“No state income tax” is the first thing people hear about Texas. It’s true. It’s also only half the arithmetic, and the other half surprises nearly every buyer moving in from out of state.

The trade Texas actually makes

Texas does not levy a personal state income tax. It funds through property tax instead. That is not a loophole or a catch — it is simply a different structure, and it lands differently depending on your income and the house you buy.

In Collin County, rates run roughly 1.8–2.2% of assessed value depending on your exact taxing entities. Compare that to states where 1% is considered high and the difference is immediate.

Why the total often still favours you

For a household with strong income moving from California, Illinois or New York, dropping a state income tax bill is usually the larger number. The total frequently works out in your favour.

What changes is the distribution. Income tax is withheld from a paycheck you never see. Property tax arrives as part of a monthly mortgage payment you feel every month, forever, whether or not you earned anything that year.

That difference matters most for two groups: people approaching retirement, whose income will drop but whose property tax won’t, and people whose income is variable.

The two things nobody mentions

1. MUD and PID districts

Many newer developments — particularly in Prosper and Celina, where most of the region’s new construction has moved — carry additional assessments on top of regular property tax. Municipal Utility Districts and Public Improvement Districts finance the infrastructure that made the development possible.

They can add meaningfully to your annual cost, and they will not appear in an online payment estimate. Always ask for the complete tax picture in writing before you calculate a payment.

2. Your first year’s bill may not reflect your purchase price

Assessed value and sale price are not the same number, and the assessment may lag the sale. Buyers sometimes budget from the seller’s last bill and get a different number the following year.

Ask what the assessment is likely to look like after the sale, not just what the current owner paid.

The homestead exemption

If the home is your principal residence, file for the homestead exemption. It reduces your taxable value and caps how fast the assessed value of your homestead can rise year over year.

It is not automatic and it is not retroactive in the way people assume. File it. Every year I meet someone who didn’t.

How to actually run the number

• Take the specific address, not the neighborhood or the city
• Get the combined rate for every taxing entity that applies to it
• Ask whether a MUD or PID assessment applies, and for how much
• Add the homestead exemption if it will be your principal residence
• Compare that monthly figure against what you currently pay in income tax plus property tax combined

Do this before you tour, not after you’ve fallen for a kitchen. It takes twenty minutes and it occasionally changes which city people buy in.

The short version

Texas is often genuinely cheaper in total for relocating households. It is almost never cheaper in the way people picture before they arrive. Knowing which is which before you write an offer is the entire point.

Want help running it on a specific address? Call or text 847-401-6690.