Key Tax Facts: Texas
- No state income tax on personal income
- Franchise (margin) tax applies to most businesses
- Property taxes are among the highest in the U.S.
- No state estate or inheritance tax
Estimate Your 2025 Federal Income Tax
Texas State Income Tax Overview
Texas has no state income tax on personal income, making it one of nine states with this advantage and by far the most populous. Texas is the largest U.S. state by population without a state income tax, and this benefit attracts significant domestic migration from high-tax states like California and New York. To illustrate the financial impact: a Texas resident earning $100,000 pays $0 in state income tax. That same person living in California would owe approximately $7,000 or more in state income tax each year - a difference that compounds dramatically over time. Texas funds its state government primarily through a 6.25% state sales tax, with local additions bringing combined rates up to 8.25% in many areas. Property taxes in Texas are among the highest in the nation, averaging around 1.6% to 1.8% of assessed value annually, which is an important consideration for homeowners. A home valued at $350,000 in Texas might carry a property tax bill of $5,600 to $6,300 per year, depending on location. Texas residents owe federal income tax on all taxable income at the same rates as all other U.S. taxpayers. Texas has no estate tax or inheritance tax, making it an attractive state for retirement and wealth planning. The Texas Homestead Exemption reduces the taxable value of a primary residence by $100,000 for school district taxes, providing meaningful property tax relief for homeowners.
What Is Different About Texas for Taxpayers
Deductions and exemptions
Texas has no personal income tax, so there are no state deductions, exemptions, or wage-earner returns. The state constitution requires voter approval for any income tax and, since 2019, bans one outright.
Credits worth knowing
There are no personal credits. Texas funds itself through a 6.25% sales tax that local governments push to 8.25% in most areas, a franchise tax on businesses, and severance taxes on oil and gas, but the biggest bill most residents feel is property tax.
Retirement, capital gains, and other income
Pensions, Social Security, IRA distributions, capital gains, and dividends are untaxed by the state. Homeowners should weigh property taxes averaging around 1.6% of assessed value, softened by the $100,000 school homestead exemption and additional exemptions for homeowners 65 and older.
Rules summarized from the Texas Comptroller of Public Accounts guidance for tax year 2025. Amounts that index annually are described in general terms; confirm the current figure on the official form instructions.
Texas Has No State Income Tax
Texas has no state income tax. It is one of the most populous states without a personal income tax.
As a Texas resident, your state income tax is $0. The calculator above estimates your federal income tax, which applies to all U.S. residents regardless of state.
Where Texas Stands Among the 50 States
Texas is one of 9 states with no tax on wage income (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming). Of the other 41 states, 14 use a flat rate and 27 use graduated brackets, with a median top rate of 5.2%.
On sales tax the picture is different: Texas's combined state and average local rate of 8.19% ranks #14 of 50, against a national median of 7.00%. That is the trade-off for skipping an income tax: Texas leans harder on consumption taxes.
Texas State Tax at Five Income Levels (2025, single filer)
| Taxable income | Texas tax | Effective rate | Marginal rate |
|---|---|---|---|
| $40,000 | $0 | 0.00% | 0% |
| $65,000 | $0 | 0.00% | 0% |
| $100,000 | $0 | 0.00% | 0% |
| $150,000 | $0 | 0.00% | 0% |
| $250,000 | $0 | 0.00% | 0% |
Brackets applied directly to the taxable-income figure shown, before Texas-specific deductions, exemptions, or credits. Federal tax is separate and comes on top of every row.
Texas vs. Its Neighbors on $75,000 of Taxable Income
A Texas resident with $75,000 of taxable income pays about $0 in state income tax. Of Texas's 4 neighboring states, 0 would tax that income less and 4 would tax it more -- Texas is the cheapest state in its region on this measure.
| State | Structure | Tax on $75,000 | Top rate | Sales tax |
|---|---|---|---|---|
| Texas (you) | No income tax | $0 | None | 8.19% |
| Louisiana | Rate to 3% | $2,250 | 3% | 9.56% |
| Arkansas | Rate to 3.9% | $2,528 | 3.9% | 9.44% |
| New Mexico | Rate to 5.9% | $3,133 | 5.9% | 7.82% |
| Oklahoma | Rate to 4.75% | $3,374 | 4.75% | 8.98% |
Frequently Asked Questions -- Texas Income Tax
Does Texas have a state income tax?
No. Texas does not impose a broad-based state income tax on wages, salaries, or most personal income. Texas has no state income tax. It is one of the most populous states without a personal income tax.
Do I still owe federal income tax as a Texas resident?
Yes. Federal income tax applies to all U.S. residents regardless of state. Texas residents pay the same federal tax brackets as everyone else -- only your state income tax is $0.
What taxes do Texas residents pay instead of income tax?
Texas has no state income tax on personal income, making it one of nine states with this advantage and by far the most populous. Texas is the largest U.S. state by population without a state income tax, and this benefit attracts significant domestic migration from high-tax states like California and New York. To illustrate the financial impact: a T...
How much does living in Texas save compared with neighboring states?
On $75,000 of taxable income a Texas resident pays $0 in state income tax, while Louisiana would collect $2,250, Arkansas would collect $2,528, New Mexico would collect $3,133, Oklahoma would collect $3,374. Sales tax in Texas is 8.19%, ranked #14 of 50.
Do I need to file a Texas state tax return?
Texas does not require a personal income tax return for most residents. You must still file a federal return with the IRS. Check the Texas Comptroller of Public Accounts for any state-specific obligations that may apply.
What is the sales tax rate in Texas?
Texas's combined state and average local sales tax rate is 8.19%. States without an income tax typically lean more on sales, excise, or property taxes to fund government services -- use our sales tax calculator to see how that adds up.
Understanding Your Texas Tax Estimate
Your results combine two separate bills: federal tax owed to the IRS, and Texas state tax -- which for residents here is $0. Texas has no state filing requirement for personal income; you only file the federal return. For the mechanics of how bracket math actually works -- why your effective rate is almost always lower than your top bracket -- see our marginal vs. effective tax rate guide.
Combined Sales + Income Tax Picture
Texas's combined state-plus-average-local sales tax rate is 8.19%. States without an income tax typically lean more heavily on sales, excise, or property taxes to fund government services -- worth factoring in alongside the $0 income tax figure above. Use our sales tax calculator to see how that adds up on a purchase.
Disclaimer: Estimates for educational purposes only. State tax results are approximations based on published bracket data and do not account for all deductions, credits, exemptions, local taxes, or individual situations. Not tax, legal, or financial advice. Consult the Texas Comptroller of Public Accounts or a qualified tax professional for guidance specific to your situation.