Look, I’m going to be straight with you. If you’re an energy executive pulling in serious money, and you’re not thinking about Texas… you might be leaving millions on the table. Literally.
I know what you’re thinking. “Here we go, another tax strategy article.” But stay with me, because this isn’t about chasing some loophole. It’s about understanding how Texas’ zero income tax changes everything about how you can structure your comp package.
“We’re watching executives wake up to this,” says Jim Hickey, President Managing Partner at Perpetual Talent Solutions, Houston executive recruiters. “They relocate to Texas and suddenly they’re playing a completely different game with their compensation.”
The Tax Thing Everyone’s Talking About
Texas is one of nine states that don’t touch your income. Not your salary. Not your investments. Not even your retirement money. Zero.
Here’s what that actually means. You make $100,000 in Texas? You keep it. Same job in Massachusetts? You’re handing over $5,000 to the state. And don’t even get me started on California—their top rate hits 13.3 percent. That’s not a tax, that’s a business partner you never asked for.
Now, Texas isn’t running on wishes and dreams. They’ve got a 6.25 percent sales tax and property taxes that average around 1.47 percent of your home’s value. But when you’re making executive-level money? The income tax savings blow these costs out of the water.
The Deferred Comp Strategy That Actually Works
This is where it gets interesting.
Deferred compensation plans—those non-qualified plans where you push salary and bonuses into the future—become these powerful wealth-building machines in Texas. Because here’s the thing… every dollar that grows in there, every distribution you eventually take? State tax-free. Forever.
“We’re telling our energy clients to max these plans out in ways that just wouldn’t make sense in California or New York,” Hickey explains. “When you know your money will never see state taxation, you can get really aggressive with how you structure things.”
And honestly? The timing couldn’t be better. Energy CEOs saw median pay bumps of eight percent in 2024, with bonuses averaging 118 percent of target. When you’re pulling in those kinds of bonuses, deferring them into a state-tax-free account… yeah, that’s real money we’re talking about.
Your Stock Options Just Got More Valuable
If you’ve got unvested equity sitting there—stock options, RSUs, whatever—your move to Texas needs to be strategic. Like, really strategic.
Most people don’t realize this, but equity compensation gets taxed differently than regular stock. States use this pro-rata system based on how many days you worked there during the vesting period. But once you’re a Texas resident? When you exercise those options or sell vested shares, you’re dodging state capital gains entirely.
An executive exercising a million dollars worth of options saves $133,000 just by not being in California. That’s a nice beach house. Or, you know, college for a couple kids.
“If you’ve got significant unvested equity, plan your move carefully,” Hickey advises. “Getting to Texas before a big vesting event or an IPO? That’s the kind of decision that can shift your entire financial picture.”
Why Energy Comp Makes This Even Better
Energy executives face this wild compensation structure that makes Texas’ tax advantage even more pronounced. We’re talking median total comp ranging from $2.9 million at the lower end to $10.4 million at the 75th percentile.
But here’s the catch—and you know this if you’re in the industry—your pay swings with commodity prices. Bonuses tied to oil at $80 versus $60 a barrel. Performance-vesting awards that hit or miss based on factors you can’t always control.
About 85 percent of exploration and production executive comp is incentive-based. That’s a lot of income volatility. And that’s exactly why eliminating state income tax matters so much.
“Energy execs deal with enough uncertainty around commodity prices,” Hickey notes. “Texas residency gives you one thing you can count on—none of those variable earnings get hit with state tax, whether oil spikes to $100 or crashes to $40.”
Actually Making the Move (And Making It Stick)
Here’s where people mess up. You can’t just buy a condo in Houston, spend three weeks a year there, and call yourself a Texas resident. That’s not how this works.
California and New York? They’re not idiots. They’ve got entire departments that audit people who claim they moved. They’ll look at everything—voter registration, driver’s license, where your stuff is, where your kids go to school, even where your dog’s vet is. (Okay, maybe not the dog, but you get the idea.)
Tax authorities will review how many days you spent in each state, where your “most important possessions” are kept, where your family lives. They’re thorough.
So you need to actually move. Update everything. Keep travel records. Make Texas your real home, not just your tax strategy. Some states even have these “convenience rules” where they try to tax you based on where your employer is, though that’s mostly for remote workers.
The Property Tax Reality Check
Let me be real with you about something. Texas property taxes aren’t cheap.
Unlike California with its Proposition 13 caps, Texas assesses properties at market value. Which means when home prices go up—and in Houston’s energy corridor where companies keep relocating, they definitely do—your property tax bill climbs with it.
If you’re buying a multi-million dollar place in a nice Houston neighborhood, you could easily hit $50,000 or more in annual property taxes. That’s not nothing.
But let’s do the math. An energy exec making $2 million a year saves over $250,000 in California state income tax. Even with a hefty property tax bill, you’re still way ahead.
“We always tell clients to factor property taxes into their housing decisions,” Hickey emphasizes. “But the numbers still heavily favor Texas for high earners. It’s not even close.”
The Long Game
Think about this over the course of a career. Twenty years. Average compensation of $800,000 annually.
Texas versus California? You save around $2.1 million in state income taxes. And that’s just the taxes—invest those savings with even modest returns, and you’re looking at several million more in net worth by the time you retire.
And here’s the kicker… Texas doesn’t have estate or inheritance taxes either. All that wealth you’ve built? Your kids inherit it without the state taking a cut. (Federal estate taxes still apply over $13.61 million in 2025, but that’s a different conversation.)
Look, I get it. Moving states is a big deal. It’s not just about the money—it’s about uprooting your life, maybe your family. But if you’re building a career in energy, and you’re already considering Houston or Dallas or wherever… understanding these tax advantages changes how you think about compensation negotiations, equity timing, deferred comp strategies.
The energy industry’s already here. The tax benefits are already here. And honestly? For executives willing to make the move, it’s one of those rare situations where everything actually lines up in your favor.
