California vs Texas Taxes 2026: Complete Comparison + Savings Calculator

Thinking about moving from California to Texas? Or comparing these two economic powerhouses for relocation? The tax difference is staggering. In this comprehensive guide, we'll break down exactly how much you could save (or pay) by choosing one state over the other.

Key Takeaway: A California resident earning $100,000 pays approximately $8,200+ more in state taxes annually compared to a Texas resident. For high earners at $500,000, the difference jumps to $50,000+ per year.

Ready to see your personal savings? Use our calculators throughout this guide to run your exact numbers.

Quick Comparison: California vs Texas Taxes at a Glance

Bottom Line: Texas wins on income and sales taxes. California wins on property taxes. Overall, Texas has dramatically lower total taxes for most income levels.

California Income Tax: Deep Dive

California has one of the most progressive income tax systems in the United States, with 10 tax brackets ranging from 1% to 13.3%.

California 2026 Income Tax Brackets

Single Filers:

• 1% on income up to $10,412
• 2% on $10,413 - $24,684
• 4% on $24,685 - $38,959
• 6% on $38,960 - $54,081
• 8% on $54,082 - $68,350
• 9.3% on $68,351 - $349,137
• 10.3% on $349,138 - $418,961
• 11.3% on $418,962 - $698,271
• 12.3% on $698,272 - $1,000,000
• 13.3% on $1,000,001+

Married Filing Jointly:

• 1% on income up to $20,824
• 2% on $20,825 - $49,368
• 4% on $49,369 - $77,918
• 6% on $77,919 - $108,162
• 8% on $108,163 - $136,700
• 9.3% on $136,701 - $698,274
• 10.3% on $698,275 - $837,922
• 11.3% on $837,923 - $1,000,000
• 12.3% on $1,000,001 - $1,396,542
• 13.3% on $1,396,543+

California Standard Deduction 2026

• Single: $5,363
• Married Filing Jointly: $10,726
• Head of Household: $10,726

Real California Tax Examples

Single earning $50,000:

• California state tax: ~$1,470
• Effective rate: 2.9%

Single earning $100,000:

• California state tax: ~$4,775
• Effective rate: 4.8%

Single earning $200,000:

• California state tax: ~$14,350
• Effective rate: 7.2%

Single earning $500,000:

• California state tax: ~$46,750
• Effective rate: 9.4%

Married couple earning $150,000:

• California state tax: ~$8,185
• Effective rate: 5.5%

Texas Income Tax: The Simple Truth

Texas has NO state income tax. Zero. Nada. Nothing.

This means:

• $0 state tax on $50,000 income
• $0 state tax on $100,000 income
• $0 state tax on $500,000 income
• $0 state tax on $10,000,000 income

Important: You still pay federal income tax, Social Security, and Medicare taxes. But there's no state-level income tax whatsoever.

Income Tax Savings: California → Texas

Moving from California to Texas saves you 100% of California state income tax:

10-Year Savings: That $100K earner saves $47,750 over 10 years. The $500K earner saves $467,500 over 10 years!

Sales Tax Comparison: Close Race

Both states have relatively high sales taxes, but Texas edges out California slightly.

California Sales Tax 2026

State Rate: 7.25% Local Rates: 0.10% - 2.50% Average Combined Rate: 8.82% Highest Combined Rate: 10.75% (some Los Angeles County cities)

What's Taxed:

• Most tangible goods
• Some services

What's NOT Taxed:

• Groceries (unprepared food)
• Prescription medications
• Medical devices

Texas Sales Tax 2026

State Rate: 6.25% Local Rates: 0% - 2.00% Average Combined Rate: 8.20% Highest Combined Rate: 8.25% (most major cities)

What's Taxed:

• Most tangible goods
• Some services

What's NOT Taxed:

• Groceries (unprepared food)
• Prescription medications
• Over-the-counter medications

Sales Tax Impact on Your Budget

Annual spending on taxable goods: $30,000

Winner: Texas, but the difference is minimal compared to income tax savings.

Property Tax: California's Big Win

This is where California shines. Texas makes up for no income tax with significantly higher property taxes.

California Property Tax 2026

Average Effective Rate: 0.73% Statewide Rate: 1% of assessed value + local assessments

Proposition 13 Benefits:

• Assessment capped at purchase price
• Annual increases limited to 2% max
• Property not reassessed until sold
• Transferable to children (some limitations)

Real Examples:

• $500,000 home: ~$3,650/year property tax
• $800,000 home: ~$5,840/year property tax
• $1,000,000 home: ~$7,300/year property tax

Texas Property Tax 2026

Average Effective Rate: 1.60% (over 2x California!) No Statewide Rate: Varies dramatically by county Range: 0.18% - 2.31%

Major Cities:

• Houston area: ~2.0%
• Austin area: ~1.8%
• Dallas area: ~1.9%
• San Antonio area: ~2.1%

Homestead Exemption:

• Reduces taxable value by $100,000 for school district taxes
• Additional local exemptions available
• 65+ get additional $10,000 exemption

Real Examples:

• $500,000 home in Austin: ~$9,000/year property tax
• $800,000 home in Houston: ~$16,000/year property tax
• $1,000,000 home in Dallas: ~$19,000/year property tax

Property Tax Face-Off

Winner: California, and it's not even close. Property taxes in Texas can be double or triple California's rate.

Critical Consideration: Higher home prices in California somewhat offset the lower tax rate. A $1M home in California might be comparable to a $500K home in Texas in terms of size/quality.

Other Taxes: The Complete Picture

Estate Tax

• California: No state estate tax
• Texas: No state estate tax
• Winner: Tie (both good)

Inheritance Tax

• California: None
• Texas: None
• Winner: Tie

Gas Tax (per gallon)

• California: 68¢ (highest in nation)
• Texas: 20¢
• Winner: Texas by a landslide

Annual impact (15K miles, 25 MPG vehicle):

• California: $408 in gas taxes
• Texas: $120 in gas taxes
• Savings: $288/year in Texas

Vehicle Registration

• California: Higher, based on vehicle value
• Texas: Moderate, one-time sales tax on purchase (6.25%)
• Winner: Generally Texas (especially for expensive vehicles)

Alcohol Tax

• California: Moderate
• Texas: Moderate
• Winner: Similar

Tobacco Tax

• California: Very high
• Texas: Moderate
• Winner: Texas (if you smoke)

Total Tax Burden: Real-World Scenarios

Let's calculate the complete tax picture for different household types.

Scenario 1: Single Software Engineer

Income: $150,000/year Rents apartment (no property tax)Spending: $40,000 on taxable goods

California Total:

• State income tax: $8,970
• Sales tax: $3,528
• Gas tax: $408
• Total state/local taxes: $12,906

Texas Total:

• State income tax: $0
• Sales tax: $3,280
• Gas tax: $120
• Total state/local taxes: $3,400

Winner: Texas saves $9,506/year 🎉

Scenario 2: Family with Kids

Income: $200,000/year (married) Owns $600,000 homeSpending: $50,000 on taxable goods 2 kids

California Total:

• State income tax: $12,700
• Sales tax: $4,410
• Property tax: $4,380
• Gas tax (2 cars): $816
• Total state/local taxes: $22,306

Texas Total (Austin area):

• State income tax: $0
• Sales tax: $4,100
• Property tax: $10,800
• Gas tax (2 cars): $240
• Total state/local taxes: $15,140

Winner: Texas saves $7,166/year 🎉

Scenario 3: Retired Couple

Income: $80,000/year (Social Security + pension) Owns $750,000 home (paid off)Spending: $35,000 on taxable goods

California Total:

• State income tax: $2,850
• Sales tax: $3,087
• Property tax: $5,475
• Gas tax: $408
• Total state/local taxes: $11,820

Texas Total (Dallas area):

• State income tax: $0
• Sales tax: $2,870
• Property tax: $14,250
• Gas tax: $120
• Total state/local taxes: $17,240

Winner: California saves $5,420/year 🎉

Key Insight: Retirees with expensive homes may pay MORE in Texas due to property taxes!

Scenario 4: High-Earning Professional

Income: $500,000/year Owns $1,500,000 homeSpending: $80,000 on taxable goods

California Total:

• State income tax: $46,750
• Sales tax: $7,056
• Property tax: $10,950
• Gas tax: $408
• Total state/local taxes: $65,164

Texas Total (Austin area):

• State income tax: $0
• Sales tax: $6,560
• Property tax: $27,000
• Gas tax: $120
• Total state/local taxes: $33,680

Winner: Texas saves $31,484/year 🎉

10-year savings: $314,840!

Scenario 5: Small Business Owner

Business income: $300,000/year Owns $800,000 homeSpending: $60,000 on taxable goods

California Total:

• State income tax: $25,400
• Sales tax: $5,292
• Property tax: $5,840
• Gas tax: $408
• Total state/local taxes: $36,940

Texas Total (Houston area):

• State income tax: $0
• Sales tax: $4,920
• Property tax: $16,000
• Gas tax: $120
• Total state/local taxes: $21,040

Winner: Texas saves $15,900/year 🎉

Which State Wins for You?

Texas is Better For:

✅ High-income earners ($100K+): Massive income tax savings ✅ Young professionals who rent: No income tax + manageable sales tax ✅ Business owners: No state income tax on business profits ✅ Tech workers: Remote work + no income tax = big win ✅ Athletes/entertainers: High, variable income benefits from 0% tax ✅ Investors: No tax on capital gains at state level ✅ Those who value low taxes overall

California is Better For:

✅ Lower-income households ($50K or less): Minimal CA income tax anyway ✅ Retirees with expensive homes: Property tax savings outweigh income ✅ Homeowners planning to stay long-term: Prop 13 protects from increases ✅ Those who don't need much space: Can buy smaller home, lower property tax ✅ Social Security recipients: California doesn't tax Social Security ✅ Those who value CA lifestyle/amenities despite higher taxes

It's Complicated For:

⚖️ Middle-income homeowners ($75K-150K): Need to calculate both ways ⚖️ Families near retirement: Consider both earning years and retirement ⚖️ Remote workers with CA employer: May still owe CA taxes (consult CPA) ⚖️ Self-employed: Need to consider business taxes + personal situation

Special Considerations

Remote Work Tax Issues

Critical: If you work remotely for a California employer while living in Texas, you may still owe California taxes in some cases. California has aggressive "source state" rules.

When you owe CA taxes from Texas:

• Performing services for CA company while physically in CA
• CA convenience rule may apply (rare, consult CPA)

When you DON'T owe CA taxes:

• Living full-time in Texas
• Working remotely from Texas for out-of-state company
• Completely severed CA tax residency

Pro tip: Get written confirmation you're a Texas resident, update all addresses, get TX driver's license immediately.

Business Owner Tax Strategies

Texas Advantage:

• No franchise tax for businesses under $2.47M revenue
• No state tax on pass-through business income
• No personal income tax on business distributions

California Challenges:

• $800 minimum franchise tax (even at $0 profit)
• State tax on all pass-through income
• Complex rules for multi-state businesses

Use our QBI Deduction Calculator to see federal tax implications regardless of state.

High Net Worth Considerations

Moving from CA to TX with $2M+ income:

10-year tax savings example:

• Year 1-10 income tax savings: $1,200,000+
• Property tax difference (assumes $2M home): -$150,000
• Net 10-year savings: $1,050,000+

Estate planning: Neither state has estate tax, so equal on that front.

Investment income: Texas doesn't tax capital gains, dividends, or interest at the state level. California taxes all as ordinary income.

Cost of Living Beyond Taxes

Don't forget to consider:

Higher in California:

• Housing prices (significantly)
• Gas prices
• Utility costs
• Insurance costs
• General cost of living

Higher in Texas:

• Air conditioning costs (brutal summers)
• Potentially higher car insurance (uninsured motorist rates)
• Property maintenance (weather extremes)

Similar:

• Food costs
• Entertainment
• Healthcare (varies by location)

Weather and Lifestyle Factors

Yes, this is about taxes, but these matter too:

California Pros:

• Better weather (coastal areas)
• More diverse geography
• Better public transportation (Bay Area, LA)
• Stronger tenant protections
• More progressive policies

Texas Pros:

• More affordable housing (lower property taxes don't fully offset)
• No state income tax
• More space/land for the money
• Strong job markets (Austin, Dallas, Houston)
• Growing tech scene

Frequently Asked Questions

Does Texas really have no income tax at all?

Yes, absolutely. Texas is one of nine states with no state income tax whatsoever. You still pay federal taxes (same as everyone), but Texas takes 0% of your income. This has been true since 1845 and is constitutionally protected.

How does Texas make up for no income tax?

Property taxes and sales taxes. Texas has some of the highest property tax rates in the US (average 1.60%). They also have a 6.25% state sales tax. The state relies heavily on these consumption-based taxes instead of income taxes.

Will I owe California taxes after moving to Texas?

Not if you're a true Texas resident. To completely sever California tax residency:

• Move permanently (not temporary)
• Get Texas driver's license
• Register to vote in Texas
• Update all address records
• Don't maintain a California home
• Spend less than 6 months/year in California

Exception: Remote workers for CA companies may owe taxes for days physically worked in California.

What about Social Security and pension income?

Neither state taxes Social Security benefits.

For pensions:

• California: Generally doesn't tax most pensions
• Texas: No income tax means no pension tax

Both states are retirement-friendly in this regard.

Which state is better for families with kids?

Tax-wise, usually Texas because:

• No income tax means more take-home pay
• Federal Child Tax Credit is the same in both states
• More money available for college savings

However, consider school quality, childcare costs, and overall cost of living beyond just taxes.

Can I deduct state taxes on my federal return?

Yes, but with limits. The federal SALT (State and Local Tax) deduction is capped at $10,000 for both states. This means:

• High-earner in California: Pays $50K CA tax, can only deduct $10K federally
• Same person in Texas: Pays $0 income tax, but property taxes might hit $10K cap anyway

The SALT cap makes high-tax California even less attractive for high earners.

What if I'm self-employed or own a business?

Texas is usually a huge winner for business owners:

• No state tax on business profits
• Lower compliance burden
• No $800 minimum franchise tax (like California)
• Business-friendly regulatory environment

Use our QBI Deduction Calculator to see your federal Qualified Business Income deduction, which applies in both states.

Do I need to file part-year resident returns when moving?

Yes, in most cases. When moving from California to Texas:

• File California part-year return for income earned while CA resident
• You don't file a Texas return (no income tax)
• Clearly document your move date

When moving from Texas to California:

• Start filing California returns from your move date
• Allocate income by time period
• You never filed Texas returns (no income tax)

Conclusion: What Should You Do?

For most people earning over $75,000, Texas offers substantial tax savings compared to California—potentially $5,000-$50,000+ per year depending on your income and home value.

Quick Decision Guide:

Choose Texas for taxes if you:

• Earn $100,000+
• Rent or will buy a modest home
• Value take-home pay
• Are building wealth
• Are self-employed

Consider staying in California if you:

• Own an expensive home with low Prop 13 basis
• Earn under $50,000
• Are retired with fixed income
• Highly value California-specific amenities
• Have strong family/social ties

Need to run the numbers for your situation?

Calculate Your Personal Tax Savings:

Final Thought

Taxes are important, but they're not everything. California and Texas are both amazing states with different strengths. Use our calculators to understand the financial impact, then make the decision that's right for your entire life situation—not just your tax bill.

Thinking of moving? Calculate your exact savings with our free tax calculators above. Want to compare other states? Check out our complete state tax comparison guides.

Last Updated: January 2, 2026 | Tax Year: 2026