How much will I save moving from California to Texas?

At $100,000 income, you'll save approximately $5,762 per year on state income tax alone by moving from California to Texas. California has a top rate of 13.3% while Texas has 0% state income tax. However, Texas has higher property taxes (1.6% vs 0.76%), so total savings depend on whether you own property.

What is the state income tax rate in California vs Texas?

California has progressive state income tax rates from 1% to 13.3% (the highest in the nation). Texas has no state income tax - it's constitutionally prohibited. This means all your income in Texas is exempt from state income tax.

Is Texas really tax-free?

Texas has no state income tax, but it's not completely tax-free. Texas makes up revenue through higher property taxes (averaging 1.6% of home value) and sales tax (6.25%-8.25%). However, if you rent or earn high income, Texas is typically much cheaper overall.

Why are people moving from California to Texas?

People move from California to Texas for: 1) Zero state income tax, 2) Much lower cost of living (median home $350K vs $800K), 3) Business-friendly policies, 4) Growing tech scene in Austin. Companies like Tesla, Oracle, and HP Enterprise have relocated headquarters to Texas.

What are the property tax differences between California and Texas?

California property tax averages 0.76% of home value (limited by Prop 13), while Texas averages 1.6%. On a $500K home: California = $3,800/year, Texas = $8,000/year. However, Texas homes are typically 50%+ cheaper, so the actual dollar amount may be similar.

California vs Texas Taxes 2026: Save $8,000+/Year Moving to TX

The Big Picture

🌴 California

13.3%

Highest in the Nation

9 progressive brackets
1% - 13.3%

⭐ Texas

0%

No State Income Tax

Constitutional prohibition
on income tax

💰 Typical Annual Savings

At $100,000 income:

$5,762

That's $480/month back in your pocket!

Calculate Your Personal Savings

Annual Income ($) Filing Status

Your Tax Comparison

California

Income: $0

State Tax: $0

Take Home: $0

Texas

Income: $0

State Tax: $0

Take Home: $0

🎉 Your Annual Tax Savings in Texas

$0

Tax Savings by Income Level

Income	CA State Tax	TX State Tax	Annual Savings	10-Year Savings
$50,000	$1,711	$0	$1,711	$17,110
$75,000	$3,349	$0	$3,349	$33,490
$100,000	$5,762	$0	$5,762	$57,620
$150,000	$10,991	$0	$10,991	$109,910
$250,000	$22,471	$0	$22,471	$224,710

California Pros & Cons

✅ Pros

Perfect weather year-round
Tech hub (Silicon Valley, SF, LA)
World-class universities (Stanford, Berkeley, UCLA)
Ocean access, mountains, deserts
Progressive policies, diversity
Entertainment industry capital
Strong worker protections

❌ Cons

Highest state income tax (13.3%)
Extremely high cost of living
Housing crisis (median home $800k+)
Traffic congestion
High sales tax (7.25%-10.25%)
Wildfire risk
Water scarcity issues

Texas Pros & Cons

✅ Pros

0% state income tax
Affordable housing ($300k median)
No personal property tax
Booming economy (2nd largest GDP)
Tech growth (Austin "Silicon Hills")
Business-friendly policies
No estate tax

❌ Cons

High property taxes (1.6% average)
Hot, humid summers
Hurricane risk (coastal areas)
High sales tax (6.25%-8.25%)
Less public transportation
Fewer worker protections
Power grid concerns

The Real Cost of Living Difference

🏠 Housing Comparison

San Francisco 2BR: ~$3,500/month

Austin 2BR: ~$1,800/month

Savings: $1,700/month ($20,400/year)

🏡 Property Taxes

California: ~0.76% of home value (Prop 13 limits increases)

Texas: ~1.60% of home value (no state income tax offset)

On $500k home:

California: $3,800/year
Texas: $8,000/year
Difference: $4,200/year more in TX

⚠️ The Trade-off

At $100k income:

Save $5,762/year on income tax in TX
Pay ~$4,200/year more on property tax in TX (on $500k home)
Net savings: ~$1,562/year

BUT: Housing is SO much cheaper in TX that you might buy a bigger/nicer home for the same price, making the property tax difference feel larger.

When Moving to Texas Makes Sense

                ✅ Move to Texas if you:
                Earn $75k+ (bigger tax savings)
Work remotely or in tech/energy/finance
Want to buy a house (way more affordable)
Are starting a business (better policies)
Can handle hot weather
Value lower cost of living over beaches

            

⚠️ Stay in California if you:

Work in entertainment/Hollywood
Need specific CA tech ecosystem (deep specialization)
Have strong family/social ties
Value weather and outdoor access above all
Earn under $50k (tax savings are small)
Can't handle humidity and heat

The Tech Migration: Why Companies Are Moving

Since 2020, major companies have relocated from CA to TX:

Tesla: Headquarters moved to Austin (2021)
Oracle: Headquarters moved to Austin (2020)
Hewlett Packard Enterprise: Moved to Houston (2020)
CBRE: Moved to Dallas (2020)
Charles Schwab: Moved to Westlake (2021)

                Why they're moving:
                Corporate tax savings - No state corporate income tax in TX
Employee retention - Lower cost of living = competitive salaries go further
Office space costs - Austin/Dallas ~50% cheaper than SF/LA
Business incentives - TX offers aggressive relocation packages

            

Best Texas Cities for CA Transplants

🎸 Austin

Best for: Tech workers, creatives, outdoors enthusiasts

Vibe: "Keep Austin Weird" - liberal, artsy, music scene

Salary: Tech salaries 70-80% of SF but housing 50% cheaper

🏢 Dallas

Best for: Finance, corporate, families

Vibe: Business-focused, suburban, traditional

Salary: Strong corporate jobs, major HQs

🚀 Houston

Best for: Energy, healthcare, aerospace

Vibe: Diverse, international, humid

Salary: High energy sector salaries

🌵 San Antonio

Best for: Affordability, culture, retirement

Vibe: Historic, family-friendly, relaxed

Salary: Lower than Austin/Dallas but very affordable

Frequently Asked Questions

Q: Can I really save $5,000+ per year?

A: Yes, at $100k income you'll save $5,762/year on state income tax alone. However, factor in higher property taxes if you buy a home. Total savings depend on your lifestyle.

Q: What about federal taxes?

A: Federal taxes are the same in both states. This comparison focuses on state income tax only. You'll pay the same federal rate regardless of where you live.

Q: How do sales taxes compare?

A: Similar - CA: 7.25%-10.25%, TX: 6.25%-8.25%. Slightly lower in TX on average, but not a major differentiator.

Q: Will I really feel the difference?

A: At $100k+, absolutely. That's $480/month extra in your paycheck. Plus dramatically lower housing costs. The combination can improve quality of life significantly.

Q: What's the catch?

A: Property taxes are higher in TX. Summer heat is intense. You lose ocean access and perfect weather. It's a trade-off, not a pure win.

Q: Do I need to change my job?

A: Not necessarily. Many CA companies now allow remote work from TX. Or look for jobs with companies that moved to TX (Tesla, Oracle, etc.).

📋 US Expat Returning Home?

If you're an American living abroad and considering a move back to the US, you may have complex tax filing requirements. Even after returning, you may need to catch up on past US tax filings.

Taxes for Expats (TFX) helps Americans abroad and those returning home with:

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