The Property Tax vs. Income Tax Tradeoff
States fund themselves through three main levers: income tax, property tax, and sales tax. When one is low (or zero), the others tend to compensate. The scatter plot above makes this visible - no-income-tax states like Texas (1.60% property tax), New Hampshire (1.86%), and South Dakota (1.22%) cluster toward the right side of the chart. Meanwhile, high-income-tax states like Hawaii (11% top rate, 0.27% property tax) and Oregon (9.9% top rate, 0.87% property tax) sit near the top-left.
For a household earning $150,000 with a $400,000 home, the total tax picture swings by over $15,000/year depending on the state. Switch the chart above to "$ Amounts" and drag the income slider - you'll see the no-income-tax states (pinned at $0 on the Y axis) pull away from high-tax states like California and New York in real time.
Why the "Best" State Changes With Your Income
At $75,000 income and a $250,000 home, a state with 5% income tax and 0.5% property tax costs roughly the same as one with 0% income tax and 1.5% property tax - about $5,000/year either way. But at $300,000 income, the income tax state charges $15,000 while the property tax state still charges only $3,750.
Move the income slider above to $300,000, switch to "$ Amounts," and watch the no-income-tax states stay pinned at $0 while California climbs past $20,000/year. Click Texas and California to pin them side-by-side - the comparison bar shows the exact dollar delta at your numbers. High earners considering relocation see the clearest benefit from no-income-tax states. Retirees with modest income but valuable property see the opposite pattern - property tax hurts more than income tax savings help.
The Insurance Wildcard
Tax rates get the headlines, but homeowners insurance varies 4x between states. Florida averages $4,200/year - three times the national average - due to hurricane risk and a troubled reinsurance market. Colorado ($2,600) and Louisiana ($3,400) also face elevated premiums from natural disaster risk. Hawaii and Utah sit below $1,200/year.
On a $400,000 home, the insurance difference between Florida ($350/month) and Utah ($92/month) is $258/month - potentially larger than the property tax difference. The total cost column in the table above includes insurance precisely because ignoring it distorts the comparison.
How the 2026 SALT Cap Changes the Comparison
The ordinary 2026 cap on state and local tax deductions is $40,400, or $20,200 for married filing separately. A New Jersey homeowner below the income phase-down with $35,000 of property tax and $15,000 of state income tax has $50,000 of potential SALT deductions but can claim at most $40,400. The remaining $9,600 is not deductible under the cap. Whether that changes the federal bill depends on the filer's other itemized deductions and marginal rate.
The income phase-down begins above $505,000 of MAGI ($252,500 MFS) and reduces the cap by 30 cents for every dollar above the threshold. For a non-MFS filer it reaches the $10,000 floor at about $606,334 of MAGI. This page intentionally shows state and local costs before federal deductions because itemizing status, filing status, income, and the phase-down all change the federal effect.