California vs Texas: Taxes & Take-Home Pay 2026

California vs Texas: the short answer

Texas takes no income tax from wages; California taxes them at 1% to 13.3% and also withholds 1.3% for State Disability Insurance on every dollar of pay. For most households that makes Texas the cheaper state for income taxes by several thousand dollars a year, and the gap grows quickly once a single filer passes $75,197 of California taxable income, where the 9.3% bracket begins.

Texas recovers much of that revenue through local property taxes and a sales tax that is close to California’s. The right comparison for a household that owns a home is therefore income tax saved minus any extra property tax paid, not income tax alone.

Income and payroll taxes side by side

The two systems differ on almost every line of a pay stub except the federal ones, which are identical in both states.

Property tax: where Texas collects instead

Texas has no state property tax. Counties, cities, school districts and special districts each set their own rate, and the bill for a home is the sum of those rates applied to the appraised value set by the county appraisal district. Owners can protest that value to the Appraisal Review Board each year.

The main relief is the residence homestead exemption. School districts must exempt $140,000 of a homestead’s value, plus another $60,000 for owners 65 or older or disabled, and any taxing unit may add a local-option exemption of up to 20% of appraised value. On a home appraised at $300,000, school taxes are charged as if it were worth $160,000. You must apply on Form 50-114, generally before May 1; it is not automatic.

California works the other way round. Proposition 13 limits the general levy to 1% of assessed value, and assessed value usually equals the purchase price raised by no more than 2% a year. Voter-approved debt rates add roughly another tenth of a percent statewide, and Mello-Roos and parcel taxes can add more. When a home sells, the county assessor resets it to current market value.

The practical effect: a long-time California owner may pay a low effective rate on a home bought decades ago, while a Texas buyer pays the full local rate on today’s value from the first year. Before moving, look up the combined rate for the specific Texas address and school district rather than relying on a state average.

Worked example: a family of four on $180,000

A married couple with two children under 17 earns $180,000 in wages and puts $20,000 into 401(k) plans. Filing jointly with standard deductions, the 2026 picture looks like this:

• Moving to Texas saves this family -$7,488 a year, about -$624 a month, before property and sales tax differences.
• $2,340 of the California cost is SDI. Because SDI has no wage cap, it rises in step with pay even at very high incomes.
• If the Texas home costs more in property tax than the California one, subtract that difference from the -$7,488 saving.

The year you move from California to Texas

You file a California Form 540NR as a part-year resident for 2026. California taxes all of your income from the period you lived there, plus any California-source income after you leave. Wages for work physically done in California stay California-source even if the paycheck or bonus arrives after the move, and equity awards earned partly while you worked in California can remain partly taxable there; FTB Publication 1004 explains how equity compensation is allocated.

Leaving California is a question of facts, not of a single form. FTB looks at whether you are in the state for more than a temporary or transitory purpose, and whether you are domiciled there. Changing your driver’s license, vehicle registration, voter registration and primary home, and actually spending your time in Texas, is what makes the move stick.

• Ask your employer to change your work location in payroll the day you move, so California withholding and SDI stop.
• File the Texas homestead application once you own and live in the home.
• Moving costs are not deductible on your federal return unless you are an active-duty member of the Armed Forces moving under military orders, or (for moves in 2026 or later) an Intelligence Community employee or new appointee treated the same way.