This. I'm in the 50-100K income bracket myself, and $500 is more or less my hard max for a suit purchase (that doesn't count tailoring expenses into the actual cost, which can quickly add up), and this is coming from someone who values good clothes and is not one inclined to expensive habits. I think spending in excess of 1% of your yearly salary on a suit could be trouble from a financial perspective, especially if you need more than a few.
I think your 1% rule is a good one. In the past I've generally budgeted to spend no more than 5% of my gross income (before commissions and bonuses) on clothing per year, total. I was in a fairly unusual situation, though - dual income, no kids, no debt, cheap rent. We've recently purchased a condo, so my new budget is no more than 0% of my gross income