Is Moving to Texas Worth It Financially?

The income-tax savings get the headline, but the full financial picture is more interesting. Here’s an honest, line-by-line look at what most people actually save (or don’t).

What you save

State income tax. Anywhere from $1,500/year on a $60k salary moving from a flat 5% state, up to $50,000+ on a $500k salary moving from California.
Local income tax. If you’re leaving NYC or Yonkers, this is another 3–4% gone.
SDI / disability tax. California now charges 1.1% with no wage cap. Texas: $0.
Capital gains. If you have substantial investment income or are about to liquidate equity, Texas saves you the entire state-level layer (CA: up to 13.3%; OR: 9.9%; NY: up to 10.9%).

What you spend more on

Property tax. Roughly $5,000–$12,000/year more on a $500k–$700k home vs comparable CA. Renters dodge this entirely.
Home insurance. Hurricanes, floods, hail, and tornadoes drive Texas premiums above the U.S. average. Houston homeowners often see $3,000–$5,000/year on a typical home, vs $1,200–$2,000 in coastal CA.
Auto insurance. Texas auto insurance averages ~10–20% above the national mean.
Utility costs in summer. Hot summers and full A/C use mean higher electric bills than mild coastal climates.

What roughly washes

Sales tax — TX 8.25% vs CA 9.5% in cities is a modest difference at typical spend levels.
Groceries are exempt in both states.
Childcare and education have huge variance within both states.

A worked example

Single tech worker, $200k base salary, renting:

California state income + SDI: roughly $19,000/year saved.
Higher Texas property tax: $0 (renting).
Insurance delta: ~$500/year more.
Sales tax delta: ~$300/year less.
Net: ~$18,800/year better in Texas.

Same person, but buys a $600k home in Austin:

State tax saved: ~$19,000.
Property tax delta vs new CA buy: ~+$7,000 (less if homestead exemption applied).
Insurance delta: ~+$1,200.
Net: ~$10,800/year better in Texas.

The honest answer

If you’re a renter or making $150k+, moving to Texas almost always wins financially in 2026. If you own a home in California with a low Prop 13 base and are buying a comparable home in Texas, run the numbers carefully — sometimes the move loses money for the first 5–7 years before the income-tax compounding catches up. Beyond a decade, almost every scenario tilts toward Texas.

And money isn’t everything. Climate, family, schools, healthcare access, and the texture of daily life still decide most moves. Just go in with a real budget.

Frequently asked questions

Who saves the most by moving to Texas?

High-earning renters and high-net-worth investors with significant capital gains. They get the full income-tax delta with no property tax exposure (renters) or proportionally smaller exposure (investors don't have a home tied to wage income). Earners under ~$80k and people buying expensive homes save less, sometimes nothing once everything is netted out.

Who saves the least, or might lose money?

Long-time California homeowners with deep Prop 13 protection (paying property tax on a 1990s assessment) often lose money on the move because they give up that lock. Buying a $700k home in Austin with TX property tax can cost more than they were paying on a $1.5M home in CA. Modeling carefully matters.

How does insurance affect this?

Materially. Texas has higher car insurance, much higher home insurance (especially in Houston for hurricane/flood, and along Tornado Alley), and historically higher health premiums than California. Add $2,000–$5,000/year for an honest insurance delta when you compare states.

What about utilities?

Texas has a deregulated electricity market — bills can be cheap with a smart plan, expensive without one. Summer A/C costs in Houston and Dallas are higher than most U.S. averages. Natural gas is cheap. Water bills in fast-growing suburbs can be high in drought years.