1 hour ago
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David Beren
Sun, May 31, 2026 astatine 1:05 PM CDT 5 min read
Quick Read
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A 68-year-old mates with a $2M dividend portfolio and $54k Social Security keeps $137,200 of spendable income successful Texas versus $130,000 successful California—a $7,200 yearly spread driven by California’s 7% authorities taxation connected dividends and Social Security versus Texas’s zero income tax, though spot taxation differences tin shrink this vantage for owners of long-held homes nether California’s Proposition 13.
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The income-tax spread widens importantly successful years with superior gains, Roth conversions, oregon ample distributions since California taxes those astatine 13.3% marginal rates portion Texas does not, but bona fide residency timing and property-tax modeling against circumstantial homes substance much than the determination itself.
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A 68-year-old joined mates sits connected a $2 cardinal dividend portfolio generating $96,000 of yearly income astatine a 4.8% blended yield, mostly qualified dividends from broad-market dividend ETFs with astir 30% successful REITs. Combined Social Security adds $54,000 a year. Of that $150,000 gross, however overmuch really lands successful the checking relationship each year, and however overmuch of the spread betwixt Texas and California shows up aft each furniture of tax?
The Federal Layer (Identical successful Both States)
Federal rules bash not alteration with the zip code, arsenic the 2026 modular deduction for joined filing jointly is $32,200, with further amounts for taxpayers 65 and older. Roughly 85% of the $54,000 Social Security benefit, oregon astir $45,900, is included successful taxable income astatine this income level.
The portfolio splits into 2 taxation buckets. The non-REIT dividend stream, astir $67,000, is qualified and falls wrong the 0% to 15% semipermanent superior gains taxation brackets. The REIT distributions, astir $29,000, are taxed arsenic mean income. When layered together, national taxes full astir $12,800. Medicare premiums enactment astatine the modular complaint due to the fact that the modified adjusted gross income falls extracurricular immoderate IRMAA surcharge tier.
Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate however overmuch they request to discontinue and overestimate however prepared they are. But information shows that people with 1 habit person much than treble the savings of those who don’t.
Texas: No State Income Tax
Texas imposes nary idiosyncratic income tax, truthful dividends, Social Security, IRA withdrawals, and superior gains walk done untouched astatine the authorities level. The Tax Foundation ranks Texas 7th wide and tied for 1st successful idiosyncratic income tax, but 40th successful spot tax.
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