Since 2020, California has lost hundreds of thousands of residents — many of them to Texas. The appeal is obvious: Texas has no state income tax, a lower cost of living, and a booming economy. California has the highest income tax in the US and sky-high housing costs.
But the real financial picture is more nuanced than the headline. Let's run the actual numbers.
Income Tax: Where California Loses Badly
This is the clearest comparison. California has a graduated state income tax from 1% to 13.3%. Texas has zero. For W-2 employees, this is a straightforward calculation:
| Gross Salary | CA State Tax | TX State Tax | Annual Savings in TX |
|---|---|---|---|
| $80,000 | ~$3,200 | $0 | ~$3,200 |
| $150,000 | ~$10,800 | $0 | ~$10,800 |
| $200,000 | ~$16,500 | $0 | ~$16,500 |
| $300,000 | ~$27,000 | $0 | ~$27,000 |
| $500,000 | ~$50,000 | $0 | ~$50,000 |
California also charges SDI at 1.1% with no wage cap. A $300,000 earner pays $3,300 in SDI alone — money Texas residents never see deducted from their paycheck.
Take-Home Pay: Side by Side
Here's the monthly take-home pay for a single filer in each state, after all taxes (federal + state + FICA):
| Gross Salary | Monthly Take-Home in CA | Monthly Take-Home in TX | Monthly Difference |
|---|---|---|---|
| $80,000 | ~$4,950 | ~$5,200 | ~$250/mo |
| $150,000 | ~$8,700 | ~$9,600 | ~$900/mo |
| $200,000 | ~$11,000 | ~$12,400 | ~$1,400/mo |
| $300,000 | ~$15,800 | ~$18,000 | ~$2,200/mo |
The Texas Offset: Property Taxes
Texas funds its government through property taxes instead of income taxes — and they are high. Texas homeowners pay an average effective property tax rate of 1.7%–2.5% of assessed home value per year.
California's Prop 13 limits property tax increases to 2% per year, meaning longtime owners often pay rates well below 1% of current market value.
| Home Value | TX Property Tax (~2%) | CA Property Tax (~0.75%) | Extra Cost in TX |
|---|---|---|---|
| $400,000 | $8,000/yr | $3,000/yr | $5,000/yr |
| $600,000 | $12,000/yr | $4,500/yr | $7,500/yr |
| $800,000 | $16,000/yr | $6,000/yr | $10,000/yr |
The Net Calculation: Who Wins?
Renters
If you rent (not own), Texas wins decisively. You pay no income tax and bear no property tax directly — your landlord does. A renter earning $150,000 saves approximately $10,800/year in state income tax by moving to Texas.
Homeowners at $150,000 income
Income tax saving in Texas: ~$10,800/year. Extra property tax on a $500,000 home: ~$6,250/year. Net win for Texas: ~$4,550/year.
High earners at $300,000+
Income tax saving in Texas: ~$27,000/year. Extra property tax on a $700,000 home: ~$8,750/year. Net win for Texas: ~$18,000/year. The higher the income, the more Texas wins — because income tax savings scale with income while property tax scales with home value.
Other Factors to Consider
- Cost of living: Austin and Dallas have risen significantly, though still cheaper than SF or LA on average.
- Capital gains: California taxes capital gains as ordinary income at up to 13.3%. Texas has zero. Selling a business or appreciated stock becomes far more expensive in California.
- Remote workers: California may still tax you on income earned while living in California, even after you move. The "safe harbor" rules are complex — consult a tax professional if you worked in California before relocating.
- No-income-tax states vs. Texas: Florida and Nevada also have no income tax and lower property taxes than Texas, making them worth comparing if lifestyle fits.
Frequently Asked Questions
How much do you save by moving from California to Texas?
On a $150,000 salary, approximately $10,800/year in state income tax. At $300,000, over $25,000/year. Property taxes partially offset this for homeowners.
Does Texas have lower total taxes than California?
For renters and high earners: yes, significantly. For homeowners with modest incomes, higher Texas property taxes can offset part of the income tax savings.
Is moving from California to Texas worth it financially?
For most people earning above $100,000, yes. Run your personal numbers using the calculator below to see the exact difference for your income and housing situation.
Compare Your Take-Home Pay: California vs Texas
Enter your salary and switch between California and Texas to see the exact monthly difference in your take-home pay.