Texas vs California Taxes: Which State Is Actually Cheaper?

June 11, 2025

The Conventional Wisdom

"Move from California to Texas and save a fortune on taxes." You hear it everywhere. And it's true that Texas has no state income tax while California has the highest in the country (up to 13.3%).

But the full picture is more nuanced.

Head-to-Head Comparison

MetricTexasCalifornia
State Income Tax0%1-13.3% (progressive)
Effective Property Tax Rate1.29%0.71%
Combined Sales Tax8.20%8.68%
Total Tax Burden (median)5.72%11.83%

At the median level, California is clearly more expensive — about 6 percentage points higher. At $100K income, that's roughly $6,000/year more in California.

But It Depends on Your Situation

If you earn $75K and buy a $400K home:

Texas:

  • Income tax: $0
  • Property tax: $5,160/year (1.29% × $400K)
  • Sales tax burden: ~$2,000/year (est.)
  • Total: ~$7,160/year

    • California:

  • Income tax: ~$3,600 (effective ~4.8% at $75K)
  • Property tax: $2,840/year (0.71% × $400K)
  • Sales tax burden: ~$2,100/year
  • Total: ~$8,540/year

    • Texas saves you ~$1,380/year — real savings but not life-changing.

    If you earn $200K and buy a $400K home:

    Texas:

  • Income tax: $0
  • Property tax: $5,160/year
  • Sales tax: ~$2,700/year
  • Total: ~$7,860/year

    • California:

  • Income tax: ~$14,900 (effective ~7.5% at $200K)
  • Property tax: $2,840/year
  • Sales tax: ~$2,900/year
  • Total: ~$20,640/year

    • Texas saves you ~$12,780/year — now THAT's significant.

    The Pattern

    The higher your income, the more Texas saves you. California's progressive income tax hits hardest above $100K. Below $75K, the difference shrinks dramatically because California's effective rate is low at that level while Texas property tax is fixed.

    What About Home Prices?

    Here's what people forget: homes in Texas are significantly cheaper in most metros compared to California equivalents. A $400K home in Austin gets you more than $400K gets you in... basically anywhere in coastal California.

    But property tax is applied to the full home value. So if you buy a $700K home in a Texas suburb (common in DFW/Austin), you're paying $9,030/year in property tax.

    The Verdict

  • High earners ($150K+): Texas is significantly cheaper, no question
  • Median earners ($50-80K): Texas is slightly cheaper, but the gap is smaller than you think
  • Retirees: Texas wins (no income tax on retirement withdrawals + homestead exemption)
  • Expensive home buyers: Calculate carefully — Texas property tax on a $600K+ home adds up fast

    • Compare Your Specific Situation

    Use our move calculator to enter your actual income and home value. Or see the full state comparison.

    See all Texas counties → | See all California counties →

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