Moving from Alberta to Texas: The Tax Side of Two No-Income-Tax Jurisdictions

Alberta and Texas are both marketed as low-tax jurisdictions: Alberta has no provincial sales tax (though it has provincial income tax), and Texas has no state income tax. For someone moving from Calgary or Edmonton to Houston or Dallas, the instinct is that the tax picture should be simpler than, say, moving from Ontario to California. That is only partly right. The federal obligations on both sides are identical regardless of province or state, and the cross-border mechanics (departure tax, treaty elections, RRSP treatment, FBAR) do not change. What does change is the provincial/state layer, and the result is not always what people expect.

What happens on the Alberta side when I leave?

Leaving Alberta for the US triggers the same departure tax as leaving any other province. The deemed disposition applies to worldwide assets (with exceptions for Canadian real property, pension plans, and certain other properties). The federal capital gains inclusion rate is 50%, and Alberta’s provincial rate applies on top.

Alberta’s provincial income tax rates for 2025:

• 10% on the first $148,269
• 12% on $148,269 to $177,922
• 13% on $177,922 to $237,230
• 14% on $237,230 to $355,845
• 15% on amounts over $355,845

For comparison, Ontario’s top marginal rate (including surtax) reaches about 20.5% provincially, and BC’s top rate is 20.5%. Alberta’s top rate of 15% makes the provincial tax on the departure year meaningfully lower, especially if the deemed disposition creates a large capital gain.

The final Canadian return is filed for the period January 1 to the date of departure. It includes all worldwide income earned up to that date, plus the deemed disposition gains. After departure, Canadian-source income (rental income, pension payments, RRSP withdrawals) is subject to Part XIII withholding.

What happens on the Texas side when I arrive?

Texas has no state income tax (Texas Constitution Article VIII, Section 24-a prohibits it). There is no state return to file, no state estimated tax payments, and no state withholding on wages.

This does not mean Texas is tax-free. The state raises revenue through:

• Property tax. Texas property tax rates average around 1.6% to 1.8% of assessed value (compared to roughly 1% in Alberta for municipal property tax). A $500,000 home in Houston may generate $8,000 to $9,000 in annual property tax.
• Sales tax. The combined state and local sales tax in Texas ranges from 6.25% to 8.25%. Alberta has no provincial sales tax (only the 5% federal GST), so the total consumption tax burden is higher in Texas on most purchases.
• Franchise tax. If you operate a business in Texas, the franchise tax (a margin tax on gross receipts above $2.47 million) applies, though sole proprietors and single-member LLCs with revenue below the threshold are generally exempt.

For employment income, the absence of a Texas state tax means the effective combined federal+state rate in Texas is simply the federal US rate (10% to 37%), compared to the combined federal+Alberta rate (20.5% to 48% at the top). This is the source of the “lower tax” perception, and it is correct for employment income at most income levels.

How does the RRSP/TFSA decision change?

It does not change based on the province or state. The RRSP decision after moving to the US depends on whether you withdraw as a lump sum (25% Canadian withholding) or periodically (15% treaty rate). The US side taxes the RRSP withdrawal as ordinary income, and the FTC offsets the Canadian withholding.

• The one nuance: because Texas has no state income tax, there is no state tax on the RRSP withdrawal. In a state like California (up to 13.3%), the RRSP withdrawal would face both federal and state tax, with the FTC for Canadian withholding only available against federal tax (not state). In Texas, the RRSP withdrawal faces only federal tax plus the Canadian withholding, and the FTC is more likely to cover the Canadian portion fully.
• The TFSA creates the same reporting headache regardless of state: Form 3520/3520-A, potential PFIC exposure on the investments inside, and the CRA/IRS mismatch on whether the growth is taxable. Texas does not add a state layer, but the federal reporting burden is the same.

What about Alberta Health Care (AHCIP)?

Alberta Health Care Insurance Plan coverage ends at the end of the month following departure. If you leave Alberta on March 15, your AHCIP coverage ends April 30. You need US health insurance to start no later than May 1.

Texas does not have a state-run health insurance marketplace (it uses the federal marketplace, healthcare.gov). Moving to the US from Canada qualifies as a Special Enrollment Period event, giving you 60 days from the move date to enroll in a marketplace plan or employer-sponsored plan.

What about the 183-day rule and residency?

The Canadian tax residency determination does not depend on the province. If you sever your residential ties with Canada (sell or vacate the home, move the spouse and dependents, close the bank accounts and health card), you are a non-resident from the departure date. Alberta does not have a separate provincial residency test beyond the federal one.

• On the US side, the substantial presence test determines whether you are a US resident for tax purposes. Days in the US count regardless of which state you are in. Texas residency is relevant only for state purposes (driver’s license, voter registration, property tax exemptions), not for federal tax.

What should I do next?

The move from Alberta to Texas follows the same cross-border playbook as any other Canada-to-US move. The key differences are the lower provincial tax in the departure year (Alberta’s 15% top rate vs. Ontario’s 20.5% or BC’s 20.5%), the absence of a state return in Texas, and the more favorable FTC math on RRSP withdrawals (no state tax to absorb the credit).

• Leaving Canada permanently: tax checklist, the full departure sequence
• Departure tax on moving from Canada to the US, the deemed disposition mechanics
• RRSP lump sum vs. periodic withdrawals after moving to the US, the withdrawal strategy
• Moving from Ontario to Florida, another no-state-income-tax destination for comparison
• Moving from BC to Washington State, another no-income-tax state with a 7% capital gains tax layer
• Moving from Ontario to Michigan, the auto industry corridor with a flat 4.25% rate and city taxes
• Moving from Canada to Tennessee, another no-income-tax state with Nashville’s booming economy
• Provincial health insurance when leaving Canada, the AHCIP timeline

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.