Comparison•2025 Tax Year•Last verified: January 2026
Texas vs Washington: Side Hustle Tax Comparison 2025
Compare Texas and Washington taxes for freelancers and gig workers. Both have no state income tax - see which no-tax state is better for your side hustle.
Texas and Washington are two of America's largest no-income-tax states, both with thriving tech scenes and strong economies. For side hustlers choosing between Austin and Seattle—or their broader states—the income tax comparison is simple: both are zero.
The real comparison comes down to other factors: property taxes, sales taxes, cost of living, climate, and career opportunities. This guide helps you understand which no-tax state fits your situation better.
**Why This Comparison Matters:**
Both states offer zero income tax with different flavors:
- **Both have 0% income tax**: No state income tax in either
- **Tech hubs**: Austin vs Seattle—both are major tech centers
- **Climate**: Texas is hot/humid; Washington is mild/rainy
- **Cost of living**: Seattle is more expensive; Texas varies by city
- **Company HQs**: Tesla/Oracle moved to Texas; Amazon/Microsoft in Washington
For side hustlers in tech or seeking zero income tax, both states are excellent choices. The decision comes down to lifestyle, career fit, and other tax factors.
Side-by-Side Tax Comparison
| Metric | Texas | Washington |
|---|---|---|
| State Income Tax Rate | 0% (no income tax) | 0% (no income tax) |
| Capital Gains Tax | None | 7% over $270K |
| State Tax Filing Required | No | No |
| Federal SE Tax | 15.3% | 15.3% |
| Est. Tax on $25K Side Hustle* | ~$9,033 | ~$9,033 |
| Property Tax (Avg Rate) | 1.63% | 0.87% |
| Sales Tax (Avg) | 8.20% | 10.25% |
| Property Tax on $500K Home | ~$8,150/year | ~$4,350/year |
| Tech Hub | Austin | Seattle |
*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.
Texas Analysis
**Texas Tax Analysis for Side Hustlers**
Texas has no state income tax and offers a diverse economy across multiple major metros.
**Key Texas Tax Facts (2025):**
- **State Income Tax**: 0%
- **Tax Type**: None
- **Filing Requirement**: No state return required
- **Property Tax**: Higher (1.63% avg)
- **Sales Tax**: 8.20% (state + avg local)
**Example**: If you earn $85,000 from your W-2 job and $25,000 from side hustle income (net of expenses) in Texas:
- Federal SE Tax: ~$3,533
- Federal Income Tax on side income: ~$5,500
- Texas State Tax: $0
- **Total Tax on Side Hustle: ~$9,033** (36.1% effective rate)
Texas offers Austin's tech scene, Dallas's finance sector, Houston's energy industry, and no state income tax. Property taxes are high, but no income tax usually wins overall.
Washington Analysis
**Washington Tax Analysis for Side Hustlers**
Washington also has no state income tax, plus Seattle's tech ecosystem rivals anywhere in the nation.
**Key Washington Tax Facts (2025):**
- **State Income Tax**: 0%
- **Tax Type**: None
- **Filing Requirement**: No state return required
- **Capital Gains Tax**: 7% on gains over $270,000
- **Sales Tax**: Higher (10.25% avg in Seattle area)
- **Property Tax**: Lower than Texas (0.87% avg)
**Example**: Same scenario—$85,000 W-2 job and $25,000 from side hustle income (net of expenses) in Washington:
- Federal SE Tax: ~$3,533
- Federal Income Tax on side income: ~$5,500
- Washington State Tax: $0
- **Total Tax on Side Hustle: ~$9,033** (36.1% effective rate)
**Identical income tax burden**: Both states have zero income tax.
Washington offers Seattle's massive tech ecosystem (Amazon, Microsoft, plus startups), no income tax, and mild Pacific Northwest climate.
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 Texas and Washington to compare.
Which State Is Right for Your Side Hustle?
**Texas May Be Better If You:**
- Prefer hot weather and sunshine
- Want lower sales tax (8.2% vs 10.25%)
- Plan to rent (no property tax advantage needed)
- Work in energy, healthcare, or finance
- Want lower overall cost of living
- Prefer multiple major metro options
**Washington May Be Better If You:**
- Plan to buy a home (big property tax savings)
- Prefer mild, temperate climate (don't mind rain)
- Work in tech and want Seattle's ecosystem
- Don't have capital gains concerns (under $270K)
- Prefer Pacific Northwest culture and outdoors
- Want proximity to mountains and water
**Important Considerations:**
1. **Property taxes favor Washington significantly**: On a $500,000 home, Washington saves ~$3,800/year vs Texas. For homebuyers, this is the deciding factor.
2. **Sales taxes favor Texas**: Texas's 8.2% beats Washington's 10.25%. But sales tax savings rarely match property tax differences for homeowners.
3. **Washington's capital gains tax**: The 7% tax on gains over $270,000 could matter if you're planning to sell a business or have significant stock options. Texas has no capital gains tax.
4. **Tech ecosystem**: Seattle (Amazon, Microsoft) and Austin (Tesla, Oracle, Apple) are both top-tier tech hubs. Seattle is arguably larger/more established; Austin is growing faster.
5. **Climate is personal**: Seattle is mild and rainy (55°F avg, 150+ rainy days). Texas is hot (Austin: 95°F+ summers, humid). Neither is objectively better—it's preference.
Frequently Asked Questions
Is Texas or Washington better for side hustlers tax-wise?
For income tax, they're identical—both have zero state income tax. The difference comes in other taxes: Texas has higher property taxes but lower sales taxes; Washington has lower property taxes but higher sales taxes (and a capital gains tax on high earners). For homebuyers, Washington often wins overall. For renters, Texas may have a slight edge.
Which state has the better tech scene - Austin or Seattle?
Seattle is larger and more established with Amazon, Microsoft, and decades of tech history. Austin is growing rapidly with Tesla, Oracle, Apple expansion, and a thriving startup scene. Seattle has more large-company jobs; Austin may have more startup energy. Both are excellent for tech freelancers.
Does Washington's capital gains tax affect side hustlers?
Usually not. Washington's 7% capital gains tax only applies to gains over $270,000 per year, which means selling stock, a business, or investments worth significant amounts. Normal side hustle income is not affected—only capital gains from asset sales. Most freelancers won't trigger this tax.
Related Comparisons
Sources
- • Texas Comptroller of Public Accounts
- • Washington State Department of Revenue
- • IRS Publication 334 - Tax Guide for Small Business
- • Tax Foundation - State Tax Data 2025