pay for somewhere to live.
Furnished short-term housing near a Bay Area hospital runs roughly $3,400 a
month ($785/week). Comparable housing in Houston runs closer to $1,600 a
month ($369/week).
| Offer A | Offer B | |
|---|---|---|
| Weekly take-home | $2,716 | $2,388 |
| Housing | −$785 | −$369 |
| Actually yours | $1,931 | $2,019 |
Offer B wins by $87 a week — about $1,130 over 13 weeks.
The offer that looked $5,200 better is $1,130 worse. And Offer B's stipend covers its housing with $1,151 a week left over, while Offer A's covers its housing with $1,063 — the "generous" stipend was generous because it had to be.
What actually moved the needle
Neither the hourly rate nor the headline package. Two things did:
- State income tax. A state with no income tax is a raise that never appears on the offer sheet. Zero-tax states can quote lower and still pay more.
- Housing cost relative to the stipend. A bigger stipend in an expensive market is not a bigger stipend. The only figure that means anything is what remains after rent.
Both are invisible in the number a recruiter texts you.
Don't run this from memory
The math isn't hard, but it's four steps across two contracts and it's easy to compare the wrong lines — which is the entire reason the headline number wins arguments it shouldn't.
The side-by-side comparison in TravelNurse Rate does this on your own figures: enter both offers, and it applies each state's tax to the taxable portion, keeps the stipends separate, and subtracts your real costs so the two contracts land on the same basis. It runs in your browser, no account needed, and it uses exactly the numbers you were quoted — no assumed "typical" stipend filling in a blank you left empty.
What to ask before you can do any of this
None of this works from a blended weekly number. You need three things, and a straight-shooting recruiter will send all three without flinching:
"Before I compare these — can you send me the taxable hourly rate and the stipend amounts broken out separately, and confirm the guaranteed hours?"
Then get your own housing quote for the actual assignment city. Don't accept the agency's estimate of what housing costs; it's the single largest uncontrolled variable in the entire comparison, and it's the one nobody verifies.
The best-paying contract is rarely the one with the biggest number on it. It's the one with the most left over.