Colorado vs Texas Taxes
Compare the total tax burden between Colorado (4.4% flat) and Texas (no income tax). Enter your income to see which state saves you more.
Colorado vs Texas: Mountain lifestyle meets zero income tax
Colorado and Texas share a Western identity and business-friendly reputation, but they diverge on income tax: Colorado levies a 4.4% flat tax, while Texas charges nothing. For the growing number of remote workers and transplants choosing between Denver and Dallas-Fort Worth or Austin, this gap amounts to thousands of dollars per year—raising the question of whether Colorado's outdoor lifestyle justifies the premium.
The financial comparison extends beyond income tax. Texas property taxes average 1.60%, significantly above Colorado's 0.55%. On a $500,000 home, Texas charges roughly $8,000 versus Colorado's $2,750—a $5,250 annual gap that offsets a significant portion of the income tax savings. Sales tax is comparable: Texas charges 6.25-8.25% while Colorado's rates range from 2.9% to over 11% in some mountain resort towns, though most Front Range cities are in the 8-9% range.
For many movers, the decision comes down to lifestyle versus pure savings. Colorado offers world-class skiing, hiking, and outdoor recreation within an hour of Denver, plus a growing tech scene centered on Boulder and Denver. Texas counters with lower housing costs outside Austin, a much larger job market overall, and zero state income tax that compounds dramatically over a career. The two states attract different profiles: Colorado draws outdoor enthusiasts willing to pay more, while Texas draws cost-optimizers focused on maximizing take-home pay.
Key Differences Beyond Income Tax
| Category | Colorado | Texas |
|---|---|---|
| Property Tax | Effective rate ~0.55%; relatively low by national standards; residential assessment rate recently cut | Effective rate ~1.60%; among the highest in the nation; reassessed frequently at market value |
| Sales Tax | State rate 2.9%, combined up to 11.2% in resort towns; most Front Range cities 8-9% | Base rate 6.25%, combined up to 8.25%; groceries exempt in most jurisdictions |
| Cost of Living | Denver metro median home ~$550K; Boulder even higher; mountain towns extremely expensive | DFW and Houston median home ~$350K-$380K; Austin ~$450K; overall more affordable |
| Retirement Income | Social Security fully exempt; pensions and 401k/IRA taxed at 4.4% flat rate; $20,000-$24,000 exclusion for 55+ | No state income tax on any retirement income |
| Business Taxes | Flat 4.4% on pass-through income; no separate corporate income tax (C-corps also at 4.4%) | No income tax; franchise (margin) tax applies only above $2.47M in revenue |
Who Benefits from Moving?
High-income remote workers choosing a base
A remote worker earning $200,000 saves $8,800 in state income tax by choosing Texas. But if buying a $500,000 home, Texas property taxes cost $5,250 more annually, reducing net savings to about $3,550. At incomes above $250K, Texas wins decisively; below $150K, the property tax gap can erase most of the income tax advantage.
Outdoor enthusiasts weighing lifestyle
If skiing, hiking, and mountain access are important to your quality of life, Colorado's 4.4% tax is the price of admission. At $120,000 income, that's $5,280/year—roughly the cost of 15-20 ski season passes. Many find that trade-off worthwhile.
Families comparing school districts and housing
Texas's lower housing prices let families buy more house for less money, and the zero income tax helps with cash flow. But Colorado's school funding benefits from a different model, and suburban Denver districts like Douglas County rank among the nation's best.
Bottom line: At $150,000 income, Texas saves $6,600 in income tax over Colorado—but higher property taxes on a $400,000 home claw back about $4,200, leaving a net advantage of roughly $2,400 for Texas.
Tax at Different Income Levels
| Income | Colorado Total Tax | Texas Total Tax | Annual Savings |
|---|---|---|---|
| $75,000 | $16,294 | $13,687 | Save $2,607 |
| $100,000 | $24,806 | $21,099 | Save $3,707 |
| $150,000 | $42,449 | $36,542 | Save $5,907 |
| $200,000 | $58,992 | $50,885 | Save $8,107 |
Based on single filer, standard deduction, 2025 tax year. Includes federal income tax, state income tax, and FICA.
Why the difference
You'd save $3,707/year ($309/month) in Texas vs Colorado.
Tax structure
Colorado has a flat 4.4% state income tax, while Texas has no state income tax.
Effective rate at your income
At $100,000, Texas's effective state rate is 0.0% vs 3.7% in Colorado — a 3.7 percentage point gap.
Tip: Colorado's flat rate has been gradually declining through TABOR-related adjustments. The state standard deduction matches the federal ($15,750 single), keeping effective rates low. TABOR refunds provide an additional tax benefit in years when state revenue exceeds limits.
Tip: While you save on income tax, Texas property taxes can exceed $5,000-$10,000/year 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
Colorado
Colorado has a flat income tax rate of 4.4% in 2025 (reduced from 4.55% in 2024 and 4.63% previously). Colorado's TABOR amendment limits government revenue growth, resulting in periodic taxpayer refunds when revenue exceeds limits. The state offers a generous standard deduction matching the federal amount.
Tip: Colorado's flat rate has been gradually declining through TABOR-related adjustments. The state standard deduction matches the federal ($15,750 single), keeping effective rates low. TABOR refunds provide an additional tax benefit in years when state revenue exceeds limits.
Texas
Texas has no state income tax, relying instead on property taxes (among the highest in the US at ~1.6-1.8% of home value) and an 8.25% combined sales tax in most areas. 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 exceed $5,000-$10,000/year 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: Colorado has a flat income tax (4.4% flat), 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 (2025+), the federal SALT cap is $40,000, phasing out above $500,000 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 Colorado or Texas?
Based on income tax alone, Texas has a lower tax burden. At $100K income, you'd save $3,707 annually in Texas compared to Colorado. However, total cost of living also depends on property taxes, sales taxes, and housing costs.
How much would I save moving from Colorado to Texas?
A single filer earning $100,000 would save approximately $3,707 per year in total taxes by living in Texas instead of Colorado. At $150,000 income, the savings change to $5,907 per year.
What is the income tax rate in Colorado?
Colorado has a flat income tax with rates of 4.4% flat.
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.