- Californians are flocking to Texas in search of a more affordable life.
- But while housing and gas is significantly cheaper in Texas, property taxes are typically higher.
The vast majority of Californians fleeing the Golden State for Texas are seeking a more affordable lifestyle — but at least one aspect of living in the Lone Star State tends to be pricier than its California counterpart.
"The property tax percentage rate is higher," said Marie Bailey, a Texas-based realtor who moved from El Segundo, California, to Prosper, Texas, in 2017 and now specializes in clients making the same move.
"Every time a prospective client calls me, it's one of the first things I talk about," Bailey told Business Insider.
In 2021, nearly 108,000 people migrated from California to Texas, according to an analysis of the most recent Census data. Business Insider has spoken to dozens of people who left California for Texas in recent years and nearly all of them cite affordability as one of their prime reasons for moving.
Janelle Crossan, a single mother, was barely making ends meet in Costa Mesa, California, she told Business Insider earlier this year. But when she moved to New Braunfels, Texas, in 2020, Crossan was able to buy a home for the first time in her life.
"It has changed my life," she said.
But while housing, gas, and grocery prices tend to be lower in Texas, California has Texas beat when it comes to property taxes.
Texas has one of the highest property tax percentage rates in the country
In the US, property taxes, which are based on the value of a piece of property, represent the single largest source of state and local revenue. The money from property taxes typically helps fund local amenities, including schools, roads, and police.
California has a proposition in place, known as Prop 13, which keeps property taxes from exceeding 1% of a home's value.
As such, the effective property tax rate comes out to an average of 0.75% in California, Business Insider previously reported.
Texas levies significantly higher property taxes, partly because it doesn't collect state personal income tax.
The average property tax percentage rate in the state is among the highest in the nation at 1.74%, according to Business Insider's past reporting. In her work as a realtor, Bailey said she typically sees property tax percentage rates in Texas sitting between 1.6% to 2.7%.
Charles Denson, a tax expert with Gill, Denson & Company, told Business Insider that what a nearby home sells for can also affect how much property tax rates increase for homeowners.
"Even if you weren't selling your house, your neighbors might have sold their house for a lot so your tax bill is going up," Denson said.
But Texas property taxes are offset by other perks in the state
While the Texas property rates may be off-putting for some considering a change of scenery, many who have actually made the move from California to Texas find the increased property taxes negligible.
The lack of a state income tax was something Chuck and Jennifer Balek took into consideration ahead of their 2021 move from Camarillo, California, to Rockwall, Texas.
"Texas doesn't have a state income tax which was equivalent to like a 10% raise for both of us," Chuck Balek said.
"When people ask us about our property taxes, I say we're not really paying more than what we paid in California," Jennifer Balek said. "Yes, the percentage is more. But the house price is less here."
Crossan, the single mom who moved to New Branfels in 2020, told Business Insider she thinks Texas is "very fair" when it comes to taxes, especially because the state has no income tax and a lower sales tax rate than California.
The state also offers prospective homeowners more affordable options than California. The average Texas home value is $298,424, according to Zillow, while the average California home value is $746,473.
"Considering I could never afford a house at all in California, property tax or not, it's a non-issue for me," Crossan said.
Property taxes were recently on the Texas ballot
The topic of property taxes is a frequent one at dinner conversations and especially among native Texans who are now battling increasing housing prices and property taxes amid a wave of new residents to the state, both Bailey and the Baleks said.
This November, voters in the state passed Proposition 4 — a $12.7 billion package approved by lawmakers earlier this year that will offer property tax relief in the form of a new constitutional amendment.
The package will send billions of dollars to school districts in the state to lower property tax rates, as well as raise the homestead exemption from $40,000 to $100,000, meaning more of a home's value can't be taxed to pay for public schools.