The bottom line: $100k salary
Full comparison at different income levels
| Salary | Texas net | California net | TX advantage |
|---|---|---|---|
| $50,000 | $40,194 | $38,847 | +$1,347/yr |
| $75,000 | $58,944 | $56,004 | +$2,940/yr |
| $100,000 | $78,509 | $73,914 | +$4,595/yr |
| $150,000 | $110,259 | $101,814 | +$8,445/yr |
| $200,000 | $138,509 | $125,714 | +$12,795/yr |
Why does Texas save so much?
Texas: Zero state income tax
Texas is one of 9 states with no state income tax. You pay federal taxes and payroll taxes (Social Security + Medicare) — but nothing to the state. This is one of the biggest reasons companies and individuals relocate to Texas.
California: Up to 13.3% state tax
California has the highest top marginal state income tax rate in the US at 13.3%. Even middle-income earners pay 6-9.3%. The progressive brackets mean higher earners lose significantly more.
What about cost of living?
The tax savings in Texas are real — but California (especially SF/LA) has significantly higher salaries in tech and finance. Before relocating, compare:
- Your actual salary offer in each state
- Housing costs (median home in Austin ~$450k, SF ~$1.2M)
- Benefits package value
- Remote work flexibility
W2 vs 1099 in each state
If you're considering freelancing or contracting, the W2 vs 1099 difference matters too. As a 1099 contractor in Texas, you pay 15.3% self-employment tax but zero state tax. In California, that's 15.3% SE tax plus up to 13.3% state tax.
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Open TaxTools US →Frequently asked questions
Does Texas really have no income tax?
Yes. Texas, Florida, Nevada, Washington, Wyoming, Alaska, South Dakota, Tennessee, and New Hampshire all have no state income tax. Texas funds its government primarily through property taxes, which are among the highest in the US.
Is moving from California to Texas worth it financially?
For most income levels, yes — the tax savings are real and significant. However, factor in property taxes (Texas ~2.1% vs California ~0.7%), healthcare costs if you lose employer benefits, and any salary adjustment if changing jobs.
What about self-employed people moving to Texas?
Self-employed individuals benefit even more from the Texas move because they avoid both federal + state income tax on the same earnings. A $120k net profit in Texas saves you approximately $8,000-$12,000/year in state taxes vs California.