In partnership with our colleagues at Briggs Freeman Sotheby’s International Realty, we are proud to highlight Dallas-Fort Worth, Texas, as a part of our Destination Spotlight Series.
Looking Ahead
As Washington state transitions to a new landscape, one affected by the impending “Millionaire’s Tax” and shifting policies, more residents are looking to broaden their horizons and explore purchasing property in new locales. High-net-worth Washington residents have historically sought investments in tax-friendly environments, and the new high-earners’ tax will likely cause more wealth to transition from the Pacific Northwest into states with fewer taxes.
The new tax will affect households with an income of over $1 million. Although this new tax will not go into effect until January 1, 2028, savvy investors and homebuyers are already looking to make their next move, knowing the importance of staying ahead of the curve when it comes to real estate trends.
If you’re curious about what makes someone technically considered a Washington resident and how you can change your Washington domicile, find more information here. Ultimately, your domicile is your permanent home, and the process of transferring from a Washington domicile to a Texas one does involve more steps than simply purchasing a Texas home, particularly if you are planning to keep a residence in Washington.
Flying South
For Washington residents who choose to view this as an opportunity rather than an obstacle, the call to migrate to Texas, where zero state income tax awaits, is pulling them south. For high-net-worth individuals, the difference between Washington’s upcoming 9.9% tax and 0% could make a world of difference in not only their portfolio but also their lifestyle.
Beyond Income Tax
Income tax aside, Texas is a haven for another reason: there is zero capital gains tax. Washington’s capital gains tax imposes a 7% rate on gains over $278,000 (adjusted for inflation), with a 9.9% rate on gains exceeding $1 million. For example, a taxpayer with $2 million in capital gains would owe $141,478 in Washington state capital gains tax.
By waiting until after successfully and verifiably changing your domicile to Texas, you could potentially eliminate state capital gains taxes on future transactions.
Additionally, Texas has no state estate tax in comparison to Washington’s estate tax imposed on properties worth more than $9 million, with a $3 million exclusion.
Property taxes and sales taxes even the playing field for Texas and Washington residents, with total Washington sales taxes (when local taxes are taken into account) landing at around 8 to 10% compared to the approximate 8.25% in Texas. Texas property taxes (which are imposed locally and not by the state) land in the 1.5 to 3% range, whereas Washington homeowners are typically paying around 1% in property taxes.
Lower Cost of Living Means More Living
Washington residents are increasingly realizing that saving more in taxes, property costs, and general costs of living means more financial freedom to live their desired lifestyle. When searching for a new home, the Dallas-Fort Worth area offers 50 to 65% more value (when looking at average dollar per square foot) than the Seattle metro area. Additionally, the median sales price of a Dallas-Fort Worth home is $395K, compared to $770K in the Seattle area. In the current landscape of inflation, buyers are taking a serious look at how far their dollar stretches and making steps to make the most out of their income.
More Than Money
Dallas-Fort Worth isn’t merely appealing to transplants because of the tax-friendly benefits; people are flocking to the Lone Star State for more sunshine, generally mild winters, and increasingly appealing career opportunities. According to the Dallas Regional Chamber, the area is home to 22 Fortune 500 company headquarters and 48 Fortune 1000 headquarters, including AT&T, American Airlines, Texas Instruments, and Toyota. The diversity found amongst the powerhouse companies located in Dallas-Fort Worth speaks to the variety, strength, and innovation of this increasingly popular region.
With one of the largest and best-connected airports in the world, Dallas-Fort Worth keeps you a flight away from domestic trips and international destinations, which is an especially appealing benefit for homeowners who are exploring splitting their time between Washington and Texas.
For sports fans, the Dallas Cowboys, Texas Rangers, Dallas Stars, and Mavericks provide ample opportunity to cheer on celebrated teams.
High-net-worth individuals, investors, retirees, and homeowners looking for more space and funds to begin their next chapter are finding a world of opportunity in Texas.
Our colleagues at Briggs Freeman Sotheby’s International Realty have broken down what a move to Texas might mean for your finances below.
Key Tax Differences: Washington vs. Texas
- State Income Tax: Washington: None | Texas: None
- Capital Gains Tax: Washington: 7% on gains above $262,000 | Texas: None
- Estate/Inheritance Tax: Washington: 10–20% on estates over $2.09M | Texas: None
- Property Tax (average effective): Washington: ~0.84% | Texas: ~1.60–1.80%
- Sales Tax (average combined): Washington: ~10.4% | Texas: ~8.2%
Capital Gains Tax
- Washington’s capital gains tax—enacted in 2022 and upheld by the State Supreme Court—is one of the most significant drivers pushing affluent residents toward Texas.
- At 7% on realized gains above $262,000, the impact on high earners, business owners, and investors is substantial.
Sample annual savings by gain amount (based on 7% WA rate above $262,000 threshold):
- $500K in gains → ~$16,660 saved in Texas
- $1M in gains → ~$51,660 saved in Texas
- $2M in gains → ~$121,660 saved in Texas
- $5M in gains → ~$331,660 saved in Texas
This is the single biggest financial motivator for Seattle’s investor and entrepreneurial group relocating to DFW.
Estate Tax
Washington is one of only 12 states with its own estate tax, with a relatively low $2.09M threshold and rates climbing to 20%.
Sample estate tax savings by estate value:
- $3M estate → ~$100,000–$150,000 saved in Texas
- $5M estate → ~$350,000–$450,000 saved in Texas
- $10M+ estate → ~$1,000,000+ saved in Texas
For multi-generational wealth planning, this difference alone can be a defining factor in the relocation decision.
Sales Tax
- Washington’s combined average sales tax of ~10.4% is among the highest in the nation; Texas comes in lower at ~8.2%.
Sample annual savings based on taxable spending:
- $100K spending → ~$2,200 saved in Texas
- $250K spending → ~$5,500 saved in Texas
- $500K spending → ~$11,000 saved in Texas
Property Tax
- Texas property taxes are higher than Washington’s—roughly double the effective rate (~1.70% vs. ~0.84%).
- However, important context applies:
- Texas offers a Homestead Exemption that reduces the taxable value on a primary residence.
- Seniors (65+) receive additional freezes and exemptions.
- The higher property tax is typically more than offset by capital gains and estate tax savings for affluent buyers.
- Texas property taxes are fully deductible on federal returns (up to the $10,000 SALT cap).
- Additional annual property tax cost in Texas vs. Washington:
- $1M home → ~$8,600/year more in Texas
- $2.5M home → ~$21,500/year more in Texas
- $5M home → ~$43,000/year more in Texas
As always, waiting can be costly, and with the “Millionaire’s Tax” less than two years away, putting plans in place now to take control over your finances could pay off big in the long run.
Visit rsirdestionationmarkets.com to view properties and learn more about tax-friendly destinations.
If you’re interested in exploring your relocation options, reach out to our Referral and Relocation team today.