Every week, families from California and other high-tax states land in Texas with a moving truck and a list of questions. The no-income-tax headline gets them here. What most people don't realize is how many other financial decisions need to be made in the first year — especially now that the One Big Beautiful Bill Act (OBBBA) has reshaped the tax landscape.
This isn't a guide about where to eat in Austin or which suburb has the best schools. This is a financial planning checklist — the things that will save you money, protect your family, and set you up for long-term success if you handle them early.
If you're planning a move to Texas in 2026 or have recently arrived, work through this list with your financial planner. The changes under OBBBA are now in effect, and several of them create opportunities that are time-sensitive.
State Income Tax — The Obvious Win
California's top marginal income tax rate is 13.3%. Texas has no state income tax. For a high-earning family, the savings can be six figures annually. That much is straightforward.
What's less straightforward is making sure California actually considers you gone. The Franchise Tax Board (FTB) is aggressive about auditing people who claim to have left the state. They look at where you vote, where your driver's license is issued, where your kids go to school, where you receive mail, and where you spend the majority of your time.
Establishing Texas domicile means more than changing your mailing address. Register to vote in Texas. Get a Texas driver's license. Update your vehicle registrations. Move your bank accounts. Close or reassign your California professional memberships. If you maintain a home in California, be very careful about how many days you spend there. The FTB counts — and they've been known to use credit card receipts, cell phone records, and social media posts to build their case.
The SALT Deduction Just Got More Relevant
One of the more significant changes under OBBBA is the increase to the state and local tax (SALT) deduction cap. In 2026, the cap is $40,400 — a meaningful jump from the $10,000 cap that had been in place since 2018. The cap increases by 1% annually through 2029, then reverts to $10,000 in 2030.
However, the deduction phases down for higher earners. It begins to phase out at $505,000 of modified adjusted gross income (MAGI) at a rate of 30%, and is fully eliminated at $605,000 MAGI.
In California, the SALT deduction was largely consumed by state income taxes, and most high earners blew through the cap before property taxes were even considered. In Texas, the equation flips. You have no state income tax, but property taxes run between 1.5% and 2.5% of assessed value. On a $1 million home, that's $15,000 to $25,000 per year in property taxes alone.
Under the new $40,400 cap, those property taxes are now likely fully deductible for the first time in years — as long as your income falls below the phase-out threshold. This is a real tax benefit that many new Texas residents overlook because they're still thinking in California SALT terms.
Re-Evaluate Your Entire Tax Strategy
Moving to a no-income-tax state doesn't just change one line on your return — it changes the math on virtually every tax planning strategy you have.
The 2026 federal income tax brackets under OBBBA range from 10% to 37%. With no state income tax layered on top, your effective marginal rate drops significantly. That has implications across the board:
Roth conversions become more attractive. Converting traditional IRA or 401(k) money to a Roth means paying tax now to enjoy tax-free growth and withdrawals later. In California, you were paying federal plus 13.3% state on every dollar converted. In Texas, you pay federal only. That makes the math on Roth conversions dramatically more favorable. The Roth IRA income phaseout for 2026 is $242,000 to $252,000 for married filing jointly — but you can still do backdoor Roth conversions regardless of income.
Capital gains recognition may be optimal in year one. Long-term capital gains rates in 2026 are 0% on taxable income up to $98,900 for married filing jointly, 15% up to $613,700, and 20% above that, plus the 3.8% NIIT above $250,000 MFJ or $200,000 single. If you have large unrealized gains — in stock, real estate, or concentrated equity positions — your first year in Texas may be the optimal time to recognize them. No state tax applies, and depending on your other income, you may be able to harvest gains at the 0% or 15% federal rate.
Equity compensation sourcing rules matter. If you have stock options, RSUs, or other equity comp from a California employer, be aware that California allocates income based on the number of days you worked in the state during the vesting period. Even after you move to Texas, California may tax a portion of equity compensation that vests after your departure if the grant was made while you were a California resident. Get specific tax advice on your equity comp timeline before you move — and consider whether accelerating or delaying exercises makes sense given your relocation date.
Real Estate Decisions
For most families moving from California to Texas, the real estate math is one of the most exciting parts of the move. You're typically selling an expensive home and buying in a more affordable market, which can free up significant capital.
But don't overlook the property tax difference. Texas has no state income tax, but property taxes are substantially higher than California's — typically 1.5% to 2.5% of assessed value compared to California's effective rates that are often well under 1% due to Prop 13. On a $1 million home in Texas, you're looking at $15,000 to $25,000 per year. Ask about agricultural exemptions if you're buying acreage — they can significantly reduce your property tax burden.
Under the OBBBA, mortgage interest remains deductible on the first $750,000 of mortgage debt. Private mortgage insurance (PMI) is now permanently deductible again, which had been an on-again, off-again provision for years. If you're putting less than 20% down on your Texas home, the PMI deduction is worth factoring into your analysis.
Update Your Estate Plan
This is one of the most commonly missed items on a relocation checklist. Your California estate plan may not work properly in Texas. The two states have different laws around community property, powers of attorney, healthcare directives, and trust administration. Even if the broad strokes of your plan carry over, the specific language and legal references may need to be updated to comply with Texas law.
Under the OBBBA, the federal estate tax exemption is now $15 million per person, or $30 million per married couple, with a 40% tax rate on amounts above the exemption. The annual gift tax exclusion for 2026 is $19,000 per recipient. For most families moving to Texas, the combination of no state estate tax and a historically high federal exemption creates significant flexibility for wealth transfer.
There's also a brand new provision worth knowing about. The OBBBA created what are informally called “Trump accounts” — a new type of IRA that allows contributions of $5,000 per year for children under the age of 18, with no earned income requirement. This is a departure from traditional IRA rules, which require earned income. These accounts become available starting in July 2026, and for families with young children, they represent a new long-term savings vehicle worth incorporating into your plan early.
Insurance Review
Your insurance needs change when you move to Texas. The risk profile here is fundamentally different from California.
Hail damage is one of the most common homeowner claims in Texas, and severe storms are a regular occurrence. Your homeowner's policy needs to be built for this environment. Flood insurance is another consideration — many Texas homes, particularly in the Hill Country and near waterways, sit in or near flood zones. FEMA flood maps may show your property outside a flood zone, but local experience often tells a different story. Don't assume your California earthquake-and-wildfire mindset translates here.
Review your auto insurance, umbrella coverage, and liability limits as well. Texas has different minimum coverage requirements than California, and the cost structure is different. Work with a Texas-based insurance agent who understands the local risk landscape.
HSA Strategy
If you're enrolled in a high-deductible health plan, the Health Savings Account (HSA) becomes even more valuable in Texas. The 2026 contribution limits are $4,400 for individual coverage and $8,750 for family coverage, with an additional $1,000 catch-up contribution for those age 55 and older.
The HSA offers a triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. In California, that first benefit was somewhat diluted because HSA contributions are not deductible for California state income tax purposes. In Texas, there's no state tax to worry about, so the full triple tax advantage applies at the federal level without any state-level friction.
For families who can afford to pay medical expenses out of pocket and let the HSA grow, it becomes one of the most powerful long-term savings vehicles available — essentially functioning as a stealth retirement account with no required minimum distributions and complete flexibility for medical spending at any age.
Build Your Professional Team in Texas
One of the biggest mistakes new Texans make is keeping their California-based financial team and assuming everything will translate. It often doesn't. Texas has different rules for property tax protests, different estate planning statutes, different insurance requirements, and different real estate customs.
Build a Texas-based team that includes a fee-only financial planner, a CPA who understands multi-state tax situations (especially the California departure audit risk), an estate planning attorney licensed in Texas, and a local insurance agent. These professionals should be working together, not in silos.
The first year in Texas is a planning window. Decisions you make about Roth conversions, capital gains recognition, estate plan updates, and account restructuring are most valuable when they're made proactively — not reactively at tax time. The earlier you start that process, the more of the opportunity you'll capture.