Texas has 0% income tax—but the math is more complex than headlines suggest. Illinois charges 4.95% flat BUT has 2.23% property tax. Texas charges 0% income BUT has 1.6-2.2% property tax. At $100,000 income + $300K home: Illinois total ~$11,640. Texas total ~$5,400 (property only). Texas saves ~$6,240/year. BUT: Illinois exempts Social Security AND retirement distributions from state tax—for retirees, Illinois often wins despite the rate. At $150,000 salary with $500K home: Illinois ~$18,575. Texas ~$9,000. Texas saves ~$9,575/year. Choose Texas if: working age, high income, moderate home. Choose Illinois if: retired (retirement income exempt), value Chicago access, or in a field paying 20%+ more in Chicago.

By Daniel, Founder of CountryTaxCalc

Daniel has spent 5+ years researching tax systems across 95+ countries and all US states to make tax comparison accessible to everyone. For corrections, contact us.

Last Updated: March 2026

The Big Picture

🏙️ Illinois

4.95%

Flat Tax

But exempts retirement income

⭐ Texas

0%

No Income Tax

1.6-2.2% property tax instead

Typical Annual Savings

At $100,000-$150,000 income:

$4,950-9,575

That is $413-798/month back in your pocket!

Tax Savings by Income Level

IncomeIL TaxTX TaxSavings10-Year
$75,000 + $250K home ~$3,713 income + $5,575 property$0 income + $4,500 propertyTexas saves ~$4,788$47,880
$100,000 + $300K home ~$4,950 income + $6,690 property$0 income + $5,400 propertyTexas saves ~$6,240$62,400
$150,000 + $500K home ~$7,425 income + $11,150 property$0 income + $9,000 propertyTexas saves ~$9,575$95,750
$80K retirement income $0 (retirement exempt!)$0 income + ~$5,400 propertyIllinois saves ~$5,400$54,000 (retirees)
$200,000 + $600K home ~$9,900 income + $13,380 property$0 income + $10,800 propertyTexas saves ~$12,480$124,800
💡

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Illinois Pros and Cons

✅ Pros

  • Retirement income exempt: Social Security, pensions, 401(k), IRA distributions = $0 state tax
  • Chicago job market: Finance, law, tech pay 20-40% more than Texas equivalent for many roles
  • No property tax explosion: Illinois's 2.23% is high but capped; Texas's 1.8% grows faster with valuations
  • International hub: O'Hare offers superior business connectivity vs Texas hubs

❌ Cons

  • 4.95% flat from first dollar: No brackets mean low earners pay same rate as high earners
  • Pension crisis: $140B+ unfunded liabilities—property taxes likely to rise to cover gap
  • Population decline: Illinois lost 100K+ residents to Texas in 2020-2024—economic momentum shifted
  • Cook County adds burden: If in Chicago area, additional county taxes and fees apply

Texas Pros and Cons

✅ Pros

  • 0% income tax constitutional: Texas can't add income tax without voter approval—protected long-term
  • Business-friendly: Lower regulations, right-to-work state, corporate relocations booming
  • Population growth: Austin, Dallas, Houston adding hundreds of thousands—economic momentum
  • No state death tax: Texas has no estate or inheritance tax (Illinois has estate tax >$4M)

❌ Cons

  • Property tax catch: 1.6-2.2% rates can offset savings, especially on expensive homes in good school districts
  • School district taxes: Local school taxes vary wildly—same home in different district = $2,000+ difference
  • Lower wage sectors: While tech pays well, many industries pay 10-15% less than Illinois equivalents
  • Infrastructure strain: Rapid growth has outpaced roads, utilities, schools in some areas

Frequently Asked Questions

Q: How much will I actually save moving from Illinois to Texas?

At $100,000 income: you'll save ~$4,950 in income tax (4.95% to 0%). But Texas property taxes average 1.8% vs Illinois's 2.23%. On a $300K home, Texas property tax is ~$1,290 LESS than Illinois. Total savings: ~$6,240/year. On a $500K home with $150K income: savings jump to ~$9,575/year.

Q: Is Texas better for retirees than Illinois?

Surprisingly, often NO. Illinois exempts ALL retirement income from state tax—Social Security, pensions, 401(k), IRA distributions. A retiree with $80,000/year from retirement accounts pays $0 state income tax in Illinois. In Texas, you save $0 on income tax (already 0%) but still pay property tax. Illinois retirees should compare property taxes only.

Q: What are the hidden costs of moving to Texas?

Higher property taxes in good school districts (2%+ in suburbs), higher homeowners insurance (hurricane/hail risk), higher car insurance (more uninsured drivers), and HOA fees are more common. Energy costs spike in summer (AC) and can be volatile (remember 2021 freeze). Factor in $2,000-5,000/year beyond tax savings calculations.

Q: Do I need to change residency completely to avoid Illinois tax?

Yes—Illinois will tax you as a resident if you maintain domicile there. To establish Texas residency: (1) spend 183+ days in Texas, (2) get Texas driver's license, (3) register to vote in Texas, (4) move financial accounts, (5) update estate documents. Keep a diary of days in each state. Illinois audits aggressively for escaped income tax.

Q: Which Texas city has the lowest total tax burden?

El Paso has among the lowest property tax rates (~2.1%) combined with lower home prices. Houston (no zoning = cheaper homes) and San Antonio also rank well. Austin has high property taxes (~2.0%+) AND expensive homes—worst combination. Suburban Dallas varies by school district (Plano ~2.1%, Frisco ~2.0%). Fort Worth often beats Dallas suburbs.

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