Moving from California to Texas: The Real Tax Savings

More than 100,000 Californians move to Texas every year, and a large part of the reason is money. California has among the highest state income tax rates in the country — up to 13.3% on the highest earners. Texas has exactly zero. The difference in your paycheck is not subtle.

The Tax Savings at Different Salary Levels

Here's the 2026 take-home comparison for Texas vs. California:

Notice how the gap grows with income. This is a feature of progressive taxation — California's top rate kicks in harder at higher incomes. A $200K earner in California faces a combined effective state rate well above 8%, while a Texas resident pays zero state tax at every income level.

What the Move Actually Costs You

The tax savings look enormous — and they are. But it's worth understanding the full picture before packing up.

Property taxes: Texas property taxes average 2–2.5% of assessed home value annually. California's Prop 13 limits increases to 2%/year from purchase price, so long-term California homeowners often pay very low effective rates. If you buy a $500,000 home in Texas, expect $10,000–$12,500/year in property taxes. A comparable California homeowner might pay significantly less.

Cost of living: Texas cities have grown substantially in cost over the past decade. Austin in particular has seen housing prices surge toward Bay Area levels in some neighborhoods. However, Houston, San Antonio, and Dallas remain far more affordable than coastal California.

Federal taxes: The 2017 SALT (state and local tax) deduction cap limits federal deductions for state taxes to $10,000/year. California residents no longer get a major federal deduction benefit from high state taxes. This further improves the relative math for Texas residents.

The Break-Even Analysis

For most white-collar workers earning above $75,000, the annual income tax savings from living in Texas vs. California exceed $3,869/year. That's meaningful money that compounds — $38,691 over 10 years at $75K, and nearly $168,586 over 10 years at $200K.

The question isn't whether the tax math works (it clearly does). The question is whether the move makes sense for your career, family, and lifestyle. Silicon Valley salaries at major tech companies often don't have equivalent offers in Texas cities — yet. That gap is closing, but it's worth factoring into the decision.

Frequently Asked Questions