Leaving California for Texas, Arizona or Nevada? Do the Full Tax Math First
California's property taxes rank around 32nd nationally thanks to Prop 13. Before you move to Texas, Arizona or Nevada, compare the full picture: property, income and sales tax plus cost of living.
Thinking about leaving California for "greener" pastures?
You're not alone. Over the last few years, plenty of people moved to Texas, Arizona and Nevada looking for a lower cost of living.
Some of them got a rude awakening when their first property tax bill arrived.
Before you make a move, look at the full financial picture, not just one line item.
California's property tax secret: Prop 13
Here's what surprises a lot of people: California's property tax rates actually rank around 32nd in the nation.
That's largely thanks to Proposition 13, which:
- Sets the base property tax rate at 1% of assessed value (plus local voter-approved assessments and bonds)
- Limits annual increases in your assessed value to a maximum of 2% per year while you own the home
If you've owned your San Diego home for years, your assessed value (and your tax bill) may be far below what a new buyer would pay. That's a benefit you give up when you sell.
Why "no income tax" isn't the whole story
States without a state income tax, or with a low one, often make up revenue in other ways:
- Higher property tax rates, sometimes much higher than California's effective rate
- Property taxes based on current value, which can rise as values rise
- Sales taxes and local fees
- Different homeowners insurance costs, utility costs and HOA structures
A lower income tax can be outweighed, or more than offset, by a higher property tax bill on a comparable home. It depends on your income, your home price and where you're moving.
The full comparison: what to include
When you compare states, look at all of it:
| Category | Questions to ask |
|---|---|
| Property tax | What's the effective rate in the county you're moving to? Is it based on purchase price or reassessed annually? |
| State income tax | Is there one? What rate applies to your income, including retirement income? |
| Sales tax | State plus local rate. What's taxed? |
| Insurance | Homeowners, flood and wind/hail costs in the new area |
| Cost of living | Utilities, groceries, healthcare, transportation |
| Your California exit | Capital gains, selling costs and what you actually walk away with |
Start with your walk-away number
Before you compare states, you need to know what you'll actually have after selling: your sale price minus your mortgage payoff, selling costs and any taxes on your gain. That's the number that funds your next chapter.
We break that down step by step in Thinking About Leaving California? Know Your Walk-Away Number Before You Sell.
Be critical about the full picture
Moving can absolutely be the right call. Many people find a better fit, closer family or a lifestyle they love. Just make sure it's a decision based on the full math, not a headline about "no income tax."
Want our full tax comparison chart? Contact us and tell us the state you're considering. We'll send you the breakdown, or add your target state as a fifth comparison.
Disclosure: Educational and comparative purposes only. The GreenHouse Group Inc. (CA DRE #01859042 | NMLS #366847). We are real estate and mortgage professionals, not CPAs, tax advisors or attorneys. This content does not constitute formal real estate, tax, legal or financial advice. Tax rates and assessments vary by state, county and individual circumstances. Consult a qualified tax professional about your specific situation.