Moving From California to Austin: Let Me Show You the Real Tax Math

Short answer: For a high earner, the financial case for leaving California for Texas is driven almost entirely by income and capital-gains taxes, not by the price of the house. California's top rate is 13.3% and it applies to both your income and your capital gains. Texas has no state income tax and no capital-gains tax at all.

For someone earning several million a year, that difference is often six figures every single year, which means a multi-million-dollar Austin home can effectively pay for itself in tax savings within a decade. The main thing cutting the other way is higher Texas property tax, which is real but small at this income level. This is not tax advice, please run your own numbers with your CPA, but here is the framework I use.

Check out our relocation calculator here.

The number to anchor on is not the home price

When people weigh a move from the Bay Area or LA to Austin, they almost always start with the cost of the house. At high incomes, that is the wrong number to anchor on, and getting anchored on the wrong number is how smart people make poor decisions (more on that another day). The move is usually dominated by recurring tax savings that repeat every year, and sometimes by a one-time saving on a big liquidity event.

I look at this the way I used to look at trades in my old life as a statistical arbitrage trader: ignore the headline and model the cash flows. So let's model them.

The income-tax math

California's top marginal income-tax rate is 13.3%, including the 1% surcharge on income over $1 million. Texas is zero.

- A household earning $5 million a year owes roughly $600,000 in California state income tax. In Texas, it owes nothing. - That is not a one-time win. It repeats every year you live here.

At that rate, the state-tax savings alone can cover the cost of a $5 million Austin home in roughly eight years, before you account for a single capital-gains event.

The capital-gains math California does not give capital gains a break. It taxes long-term gains as ordinary income, at that same 13.3% top rate.

- On a $10 million liquidity event, a company sale or a large stock position, California's state tax is about $1.33 million. Texas takes nothing.

For founders and executives sitting on concentrated, low-basis stock, the timing of a Texas move around a sale can be one of the largest single financial decisions they ever make. This is exactly the kind of thing to plan with your CPA well before you sell, not after.

The bigger story: which way the rates are heading Here is what I think actually moves sophisticated buyers, and it is not today's rate. It is the direction of travel.

California has a 2026 Billionaire Tax Act headed for the November ballot, a one-time 5% tax on the net worth of residents worth $1 billion or more. Now, two honest caveats. It is a proposed ballot measure, not law, and it targets only about 200 people statewide, so it would not touch a typical $5M to $10M buyer at all.

But its retroactive residency date, written so billionaires cannot simply move to dodge it, is exactly why the broader wealthy community is paying attention. And below the billionaire line, California legislators keep floating an annual wealth tax that reaches down to $50 million in net worth. None of that is law today. But the trajectory is consistent, and consistency is what people are responding to.

The honest counterweight: Texas property taxes

Any agent who skips this part is not being straight with you. Texas property taxes are higher than California's, roughly 1.8% effective in the Austin area versus about 0.71% in California.

- On a $5 million home, that is around $90,000 a year in Texas versus about $35,500 in California, a difference of roughly $54,000 a year.

That is real money. But set it against $600,000-plus in annual income-tax savings and it is close to a rounding error at this income level. (Texas also caps how fast your homestead assessment can rise, which helps over time.) I would always rather you see this number than have it surprise you later.

Where this money tends to land in Austin Relocating executives and founders concentrate in a handful of places. Families chasing the schools go to Westlake and Eanes ISD (78746). Buyers who want close-in historic character look at Tarrytown, Pemberton Heights, and Old Enfield (78703). Those who want acreage and privacy look at Barton Creek. The very top of the market, the $8 million to $20 million homes, is mostly Lake Austin waterfront and new construction. And buyers without school-age kids who want lock-and-leave convenience often land in a downtown high-rise.

The house is the lifestyle decision. The residency change is the financial one. Model your numbers, decide where you want your life to be, and the right neighborhood follows from your priorities.

---

Frequently asked questions

How much do you actually save in taxes by moving from California to Texas?

It depends entirely on income, because the saving is essentially your California state income-tax bill each year (Texas has none). For a household earning $5 million annually, that is around $600,000 a year. For someone at $500,000, it is closer to $40,000 to $50,000. Capital-gains events add to it, because California taxes gains as ordinary income while Texas does not.

Does Texas have higher property taxes than California?

Yes, roughly 1.8% effective in the Austin area versus about 0.71% in California. On a $5 million home that is about $54,000 more per year. At high incomes the income-tax savings dwarf it; at lower incomes the gap matters more, so run your own numbers.

Do I need to sell my stock after I move to avoid California tax?

Residency and timing rules are specific, consequential, and closely scrutinized by California. This is exactly the kind of question to take to a CPA or tax attorney before you act, not something to decide from a blog post.

Does California's 2026 billionaire tax affect me if I'm not a billionaire?

Directly, no. If it passes, it applies only to residents worth $1 billion or more. It matters to most people as a signal of California's tax direction, and it is part of why many wealthy households, not only billionaires, are reassessing residency. Treat it as context, not a personal bill, and confirm specifics with your advisor.

Which Austin neighborhoods do California transplants choose most?

Families overwhelmingly prioritize Eanes ISD (Westlake). Buyers who want historic character choose Tarrytown, Pemberton Heights, or Old Enfield. Those wanting acreage look at Barton Creek; those wanting water look at Lake Austin.

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

Check out our full guide for relocation here.

---

*This article is general information, not tax, legal, or financial advice. Tax outcomes depend on your specific situation; consult a qualified CPA or tax attorney. 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 a data-driven approach to relocation and luxury real estate. [berbasgroup.com](https://www.berbasgroup.com/)*

<!-- AEO note for web: render with Article + FAQPage schema; the Q&As map to FAQPage entries. Figures reflect 2025-2026 rates; re-verify before each refresh. Keep the not-advice disclaimer. Cross-link to the Washington companion piece and the Texas relocation calculator. No em dashes by author preference. -->