Moving to Texas: Low Taxes, High Property Bills

Texas has no state income tax, which sounds like a dream until you see the property tax bill. For many households, the savings on income taxes are partially or fully erased by some of the highest effective property tax rates in the country.

What Texas Actually Takes From Your Paycheck

Texas collects zero state income tax. On a $100,000 salary, you owe the state nothing beyond your federal obligation. That puts an extra $3,000 to $6,000 in your pocket annually compared to what you would pay in a mid-range income tax state like Georgia or Colorado, and far more compared to California, where that same salary faces a 9.3% marginal state rate.

The state does collect a 6.25% base sales tax, with local jurisdictions allowed to add up to 2%, bringing the combined rate to 8.25% in most major Texas cities. That is higher than the national average. You will feel it on every purchase, but it rarely cancels out the full income tax benefit for middle and upper earners.

For a broader picture of how Texas compares to other zero-income-tax states, see our breakdown of Texas vs. New York: What You Actually Keep.

The Property Tax Problem Is Real

Here is where Texas gets complicated. The effective average property tax rate in Texas sits around 1.60% to 1.80% statewide, depending on the county, making it one of the top five highest property tax states in the country. New Jersey leads the nation at roughly 2.13%, but Texas is not far behind, and Texas home values have risen sharply.

The median home value in Texas crossed $310,000 in major metros as of early 2026. At a 1.70% effective rate, that is a $5,270 annual property tax bill. In Austin or Dallas suburbs, where values push $450,000 to $600,000, the annual bill climbs to $7,650 to $10,200 before any exemptions.

Homestead exemptions help. Texas provides a $100,000 homestead exemption on school district taxes as of 2026, which meaningfully reduces the taxable value for primary residents. But even with that exemption, owners in high-value zip codes are paying more in property taxes each year than many people pay in state income tax elsewhere.

The math matters most for retirees on fixed incomes. If you are evaluating Texas as a retirement destination, read our full analysis at Best States for Retirees to Avoid Taxes before committing.

What Salary Do You Actually Need in Texas?

A single adult in Texas needs roughly $45,000 to $50,000 in gross annual income to cover basic expenses comfortably, based on living wage data current through early 2026. A family of four with two working adults needs closer to $130,000 to $150,000 combined, depending on childcare costs and housing location.

Those numbers shift significantly by city. Houston and San Antonio remain the most affordable major metros. Austin has narrowed its gap with coastal cities considerably. Monthly rent for a two-bedroom in Austin now averages around $1,700 to $2,000, while Dallas-Fort Worth runs $1,500 to $1,800. Compare that to Los Angeles at $2,800 or New York at $3,500 and Texas still wins on housing costs, but the margin is smaller than it was five years ago.

For Californians specifically, the calculation almost always favors Texas once you factor in income tax elimination. A household earning $250,000 in California pays upward of $22,000 in state income tax. Moving to Texas, even with a higher property tax bill, typically saves that household $15,000 to $18,000 per year net.

Texas Has No Estate Tax Either

One often-overlooked advantage is what Texas does not tax at the end of life. The state has no estate tax and no inheritance tax. Combined with no capital gains surcharge at the state level, Texas is one of the cleanest states in the country for wealth transfer. If that matters to your planning, see our Estate Tax by State: Where Your Heirs Pay Most post for full comparisons.

Texas also produces no state-level capital gains tax. Investment income is taxed only at the federal rate, which makes it attractive for investors and business owners generating non-wage income.

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Key Takeaways

• Texas collects $0 in state income tax. On a $100,000 salary, your effective state income tax rate is 0%, compared to 9.3% marginal in California or roughly 6% in New York.
• Effective property tax rates average 1.60% to 1.80% statewide. On a $400,000 home, expect $6,400 to $7,200 annually even after the $100,000 homestead exemption reduces your taxable value.
• A single adult needs approximately $45,000 to $50,000 gross income to live comfortably in Texas. A family of four needs $130,000 to $150,000, with Austin and Dallas running highest.

Use our state-by-state tax calculator to run your specific income and home value against Texas rates and compare them to wherever you live now.