Everything’s Bigger in Texas — Including Taxes, Which Are Outpacing California

A quarter of Texas, quarters of USA and white star. stock photo
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Texas has never lacked self-belief, especially when it comes to touting tax advantages it has over other states. Well, not so fast, Lone Star Staters — you could be paying higher taxes than even Californians.

As the Houston Chronicle reported, a graphic shared on Reddit’s main economic forum illustrated how the vast majority of Texans pay more in taxes than Californians do. That’s the case even though Texas does not levy a state income tax on individuals (and California does).

The graphic contained 2018 data from the nonprofit Institute of Taxation and Economic Policy (ITEP), which gathered stats from a variety of sources: IRS income taxes, sales taxes, property taxes, and the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey.

According to the ITEP’s research, Texans whose salaries fall into the lowest 20% of income earners — those who earn less than $20,900 a year — pay about 13% of their income in state and local taxes. By comparison, Californians in the bottom 20% (who earn less than $23,200 annually) pay a rate of 10.5%.

That’s not the only income group where taxes are higher in Texas than California, either: The middle 20% of earners in Texas — making $35,800 to $56,000 a year — pay 9.7% in state and local taxes .Meanwhile, it’s 8.9% for middle income earners in Californian, whose pay ranges from $39,100 to $62,300 a year.

About the only Texans who fare better than Californians are the wealthy. The top 1% of earners in Texas — those making $617,900 or more annually — only pay 3.1% of their income in state and local taxes. That compares to a rate of 12.4% for top earners in California, who make $714,400 or more per year.

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Although the ITEP data is from four years ago, taxes in Texas are pretty much the same now as they were then, according to Robert Peroni, a tax professor at the University of Texas at Austin School of Law.

As the Chronicle noted, ITEP ranked Texas as the second-most regressive tax state behind Washington. That’s because low-income taxpayers pay a disproportionate share of the tax burden. California ranked as the most progressive tax state because its higher-income residents tend to pay higher tax rates.

“When they say Texas is a very regressive state, it means if you’re low income, you spend 100 percent of it,” Peroni told the Chronicle. “Some of it is tax-exempt, but most of that spending is taxed by sales tax.”

Not surprisingly, Californians have had a field day with the Reddit post — including Long Beach Mayor Robert Garcia, who tweeted: “Hey Texans, come over to California to pay lower taxes. And we have great weather.”

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