Moving to Austin? How Zero State Tax Boosts Your Take-Home Pay

Austin has become the top relocation destination for tech workers leaving California and New York. The reason is simple: Texas has zero state income tax. For a software engineer earning $180,000, moving from San Francisco to Austin means an immediate $15,000+ increase in annual take-home pay.

The Real Tax Savings of Moving to Austin

On a $150,000 salary, here is the comparison: In California, you would pay approximately $10,500 in state income tax. In New York City, you would pay about $8,900 in state tax plus $4,800 in city tax. In Austin, Texas? Zero state income tax. That is $10,000-$14,000 more in your pocket every year.

Watch Out for Property Taxes

Texas compensates for no income tax with higher property taxes — averaging 1.8% of assessed value. On a $500,000 home in Austin, that is $9,000 per year. However, for renters and high-income earners, the math still heavily favors Texas.

Sales Tax Considerations

Austin's combined sales tax rate is 8.25%, which is higher than many states. Budget for this when comparing cost of living, especially for large purchases like vehicles and electronics.

Remote Work Tax Traps

If you move to Austin but your employer is in California or New York, be careful. Some states still try to tax remote workers based on the employer's location. Ensure your employer updates your tax withholding to reflect your Texas residency.

Maximize Federal Deductions

Without state income tax to deduct, your SALT deduction will be limited to property taxes. Focus on other deductions: mortgage interest, charitable contributions, and retirement account contributions to reduce your federal tax burden.