Retired Couple Keeps $7,200 More in Texas on $150,000 Income Than in California
Updated
Updated · 24/7 Wall St. · May 31
Retired Couple Keeps $7,200 More in Texas on $150,000 Income Than in California
1 articles · Updated · 24/7 Wall St. · May 31
$150,000 of annual gross income leaves a retired couple with about $137,200 in Texas versus $130,000 in California, creating a $7,200 after-tax gap on a $2 million dividend portfolio and Social Security.
Nearly $12,800 of federal tax is the same in both states: the couple earns $96,000 of dividends at a 4.8% yield, gets $54,000 of Social Security, and pays ordinary-income tax on roughly $29,000 of REIT distributions.
California adds about $7,200 of state tax on roughly $109,600 of taxable income, while Texas levies no personal income tax; the gap can widen further with capital gains, Roth conversions or large 401(k) withdrawals.
Property taxes complicate the comparison because Texas often charges 1.8% to 2.5% of assessed value, while California's Proposition 13 can sharply limit bills for long-held homes and offset much of the income-tax advantage.
Over 25 retirement years, the income-tax difference totals roughly $180,000, though the report says relocation planning, residency timing and any shift into Treasuries can materially change the math.