Compare taxes and see how much you save moving from Texas to UAE
Both Texas and the UAE charge $0 in state/national income tax — but the comparison is very different depending on whether you hold a US passport. Non-Americans moving to the UAE pay absolutely no income tax. Americans moving to the UAE still file a US federal tax return every year (worldwide income obligation) and pay US federal rates of 10-37%. At $100,000 income, a US citizen in the UAE still owes approximately $17,400 in US federal tax. The foreign earned income exclusion (FEIE) allows US expats to exclude up to $126,500 (2024) of foreign earned income, which can reduce or eliminate US federal liability in many cases. Texas residents pay US federal tax with no state offset — so in practice, moving from Texas to UAE saves $0 in state tax but introduces complex US expat filing requirements. Non-Americans choosing between Texas and UAE as a place to live find the UAE clearly superior on income tax.
No State Income Tax
Constitutional prohibition on state income tax
Tax-Free Income
No personal income tax on employment income
At $100,000 income:
Both Texas and UAE charge $0 in state/national income tax. The key difference: Americans in UAE still owe US federal income tax (~$17,400 at $100K). Non-Americans moving to UAE keep everything.
| Income | TX Tax | AE Tax | Savings | 10-Year |
|---|---|---|---|---|
| $50,000 | $0 | $0 | $0 | $0 |
| $75,000 | $0 | $0 | $0 | $0 |
| $100,000 | $0 | $0 | $0 | $0 |
| $150,000 | $0 | $0 | $0 | $0 |
| $250,000 | $0 | $0 | $0 | $0 |
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Work Remotely from Anywhere →Yes. All US citizens and green card holders must file a US federal tax return regardless of where they live. Moving from Texas to the UAE eliminates your $0 state tax obligation (unchanged) but does not remove your US federal tax liability. However, the Foreign Earned Income Exclusion (FEIE) allows you to exclude up to $126,500 (2024 figure) of foreign earned income from US federal tax, which can significantly reduce or eliminate your US tax bill.
No. The UAE has no personal income tax on employment income. There is a 5% VAT on most goods and services introduced in 2018, and a 9% corporate tax on business profits over AED 375,000, but individuals pay no tax on salaries or wages.
The Foreign Earned Income Exclusion (FEIE, IRS Form 2555) allows qualifying US expats to exclude up to $126,500 (2024) of foreign earned income from US federal taxation. To qualify, you must pass the Physical Presence Test (330 days outside the US in a 12-month period) or the Bona Fide Residence Test. For many UAE-based Americans earning under $126,500, this can reduce US federal tax liability to near zero.
FBAR (FinCEN Form 114) is required for any US person who has a financial interest in or signature authority over foreign bank accounts if the aggregate value exceeds $10,000 at any point during the year. US expats in the UAE with UAE bank accounts must file FBAR annually. Greenback Expat Tax Services specialises in FBAR filing and US expat returns.
Both are zero state/national income tax. Texas retirees pay US federal tax on Social Security (up to 85% of benefits may be taxable) and retirement distributions. UAE retirees who are non-Americans pay no local tax. American retirees in the UAE still owe US federal tax on retirement income, though Social Security may not be fully taxable depending on total income.
Dubai and Abu Dhabi have high costs of living comparable to major US cities. Housing in Dubai can be expensive, though some expat packages include housing allowances. Texas offers significantly more affordable housing in cities like San Antonio and Fort Worth. However, no income tax means a UAE salary stretches further for non-Americans.
Yes. Texas has a 6.25% state sales tax, with local additions up to 8.25%. The UAE has a 5% VAT. Both jurisdictions collect consumption taxes, so neither is completely tax-free from a total tax burden perspective.