Ohio and Michigan both tax retirement income — Ohio's top rate is 3.99%, Michigan's flat rate is 4.25%. Neither exempts IRA or 401(k) distributions the way Illinois does. For most Midwest retirees, the Texas income tax advantage is real and quantifiable. Here's the comparison.
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Talk to a Specialist →Ohio taxes retirement income as ordinary income, with rates scaling from 0% on the first $26,050 up to 3.99% on income above $115,300. Ohio does offer a small retirement income credit (up to $200 for filers over 65 receiving qualifying retirement income), but this is marginal. Social Security benefits are exempt at the state level. IRA and 401(k) distributions are taxable.
A retiree in Ohio drawing $70,000 in IRA distributions (not counting Social Security) is paying approximately $1,800–$2,600/year in Ohio state income tax, depending on income level and deductions.
Ohio's property tax runs approximately 0.8–1.5% effective for most residential properties — lower than Bexar County's 1.8–2.3%.
Michigan has a flat 4.25% state income tax. Retirement income treatment depends on year of birth under Michigan's tiered exemption system:
A Michigan retiree born in 1958 drawing $80,000 in IRA and 401(k) distributions is paying approximately $2,500–$3,400/year in Michigan state income tax. A retiree born in 1945 may owe little or nothing.
Michigan property taxes average approximately 1.2–1.6% effective — below Bexar County but above Guadalupe County (Scenic Hills area).
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| Category | Ohio $350K home, $70K income | Michigan (born 1958) $350K home, $80K income | San Antonio Bexar $400K home, 65+ |
|---|---|---|---|
| State income tax on retirement income | ~$2,000/year | ~$3,000/year | $0 |
| Property tax | ~$4,200/year (1.2%) | ~$5,250/year (1.5%) | ~$6,750/year (65+ Bexar) |
| Property tax increase vs. SA | SA costs ~$2,550/year more | SA costs ~$1,500/year more | — |
| Net income tax savings moving to SA | SA saves ~$2,000/year | SA saves ~$3,000/year | — |
| Net annual outcome | Near breakeven (slight SA advantage) | SA saves ~$1,500/year net | — |
For most Ohio and Michigan retirees, the Texas income tax savings roughly offsets the property tax increase, with a modest net advantage for San Antonio. The advantage grows significantly if:
For Ohio and Michigan retirees, the tax comparison is less compelling than the housing cost comparison. A $400,000 Hill Country Retreat resale home is genuinely affordable relative to equivalent homes in suburban Columbus, Ann Arbor, or the Detroit suburbs where prices have risen significantly. Many Ohio and Michigan retirees selling a paid-off home can fund a Texas purchase outright with equity to spare.
Selling a $300,000 Ohio home and buying a $350,000 Hill Country Retreat home involves a step up in price but potentially access to far superior amenities — resort clubhouse, professional programming, lock-and-leave maintenance — that $300K–$350K in Ohio won't buy.
Ohio and Michigan winters are difficult. San Antonio averages 220+ sunny days per year. The climate comparison is strong, and it's the primary driver for most Midwest moves to Texas — not taxes.
Both states have family ties that can complicate long-distance moves. The Hill Country corridor (San Antonio to New Braunfels to Austin) has a large Midwest transplant community that makes social integration easier than some other Sun Belt markets.
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