Comparison•2025 Tax Year•Last verified: January 2026
New York vs Texas: Side Hustle Tax Comparison 2025
Compare New York and Texas taxes for freelancers and gig workers. Texas has no state income tax while NY rates reach 10.9% - see how much you could save.
New York and Texas represent two extremes of the American tax landscape. New York has one of the highest state and local tax burdens in the nation, with state rates up to 10.9% and NYC adding another 3.876% on top. Texas has no state income tax at all.
This comparison is especially relevant as Texas continues to attract New Yorkers seeking lower costs and taxes. For side hustlers earning freelance or gig income, the difference between these two states can mean keeping thousands more of your hard-earned money each year.
**Why This Comparison Matters:**
The New York to Texas migration has accelerated significantly, driven by:
- **Zero state income tax**: Texas has no income tax vs NY's up to 10.9% (plus NYC's 3.876%)
- **Lower cost of living**: Austin, Dallas, and Houston offer significantly cheaper housing than NYC metro
- **Business-friendly climate**: Texas is consistently ranked among the best states for entrepreneurs
- **Growing tech scene**: Austin has become "Silicon Hills" with major tech company expansions
- **Remote work revolution**: Many NYC workers can now work remotely from Texas
For side hustlers, this move can result in keeping an additional 8-14% of freelance income that would otherwise go to state and city taxes.
Side-by-Side Tax Comparison
| Metric | New York | Texas |
|---|---|---|
| State Income Tax Rate | 4% - 10.9% (progressive) | 0% (no income tax) |
| NYC Additional Tax | 3.078% - 3.876% | N/A |
| Common Rate for Side Hustlers | 5.85% - 6.85% (+NYC) | 0% |
| State Tax Filing Required | Yes (Form IT-201) | No |
| Federal SE Tax | 15.3% | 15.3% |
| Est. Tax on $20K Side Hustle (NYC)* | ~$9,371 | ~$7,226 |
| Annual Savings (TX vs NYC)* | — | ~$2,145 |
| Property Tax (Avg Rate) | 1.40% | 1.63% |
| Sales Tax (State + Avg Local) | 8.52% | 8.20% |
*Assumes single filer with $60,000 W-2 income + $15,000 net side hustle income. Actual taxes vary based on deductions, filing status, and total income.
New York Analysis
**New York Tax Analysis for Side Hustlers**
New York's progressive tax system combined with NYC's additional tax creates one of the highest tax burdens in the country for self-employed individuals.
**Key New York Tax Facts (2025):**
- **State Tax Type**: Progressive (9 brackets)
- **State Rate Range**: 4% to 10.9%
- **NYC Additional Tax**: 3.078% to 3.876%
- **Combined Rate (NYC)**: Up to 14.776%
- **Common Side Hustler Rate**: 5.85% to 6.85% (state only)
**Example**: If you earn $75,000 from your W-2 job and $20,000 from side hustle income (net of expenses) as an NYC resident:
- Federal SE Tax: ~$2,826
- Federal Income Tax on side income: ~$4,400
- NY State Tax: ~$1,370
- NYC Tax: ~$775
- **Total Tax on Side Hustle: ~$9,371** (46.9% effective rate)
New York does offer access to the world's financial capital and unmatched networking opportunities—but these benefits come at a steep tax cost.
Texas Analysis
**Texas Tax Analysis for Side Hustlers**
Texas is one of nine states with no state income tax, making it increasingly popular among New Yorkers seeking to maximize their earnings.
**Key Texas Tax Facts (2025):**
- **State Income Tax**: 0%
- **City/Local Income Tax**: 0%
- **Tax Type**: None
- **Filing Requirement**: No state income tax return required
- **Franchise Tax**: Only applies to businesses over $2.47 million revenue
**Example**: Same scenario—$75,000 W-2 job and $20,000 from side hustle income (net of expenses) in Texas:
- Federal SE Tax: ~$2,826
- Federal Income Tax on side income: ~$4,400
- Texas State Tax: $0
- **Total Tax on Side Hustle: ~$7,226** (36.1% effective rate)
**Savings vs New York (NYC resident): ~$2,145/year** on $20,000 of side hustle income.
Texas does have higher property taxes (averaging 1.63% vs NY's 1.40%) and sales taxes up to 8.25%, but no income tax makes it very attractive for high earners.
Calculate Your Side Hustle Taxes
Use our calculator to see exactly what you'd owe in each state. Try entering your numbers, then switch between New York and Texas to compare.
Which State Is Right for Your Side Hustle?
**New York May Be Better If You:**
- Work in NYC-centric industries (finance, media, fashion, advertising)
- Need physical access to Wall Street or Manhattan clients
- Have rent-stabilized housing in NYC
- Value NYC's cultural scene and networking opportunities
- Have established business relationships that require local presence
**Texas May Be Better If You:**
- Work remotely with no location dependency
- Prioritize keeping more of your side hustle income
- Are drawn to Austin's tech scene or Dallas/Houston business environment
- Want significantly lower cost of living
- Don't need to be physically present in NYC for work
**Important Considerations:**
1. **The NYC exit is massive savings**: NYC residents pay both state AND city income tax. Moving to Texas eliminates both entirely.
2. **New York audits aggressively**: Like California, NY actively pursues former residents. You must genuinely relocate—no keeping a NYC apartment "just in case."
3. **Remote work complications**: If you work for a NY-based employer remotely, NY may still tax that income under the "convenience of the employer" rule.
4. **Cost of living offset**: While Texas has no income tax, property taxes are higher. Factor this in if buying a home.
5. **Different lifestyle**: NYC and Texas cities offer very different experiences. Visit before committing—the tax savings aren't worth it if you're miserable.
Frequently Asked Questions
How much will I save moving from NYC to Texas for my side hustle?
NYC residents pay both NY state tax (4-10.9%) and NYC tax (3.08-3.88%). On $20,000 of net side hustle income, you could save approximately $2,100-$2,800 per year by moving to Texas. The exact savings depend on your total income and tax bracket.
Does Texas have any income tax at all?
Texas has no state income tax on wages, self-employment income, or investment income. The only business tax is the franchise tax, which only applies to businesses with gross receipts over $2.47 million—far above what most side hustlers earn.
Will New York tax me if I move to Texas but keep some NYC clients?
If you're a genuine Texas resident performing work in Texas, you owe Texas taxes (zero) regardless of where your clients are located. However, if you maintain a NY apartment or spend significant time in NY, the state may argue you're still a resident. Establish clear Texas residency to avoid this issue.
Related Comparisons
Sources
- • New York State Department of Taxation and Finance - 2025 Tax Rates
- • NYC Department of Finance - City Income Tax Rates
- • Texas Comptroller of Public Accounts
- • IRS Publication 334 - Tax Guide for Small Business
- • Tax Foundation - State Tax Data 2025