$120K in Denver vs. Dallas: What Colorado's Income Tax and Texas's Property Tax Actually Cost You
$120K in Denver vs. Dallas: What Colorado's Income Tax and Texas's Property Tax Actually Cost You
You're sitting on a job offer in Dallas. Same salary you're making now — $120,000 — but Texas has zero state income tax and Colorado takes 4.4%. Your friends are telling you it's a no-brainer. Move to Dallas, pocket an extra $5,280 a year, done.
Then your future Dallas colleague sends you a screenshot of her property tax bill.
The "no income tax" headline is one of the most misused numbers in relocation math. It's real — but it's only one variable in a system that includes property taxes, housing prices, purchasing power, and what happens to your salary if your employer finds out you moved. For a $120K earner comparing Denver and Dallas, the full picture looks very different from the headline.
Let's build the model.
Step 1: The State Tax Comparison (This Is the Part Everyone Knows)
Colorado levies a flat 4.4% state income tax. On $120,000 gross, that's $5,280 per year coming out before you see a dollar.
Texas has no state income tax. Zero. On the same $120K, you owe nothing to the state.
That's a $5,280 annual gap in favor of Dallas — and it's not imaginary. It shows up in every paycheck. But here's what most calculators stop before they reach: the states have to fund their governments somehow. Texas leans heavily on property taxes to do it.
Step 2: The Property Tax Flip
Texas has one of the highest effective property tax rates in the country. According to the Tax Foundation, the statewide average effective property tax rate in Texas is approximately 1.74%. In Dallas County specifically, effective rates hover around 1.7–1.9% depending on the municipality.
Colorado? The effective rate statewide is around 0.51% — among the lowest in the country, partly by constitutional design (the Gallagher Amendment legacy still shapes residential assessment ratios).
Now apply those rates to real home prices in each metro:
- Denver metro median home price: ~$560,000 (Zillow, Q4 2025 data)
- Dallas metro median home price: ~$400,000
| City | Median Home Price | Effective Property Tax Rate | Annual Property Tax |
|---|---|---|---|
| Denver, CO | $560,000 | 0.51% | $2,856 |
| Dallas, TX | $400,000 | 1.74% | $6,960 |
The property tax gap: $4,104 per year in favor of Denver.
So you save $5,280 on income tax in Texas — but pay $4,104 more in property tax. Net tax advantage for Dallas homeowners: $1,176 per year. Not nothing, but nowhere near the $5,280 that gets advertised in every "escape California" article.
This is the kind of analysis Vontari runs for you — so you don't have to build the spreadsheet yourself.
Step 3: The Housing Cost That Dwarfs Both
The income-tax-versus-property-tax debate is almost a distraction once you look at the actual monthly cost of owning in each city.
Assume 20% down and a 7.0% 30-year fixed mortgage rate (current market):
| Cost Component | Denver ($560K home) | Dallas ($400K home) |
|---|---|---|
| Down payment required | $112,000 | $80,000 |
| Loan amount | $448,000 | $320,000 |
| Monthly P&I | $2,982 | $2,130 |
| Monthly property tax | $238 | $580 |
| Total monthly housing | $3,220 | $2,710 |
| Annual housing cost | $38,640 | $32,520 |
The annual housing cost gap: $6,120 more per year to own in Denver — and that's before homeowner's insurance, HOA fees, or maintenance. You also need $32,000 more in your down payment to make the Denver purchase happen.
It's worth noting that Denver has been experimenting with community land trust programs — a model where the city holds the land and sells the structure at a reduced price — to make homeownership accessible at below-market entry points. Realtor.com reported on these programs as a meaningful affordability lever for first-time buyers in the metro. Even so, land trust inventory is limited and doesn't change the broader market structure for most buyers.
Step 4: Purchasing Power — The BLS Layer
State taxes and mortgage payments capture the explicit costs. But BLS Regional Price Parities (RPPs) capture what everyday life actually costs in each metro — groceries, services, transportation, utilities.
According to BLS data:
- Denver-Aurora-Lakewood MSA RPP: ~106.3 (6.3% above the national average)
- Dallas-Fort Worth-Arlington MSA RPP: ~98.7 (1.3% below the national average)
That 7.6-point spread means a dollar in Dallas buys roughly 7.5% more than the same dollar in Denver. Applied to $120,000:
$120K in Dallas has the purchasing power of approximately $129,200 in Denver. Or said another way: your Denver salary of $120K only buys what $111,700 would in Dallas.
You can model this for your specific spending mix at Vontari — groceries, childcare, and transportation costs vary significantly within each metro, and the averages hide a lot.
Step 5: The Full Ledger (Homeowner vs. Renter)
The math changes depending on whether you're buying or renting. Here's the side-by-side:
If you're buying a home (on $120K):
| Category | Denver, CO | Dallas, TX | Annual Gap |
|---|---|---|---|
| State income tax | $5,280 | $0 | Dallas +$5,280 |
| Annual property tax | $2,856 | $6,960 | Denver +$4,104 |
| Annual mortgage P&I | $35,784 | $25,560 | Dallas +$10,224 |
| Sales tax (~$50K spending) | ~$4,405 | ~$4,125 | Dallas +$280 |
| Net annual advantage | Dallas by ~$11,600 |
If you're renting (2BR in each metro):
| Category | Denver, CO | Dallas, TX | Annual Gap |
|---|---|---|---|
| State income tax | $5,280 | $0 | Dallas +$5,280 |
| Median 2BR rent | $25,200/yr | $19,800/yr | Dallas +$5,400 |
| Sales tax (~$50K spending) | ~$4,405 | ~$4,125 | Dallas +$280 |
| Net annual advantage | Dallas by ~$10,960 |
For renters, Dallas is clearly ahead — and by more than the income tax savings alone would suggest. The combination of lower rent and no income tax compounds quickly. As we covered in more depth in State Tax Burden: Why 'No Income Tax' States Aren't Always Cheaper, the full tax burden picture shifts depending on whether you're buying, renting, or own a high-value property.
Step 6: The Remote Work Trap
Here's the scenario that's actually catching people off guard right now: you're already earning $120K from a Denver-based employer, and you're thinking about moving to Dallas while keeping your job.
Before you start the U-Haul paperwork, check your employer's remote work and compensation policy. Many companies — especially those in tech and finance — now apply geographic pay adjustments when employees move to lower-cost markets. A 10% location-based salary reduction on $120K is a $12,000 cut. That immediately exceeds your income tax savings and puts you further behind than if you'd stayed.
If your employer reduces pay by 10%:
- New gross salary: $108,000
- Texas income tax: $0 (saved $5,280 vs. Colorado)
- But you lost: $12,000 in salary
- Net change: -$6,720 before accounting for any housing benefit
The calculation only works cleanly if your salary is portable at the current rate. Before you assume it is, get that in writing. And check our Relocation Financial Checklist for the employer negotiation steps that most people skip before they move.
What Changes the Answer
This comparison assumes a single professional earning $120K. Several variables can flip the math:
Higher income: The Colorado flat tax (4.4%) is more punishing at $200K than $120K — $8,800 vs. $5,280. The higher your income, the more the no-income-tax argument strengthens, as long as you're renting or buying modestly.
Children: Dallas-area childcare costs average slightly less than Denver metro, but the gap is narrower than housing. If you have two kids in daycare, you're looking at a modest Dallas advantage of $2,000–$4,000/year.
Existing homeowner: If you're selling a Denver home before buying in Dallas, model your equity position carefully. A $560K Denver home with significant appreciation gives you a larger down payment in Dallas — which means less mortgage, lower property tax bill, and potentially a positive cash-flow move. This is where the math can decisively favor the move.
Property value in Texas: Texas property tax rates are flat-rate, so a $700K Dallas home (newer construction, luxury suburbs) carries a $12,180 annual tax bill. Colorado's property tax structure would cost $3,570 on a comparable home. At higher price points, Colorado's property tax advantage starts to bite back against the income tax savings.
The Honest Summary
| Situation | Who Dallas Helps Most |
|---|---|
| Renter earning $120K | Strongly favors Dallas ($10K+/year) |
| Homeowner, modest price point | Modestly favors Dallas (~$11K/year) |
| Remote worker with pay cut risk | Do the math first — may favor Denver |
| High earner ($200K+), renter | Dallas advantage grows significantly |
| Buyer of high-value Texas home | Gap narrows; property taxes matter more |
Texas's income tax advantage is real. Colorado's low property tax rates are real. Neither cancels the other out completely — the winner depends on your income level, housing tenure, and what your employer does with your salary when you cross state lines.
The right move isn't the one that sounds better in a headline. It's the one that survives a full financial model. Build yours at Vontari — input your actual income, housing situation, and family size, and see the dollar-level comparison before you sign anything.
Sources
- Wealth Management for Families: Milestones, Services and Examples — SmartAsset
- Does War Cause Inflation? Iran vs. Afghanistan vs. Iraq — SmartAsset
- How Denver Is Offering a New Path to Homeownership — Realtor.com News
- How Does War Affect the Economy? Iran vs. Afghanistan vs. Iraq — SmartAsset
- EXCLUSIVE: Kendra Wilkinson Shuts the Door on Her Playboy Past—and Opens Up About Major Move Into Luxury Real Estate — Realtor.com News