If you are considering Austin, Texas as your next home, whether it’s for retirement, job relocation, family values, and more, here is what you need to know about taxes.
According to the U.S. Census Bureau, “Austin outpaced every other metro area in the nation from 2010 through 2019, and in 2020 (the latest figures), was the fast-growing metropolitan area. On average, the city adds 168 new residents per day, mostly due to relocations.”
What are taxes like?
Even though you won’t pay personal state income tax (a huge bonus for people moving from states with high tax rates such as California and New York). The current total sales tax in Austin is 8.25 percent. While the county doesn’t currently impose a sales tax, the state charges a state sales tax of 6.25 percent. Austin adds to that a city sales tax of 2 percent. One percent of the city’s sales tax goes towards the improvement of its public transportation system.
While Texas doesn’t have a state income tax, it makes up for it in property taxes. According to Tax-Rates.org, the median property tax in Austin is $1,903 per year for a home that is worth approximately $150,000. Currently, the average median listing home price in the city is $579,000. Based on those figures, if you move to Austin, expect to pay at least $6,000 annually in property taxes for a home slightly below the median home price.
For people moving from historically expensive cities such as Los Angeles, San Francisco, or New York (where many of Austin’s recent transplants have come from), it still works out to a lower cost of living. But for folks moving from smaller Texas towns or mid-sized cities, it’ll feel like more of a squeeze.
Why Are Businesses Moving to Austin?
Austin-based economist Jon Hockenyos told national attendees of a 2021 forecasting event that Austin will be “one of the great global cities of the 21st century.”
It’s worth noting that along with a lower comparable cost of living, businesses that move or expand to Austin will also get exceptional business incentives and be privy to some of the lowest tax rates in the country.
The state of Texas has neither corporate or personal income tax — a boon for businesses and their employees. Business incentives range from sales tax and franchise tax exemptions for qualified businesses. Additionally, the state offers waived permit fees, property tax abatements, grants, and local funding for relocating or expanding businesses.
Additionally, the city of Austin has a Business Expansion Incentive Program that rewards qualifying businesses that perform in certain target areas with tax reimbursements and wage reimbursements.
Real estate opportunities are still readily available, especially for expanding businesses or manufacturing companies that require larger warehouse spaces. With a median salary of $93,000, the economy is strong, and businesses will have access to a talent pool full of smart professionals.
Additional Business Relocation Costs to Consider
Before you make the big move, be sure to review the following points to ensure you get a return on investment:
- Deposits and/or lease fees for a new office space
- Business registration fees or any fees associated with dissolving or reforming, merging, relocating, or converting your business.
- The predicted loss of productivity and revenue during the moving process
- Employee relocation costs
- Marketing costs associated with informing clients you will be relocating or moving
- Any necessary or elected insurance dues for the move and any relocating employees
- One-time set-up costs for the new office and employees; utilities, IT, furniture, cleaning, etc.
For a full list of Austin’s economic incentives, check out the Austin Chamber of Commerce website.
What is Austin’s cost of living?
Austin has a higher-than-average cost of living with a living index of 109, which is 9 percent higher than the national average of 100. Housing accounts for a large part of the higher cost of living. However, you’ll also pay more for health care, goods, and services in Austin.
What is Austin’s real estate market like?
According to Realtor.com, the median listing home price in Austin is $579,000, with an average of $320 per square foot. This is significantly higher than the national median home sales price of $374,900. Depending on where you choose to live, you could pay substantially more for a home. Neighborhoods like Circle C, Bee Cave, Westlake and East Austin can be pricey.
Roughly 44 percent of all housing units are owner-occupied in Austin. That means more than half of the population rents. Thirty-five percent of renters pay between $1,501 and $2,000 per month while 20 percent pay more than $2,000 per month.
Does Austin, Texas, pay you to move there?
No, you won’t get paid to move to Austin. However, the city has started participating in a guaranteed income program that redistributes a portion of local taxes to lower-income families in the city.
We help business owners stay compliant and minimize their income tax liabilities for their company and personal taxes. When you’re ready to make the move to Austin, reach out to us to help you calculate the tax bite and ensure you’re maximizing your deductions come tax time.
