Texas vs California Taxes — Full 2026 Comparison
The two largest, fastest-growing state economies in America — and two completely different tax philosophies. Here’s the side-by-side on income tax, sales tax, property tax, capital gains, and what it actually means for your take-home.
| 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.
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.