Texas vs California Taxes — Full 2026 Comparison
By Bennett · Founder & editor
Reviewed
Two of the largest state economies in America, with two completely different tax philosophies. California funds itself through progressive income tax (the highest top rate in the country) plus an SDI line that, since 2024, has no wage cap. Texas funds itself through property and sales tax. Below is the side-by-side on income tax, sales, property, and capital gains, with honest takes on who actually wins after a move.
| Line item | Texas | California |
|---|---|---|
| Gross | $150,000 | $150,000 |
| Federal income tax | $24,953 | $24,953 |
| State income tax | $0 | $9,032 |
| FICA | $11,475 | $11,475 |
| Take-home | $113,572 | $104,540 |
| Effective rate | 24.3% | 30.3% |
Texas keeps you $9,032 more per year on this salary versus California at the income-tax line. Cost of living, housing, and property taxes still need to be factored in separately.
Income tax: zero vs the country’s highest top rate
California’s personal income tax tops out at 13.3% for income over $1 million (effectively 14.4% with the 1% Mental Health Services Tax surcharge). Brackets begin at 1% and step through 2%, 4%, 6%, 8%, 9.3%, 10.3%, 11.3%, 12.3%, and 13.3%. The 9.3% bracket kicks in around $70k single/$140k joint — a level that catches mid-career professionals.
Texas charges 0%. Wages, capital gains, retirement distributions, interest, and dividends — none of it is taxed at the state level in Texas. The Texas Constitution requires a statewide voter referendum to enact a personal income tax.
Sales tax: California edges higher in cities
California’s state sales tax is 7.25%; combined with local district add-ons, you commonly see 9.5%–10.75% in Bay Area cities and Los Angeles. Texas state sales tax is 6.25%, with up to 2% in local add-ons — almost always 8.25% in major metros.
Property tax: this is where Texas pays the bill
California has Proposition 13: property tax is capped at 1% of assessed value, with assessments only rising up to 2% per year until a sale resets them. Effective rates often hover around 0.7%–0.8% for long-time owners.
Texas effective property tax rates run 1.6%–2.3% in most counties, and assessments reset annually to market value (with a 10% homestead cap on increases). On a $700,000 home:
- California (~0.75%): ~$5,250/year property tax
- Texas (~2.0%): ~$14,000/year property tax
That’s about $8,750/year more in Texas. On a $300k single salary, that’s less than the income tax savings (roughly $25k). On a $90k salary with a similar-priced home, it can flip the picture.
The honest summary
For high earners (~$200k+) and especially for renters at any income, Texas almost always wins on after-tax cash flow. For modest earners buying expensive homes, the property tax cost narrows or eliminates the gap. For very long-term California homeowners benefiting from Prop 13, leaving means giving up an absurd tax advantage that’s hard to recreate elsewhere.
And then there’s lifestyle: weather, ocean access, mountains, cuisine, politics, schools, traffic, family. The tax math is decisive at the margins; lifestyle still picks the winner for most people.
“For renters at any income, Texas almost always wins. For homeowners, the calculus depends on the home's price and how long you stay.”
Frequently asked questions
How much do I save in income tax moving from California to Texas?
On a $150,000 single-filer salary, roughly $13,000–$15,000 per year in state income tax. On $250,000, closer to $22,000–$25,000. On $500,000, you can save $50,000+. Above $1M California gets even more punishing because of the 1% Mental Health Services Tax and the 13.3% top rate; Texas is still $0.
Does California's higher pay offset its taxes?
For senior tech roles in San Francisco/Palo Alto vs Austin/Dallas, base salaries are typically 10-15% higher in California. After income tax and 30%+ housing-cost differentials, Texas usually wins on disposable income — but not always at every level. Mid-career engineers often come out ahead in Texas; very senior staff/principal engineers sometimes don't.
What about Texas property taxes — don't they offset the income tax savings?
Partly, especially for owners of expensive homes. Texas effective property tax rates run 1.6%–2.3% vs ~0.7% in California. On a $700k house, Texas property tax can run $14k–$16k vs ~$5k in California. But for renters, this gap doesn't exist — you get the full income tax savings without the property tax drag. For owners, the breakeven depends on home price, salary, and how long you stay.
Is California's SDI (1.1%) really meaningful?
It is for high earners — California removed the wage cap on SDI, so 1.1% applies to your full salary now. On $400k that's $4,400/year. Texas has no SDI equivalent.
What about capital gains?
California taxes capital gains as ordinary income — meaning the same 9.3% to 13.3% applies. Texas charges $0 on capital gains. For founders selling equity, retirees liquidating a portfolio, or anyone with significant taxable investment activity, the savings can dwarf the wage-tax gap.