Leaving Los Angeles for Austin: The Opportunity-Cost Math Nobody Runs for You

Short answer: A Los Angeles household earning $1,000,000 a year pays California roughly $90,000 in state income tax, every year, at a top rate of 13.3%. In Texas that becomes zero. Invest that annual saving at a conservative 6%, and it compounds to about $1.19 million in ten years, $3.32 million in twenty, and $7.13 million in thirty.

Texas property taxes are higher than California's, so we net that out honestly, but at this income level the income-tax savings win by a mile. Here is the whole math. (This is general information, not tax advice. Please run your own numbers with your CPA.)

Let's run one specific household, all the way through

Most "Leaving LA" articles will tell you about traffic, the weather, and which Austin neighborhood feels like Silver Lake. Fine. But you are not really moving for the tacos. For a high earner, this is a capital decision, so let me run it like one. Every figure below is exactly what our relocation calculator returns: select California, enter $1,000,000 of income, married filing jointly, and set the return to 6%.

Our household lives in LA, earns $1,000,000 a year, and files jointly.

Step one: what they pay California

California taxes income on a progressive schedule that tops out at 13.3%, the highest in the country. On $1,000,000 of household income filing jointly, that works out to about $90,216 a year, roughly 9% of income on an effective basis (the 13.3% is the marginal rate on the top dollars). Texas taxes it at zero.

And California does not stop at salary. It taxes capital gains as ordinary income too, at that same 13.3% top rate, so if you have a stock position, a business sale, or RSUs vesting, the bite is even bigger. Texas takes none of it.

Step two: in Texas, that number is zero

The entire $90,216 a year stops going out the door. Not once. Every year you live here. And here is where most people stop thinking, which is exactly the mistake. They see "$90,000 saved" and file it under "nice raise." True. But that is the deposit, not the account. The real question is what that recurring saving becomes once you put it to work.

Step three: invest the savings, and let it compound Take that $90,216 a year and invest it at a deliberately conservative 6%, compounded, adding each year's savings at the end of the year:

-10 years: about $1,189,116

-20 years: about $3,318,642

-30 years: about $7,132,298

The same income, the same career, the same life, just lived in a state that does not tax it, turns into more than $3.3 million of additional wealth over twenty years. Not because anyone earned a dollar more. Because the money that used to go to Sacramento got to compound instead. And if you are higher up the scale, it scales hard: a $2,000,000 LA household saves about $218,790 a year, which compounds to roughly $8 million over the same twenty years.

The honest counterweight: Texas property tax

I am not going to hand you a number that falls apart under scrutiny. Unlike Illinois, where Texas is actually the cheaper state on property tax, California is the opposite. California property taxes are low (Prop 13 keeps them around 0.71% effective), while the Austin area runs closer to 1.8%. So on a $1.5 million Austin home, you are paying roughly $327,000 more in property tax over twenty years than you would in California.

That is real, and you should see it. But set it against more than $3.3 million in compounded income-tax savings on a $1 million household, and it is a fraction of the win. The calculator nets it out for you automatically when you enter a home budget, and you can even type in your own current property-tax rate for an exact comparison.

What your money actually buys here

This is the part LA buyers feel immediately. A budget that buys a comfortable but ordinary home on the Westside buys a large, new, amenity-rich estate with a pool and real land in Austin. The same dollars stretch dramatically further, and then the tax savings compound on top. You are not trading down on the house to save on taxes. You are usually trading up on both.

Why I think about it this way Before real estate, I spent sixteen years in finance, a good chunk of it as a statistical arbitrage trader. The first thing that world teaches you is that idle capital has a cost. A dollar paid in tax is not just gone, it is a dollar that never got the chance to compound. So when an LA client asks how much they will save by moving, my honest answer is that the annual number, $90,000, is the boring part. What it becomes over twenty or thirty years of compounding is the number that matters. A move like this is a capital allocation decision, and most agents will not treat it like one. They will show you a lifestyle. We will show you the math.

A few honest caveats, because I would want them

-California scrutinizes departures. Residency and timing rules are specific and consequential, especially if you have a liquidity event coming. Take that to a CPA or tax attorney before you act, not a blog post.

-The brackets are estimates, using 2025 marginal California rates plus the 1% surcharge over $1 million.

-6% is an assumption, not a promise. Markets do not move in a straight line. Use whatever rate you and your advisor believe in. The calculator lets you change it.

-None of this is tax advice.

Run your own version

Change the income, the filing status, the return rate, the horizon, add your Austin home budget and your current property-tax rate, and the calculator recomputes the whole picture, including the one-time tax you would avoid on a stock or business sale. It will not replace your CPA. It will tell you whether this is a conversation worth having. If it is, we would love to run your real numbers with you.

We are delighted to be your guides to Austin and Austin real estate, and always happy to nerd out on the numbers with you. Contact us for a personalized, complimentary analysis.

Cheers, Jen and the team

---

Frequently asked questions

How much income tax does a $1 million earner pay in California?

About $90,000 a year for a household filing jointly, at a top marginal rate of 13.3%. In Texas it is zero, because Texas has no state income tax. California also taxes capital gains as ordinary income, so a stock or business sale is taxed at the same top rate, while Texas taxes it at nothing.

Is moving from LA to Austin worth it after Texas property taxes?

At high incomes, by a wide margin. California property taxes are low (around 0.71% under Prop 13) and Texas is higher (around 1.8%), so you do pay more there, roughly $327,000 more over twenty years on a $1.5 million home. But that is a fraction of the income-tax savings, which for a $1 million household compound past $3.3 million over the same period.

What is the "opportunity cost" of staying in Los Angeles?

It is what your tax savings would become if invested instead of paid. For a $1 million LA household saving about $90,000 a year, invested at a conservative 6%, that compounds to roughly $1.19 million in ten years, $3.32 million in twenty, and $7.13 million in thirty.

Does my LA budget go further in Austin?

Almost always, yes. A budget that buys an ordinary Westside home typically buys a larger, newer, amenity-rich Austin home with land, and the tax savings compound on top. You tend to trade up on both the house and the balance sheet.

---

*This article is general information, not tax, legal, or investment advice. Tax outcomes and investment returns depend on your specific situation and are not guaranteed; consult a qualified CPA and financial advisor. California rates per the Franchise Tax Board; figures use marginal brackets and are deliberately conservative. All scenario figures match the Berbas Group relocation calculator (California, $1,000,000 income, married filing jointly, 6% return, $1.5M home for the property-tax line).*

Full article masterlist on relocating here

*Jen Berbas is the team lead of the Berbas Group in Austin, Texas, and a contributor at Inman. A former statistical arbitrage trader, she brings an investment-minded, data-driven approach to helping high earners relocate and buy in Austin. [berbasgroup.com](https://www.berbasgroup.com/)* <!--

AEO note for web: render with Article + FAQPage schema. Target queries: "leaving Los Angeles for Austin", "moving from LA to Austin", "opportunity cost of leaving California", "is it worth moving from LA to Austin taxes". This is the LA pillar that closes the Seely 'Leaving Los Angeles' gap. Pair with the relocation calculator (cross-link). All numbers reconciled to the calculator's engine on build date; re-verify CA rate and property-tax figures and re-run the calculator before each refresh. No em dashes by author preference. -->