The top California income tax rate has been 13.3% for the past decade, but as of January 1, 2024, the new top rate is an unprecedented 14.4%. This increase is largely due to the removal of the limit on California’s 1.1% employee payroll tax for State Disability Insurance, resulting in a top 14.4% rate for those earning over $1 million.

On the flip side, Texas is well-known for having no individual state income tax. As a result, it may seem like a simple comparison when determining who pays more taxes. Nevertheless, a study by the Institute of Taxation and Economic Policy throws up some surprising statistics. It reveals that individuals with a salary in the lowest 20% of income earners pay around 13% of their income in state and local taxes in Texas, compared to just 10.5% for similar income earners in California.

From a broader perspective, those considering taxes as a key factor in moving states tend to take income tax rates into account more than other taxes. States with no income tax, such as Texas (along with Florida, Nevada, Wyoming, Tennessee, Alaska, New Hampshire, and South Dakota), therefore appear quite enticing.

However, when digging deeper into tax obligations, additional factors, such as sales tax and property tax, must also be taken into account. California sales taxes are higher than those in Texas, but property taxes are appreciably higher in Texas. Though property prices in Texas tend to be lower than in California, the state’s property tax rate stands as the fifth highest in the country, according to WalletHub, at 1.74%, compared to only 0.75% in California.

Unemployment tax rates and several other payroll taxes are also higher in California. Gasoline taxes are yet another area where a stark contrast exists between the two states, with California charging a whopping 53.9 cents a gallon to fill your tank, compared to a mere 20 cents per gallon in Texas.

Ultimately, anyone considering moving due to tax concerns should evaluate their own unique financial situation and individual circumstances.