California vs Texas Taxes
Compare the total tax burden between California (1% – 13.3%) and Texas (no income tax). Enter your income to see which state saves you more.
| Tax Component | California | Texas |
|---|---|---|
| Federal tax | $13,170 | $13,170 |
| State tax | $4,911 | $0 |
| FICA | $7,650 | $7,650 |
| Total tax | $25,731 | $20,820 |
| Take-home | $74,269 | $79,180 |
| Effective rate | 25.73% | 20.82% |
| Annual Difference | $4,911 more | $4,911 less |
The $4,911 difference is primarily because California has a progressive income tax with rates up to 13.3%, while Texas has no state income tax. At your income level, California's marginal rate is 9.3%.
Why the difference
You'd save $4,911/year ($409/month) in Texas vs California.
Tax structure
California uses progressive brackets up to 13.3%, while Texas has no state income tax.
Effective rate at your income
At $100,000, Texas's effective state rate is 0.0% vs 4.9% in California — a 4.9 percentage point gap.
Tip: California's progressive brackets mean your effective rate is much lower than the top marginal rate for most earners. At $100,000, the effective state rate is approximately 4.91%. Consider maximizing 401(k) contributions and HSA to reduce California-taxable income.
Tip: While you save on income tax, Texas property taxes can be a large annual cost on a median-priced home. Factor in property tax when comparing total tax burden against income-tax states where property taxes may be lower.
California Total Tax
25.73% effective rate
Texas Total Tax
20.82% effective rate
Annual savings
by living in Texas
California vs Texas: The biggest tax migration in America
California and Texas represent the defining tax rivalry of modern American migration. Between 2018 and 2023, over 750,000 people moved from California to Texas, making it the single largest interstate migration corridor in the country. The reason is straightforward on paper: California levies the nation's highest marginal income tax rate at 13.3% on incomes above $1 million, while Texas collects zero state income tax.
But the full picture is more nuanced than "Texas is cheaper." Texas compensates for its lack of income tax with property tax rates that average 1.40%, against California's 0.70% effective rate. For a homeowner with a $500,000 property, that gap alone is worth $3,500 per year in Texas's disfavor. Sales tax is also slightly higher in many Texas cities. The real savings depend heavily on whether you rent or own, your income level, and which cities you're comparing.
The migration has reshaped both states' economies. Austin has become a secondary tech hub, with companies like Tesla, Oracle, and HP Enterprise relocating headquarters. Meanwhile, California has responded with policy discussions around wealth taxes and exit taxes. For a single filer earning $200,000, the income tax saving of moving to Texas is about $14,211 a year, and about $23,631 at $300,000—enough to offset the higher property taxes and then some.
Key Differences Beyond Income Tax
| Category | California | Texas |
|---|---|---|
| Property Tax | Effective rate ~0.70%, with Prop 13 limiting annual increases to 2% | Effective rate ~1.40%, no cap on assessment increases, reassessed frequently |
| Sales Tax | Base rate 7.25%, combined rates up to 11.75% in some cities | Base rate 6.25%, combined rates up to 8.25% |
| Cost of Living | Housing costs 2-3x the national average in major metros; groceries and utilities above average | Housing roughly at national average outside Austin; overall cost of living 8-10% below California |
| Retirement Income | All retirement income (401k, IRA, pensions) is taxed as ordinary income at state rates | No state income tax on any retirement income |
| Business Taxes | Corporate tax rate of 8.84%; franchise tax minimum $800/year even for LLCs with no revenue | No corporate income tax, but franchise (margin) tax of 0.375%-0.75% on revenue above $2.65M |
Who Benefits from Moving?
High-earning tech workers
Remote workers earning $200,000-$300,000 save $14,211-$23,631 annually in state income tax by moving to Texas (single filer). If you can keep your California salary while working remotely from Austin or Dallas, the math is overwhelmingly in Texas's favor.
Retirees with significant savings
Retirees drawing $80K+ from 401k/IRA accounts save substantially in Texas, where none of that income is taxed at the state level. The property tax difference matters less if you're downsizing.
Small business owners
California's $800 minimum franchise tax and 8.84% corporate rate hit small businesses hard. Texas's margin tax only kicks in above $2.65M in revenue, making it far more startup-friendly.
Bottom line: For a single filer earning $150,000, the move from California to Texas saves $9,561 in state income tax annually—but on a $500,000 home Texas's higher property tax claws back $3,500 of that.
Tax at Different Income Levels
| Income | California Total Tax | Texas Total Tax | Annual Savings |
|---|---|---|---|
| $75,000 | $16,073 | $13,408 | Save $2,665 |
| $100,000 | $25,731 | $20,820 | Save $4,911 |
| $150,000 | $45,770 | $36,209 | Save $9,561 |
| $200,000 | $65,284 | $51,073 | Save $14,211 |
Based on single filer, standard deduction, 2026 tax year. Includes federal income tax, state income tax, and FICA.
Why the difference
You'd save $4,911/year ($409/month) in Texas vs California.
Tax structure
California uses progressive brackets up to 13.3%, while Texas has no state income tax.
Effective rate at your income
At $100,000, Texas's effective state rate is 0.0% vs 4.9% in California — a 4.9 percentage point gap.
Tip: California's progressive brackets mean your effective rate is much lower than the top marginal rate for most earners. At $100,000, the effective state rate is approximately 4.91%. Consider maximizing 401(k) contributions and HSA to reduce California-taxable income.
Tip: While you save on income tax, Texas property taxes can be a large annual cost on a median-priced home. Factor in property tax when comparing total tax burden against income-tax states where property taxes may be lower.
Understanding Each State
California
California has the highest top marginal state tax rate in the US at 13.3% (single filers over $1,000,000, including the Behavioral Health Services Tax surcharge), with progressive brackets starting at 1%. Despite high taxes, California's economy — tech, entertainment, agriculture — attracts top talent globally. Under OBBBA, the SALT deduction cap is $40,400 for 2026 ($20,200 if married filing separately), but it is cut by 30 cents for every dollar of MAGI above $505,000, down to a $10,000 floor — so the highest-income California itemizers see only partial federal relief.
Tip: California's progressive brackets mean your effective rate is much lower than the top marginal rate for most earners. At $100,000, the effective state rate is approximately 4.91%. Consider maximizing 401(k) contributions and HSA to reduce California-taxable income.
Texas
Texas has no state income tax, relying instead on property taxes (among the highest in the US, averaging about 1.6% of home value) and a 6.25% state sales tax plus local additions. For wage earners, the absence of income tax is a major advantage, but property owners face a significant ongoing cost.
Tip: While you save on income tax, Texas property taxes can be a large annual cost on a median-priced home. Factor in property tax when comparing total tax burden against income-tax states where property taxes may be lower.
Key Comparison Points
Income tax structure: California has a progressive income tax (1% – 13.3%), while Texas has no state income tax.
Beyond income tax: State tax comparisons should also consider property tax rates, sales tax, and cost of living. A state with no income tax may have higher property or sales taxes that offset the savings.
SALT deduction cap: Under OBBBA, the 2026 federal SALT cap is $40,400, phasing out above $505,000 MAGI toward a $10,000 floor. This limits the federal tax benefit of living in a high-tax state, so the gross state tax difference remains close to the net difference for most earners — especially high earners inside the phaseout.
Frequently asked questions
Is it cheaper to live in California or Texas?
Based on income tax alone, Texas has a lower tax burden. At $100K income, you'd save $4,911 annually in Texas compared to California. However, total cost of living also depends on property taxes, sales taxes, and housing costs.
How much would I save moving from California to Texas?
A single filer earning $100,000 would save approximately $4,911 per year in total taxes by living in Texas instead of California. At $150,000 income, the savings change to $9,561 per year.
What is the income tax rate in California?
California has a progressive income tax with rates of 1% – 13.3%.
What is the income tax rate in Texas?
Texas has no state income tax.
Does Texas have income tax?
No, Texas does not levy a state income tax. Residents pay only federal income tax and FICA. However, Texas may have higher property taxes or sales taxes to compensate.