Moving From Chicago to Austin: The Opportunity Cost, and a Property-Tax Surprise

Short answer: A Chicago household earning $1,000,000 a year pays Illinois a flat 4.95% income tax, about $49,500 a year. In Texas that becomes zero. Invest that annual saving at a conservative 6%, and it compounds to roughly $652,000 in ten years, $1.82 million in twenty, and $3.91 million in thirty.

And here is the part that surprises Chicago movers: Texas property tax is actually lower than Illinois's, so unlike most relocations, you tend to save on property tax too. (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

I like to run actual numbers rather than talk in generalities, so here is a real scenario you can reproduce yourself in our relocation calculator: select Illinois, enter $1,000,000 of income, married filing jointly, and set the return to 6%.

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

Step one: what they pay Illinois

Illinois is refreshingly simple to calculate, because it is a flat tax. Every dollar of income is taxed at 4.95%, with no brackets and no preferential rate for capital gains. On $1,000,000, that is about $49,500 a year.

Now, that is a smaller number than a New Yorker or a Californian pays, and I am not going to pretend otherwise. A Manhattan household at the same income pays closer to $103,000 because of the New York City tax stack. So the income-tax case for leaving Illinois is real but more modest. The interesting part of the Chicago story is what happens when you add property tax, which I will get to.

Step two: in Texas, that becomes zero

Texas has no state income tax, so the entire $49,500 a year stops going out the door, every year you live here. As always, that annual number is just the deposit. The real question is what it becomes once you put it to work.

Step three: invest the savings, and let it compound Take that $49,500 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 $652,449

- 20 years: about $1,820,887

- 30 years: about $3,913,380

The same income, the same career, the same life, just lived in a state that does not tax it, turns into nearly $1.82 million of additional wealth over twenty years. Not because anyone earned a dollar more, but because the money that used to go to Springfield got to compound instead. That is the opportunity cost of staying.

The Chicago surprise: you save on property tax too

Here is where the Chicago math breaks the usual pattern. In most relocations, Texas property tax is the honest counterweight, because it runs higher than the state you are leaving. Not here. Illinois has some of the highest property taxes in the country, around 2.08% of value, while the Austin area runs closer to 1.8%. So Texas is actually the cheaper state on property tax.

On a $1,500,000 Austin home, that difference is about $4,200 a year, or roughly $84,000 over twenty years, saved, not spent. Most agents would never tell a Chicago buyer that, because it is one more thing to track. We would rather you see it, because it makes the move look better and it is true.

Put the whole picture together for that $1,000,000 household buying a $1,500,000 Austin home: the income-tax saving invested at 6% for twenty years (about $1.82 million) plus the property-tax savings (about $84,000) comes to roughly $1.9 million of advantage over two decades. Those are the exact numbers the calculator returns.

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 to compound. So when a Chicago client asks how much they will save by moving, my honest answer is that the annual number, $49,500, is the boring part.

What it becomes over twenty or thirty years of compounding, plus the property tax you stop overpaying, is the number that actually 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 - The income-tax case is more modest from Illinois than from California or New York. At 4.95% flat, the annual saving is smaller. The Chicago advantage leans more on property tax and compounding than on a dramatic income-tax cut.

- Property tax varies a lot by county and home. Illinois's Cook County burden is heavy; your specific bill depends on the property. Treat the ~2.08% figure as a statewide effective average.

- 6% is an assumption, not a promise.** Use whatever rate you and your advisor believe in. The calculator lets you change it and watch the number move. - None of this is tax advice. Confirm the specifics with your CPA before you act.

Run your own version

Change the income, the filing status, the return rate, the horizon, and add your Austin home budget, the calculator recomputes everything, including the property-tax savings unique to the Illinois case. It will not replace your CPA, and it is not meant to. 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 Illinois? About $49,500 a year. Illinois has a flat 4.95% income tax with no brackets, applied to capital gains as well. In Texas, it is zero, since Texas has no state income tax.

Is moving from Chicago to Austin worth it on taxes alone? The income-tax saving is real but smaller than from California or New York, because Illinois is a flat 4.95% rather than a 10%-plus top rate. What makes the Chicago case strong is the combination: the income-tax saving compounds over time, and unlike most moves, Texas property tax is actually lower than Illinois's, so you save there too.

Do you really save on property tax moving from Illinois to Texas?

Usually, yes. Illinois has among the highest effective property taxes in the country (~2.08%), versus roughly 1.8% in the Austin area. On a $1.5 million home that is about $4,200 a year, or $84,000 over twenty years, in your favor. It varies by county and property, so confirm your specific numbers.

What is the "opportunity cost" of staying in Chicago? It is what your tax savings would become if invested instead of paid. For a $1 million household saving about $49,500 a year, invested at a conservative 6%, that compounds to roughly $652,000 in ten years, $1.82 million in twenty, and $3.91 million in thirty.

*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. Illinois rates per the Illinois Department of Revenue; property-tax figures are approximate statewide effective averages. All scenario figures match the Berbas Group relocation calculator (Illinois, $1,000,000 income, married filing jointly, 6% return, $1.5M home for the property-tax line).*

See the full guide to 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: "moving from Chicago to Austin", "opportunity cost of leaving Illinois", "Illinois vs Texas taxes high earner", "do you save on property tax moving from Illinois to Texas". Pair with the relocation calculator (cross-link). All numbers reconciled to the calculator's engine on build date; re-verify IL rate and property-tax figures and re-run the calculator before each refresh. No em dashes by author preference. -->