No, Texas does not have a state income tax. Wages, salaries, self-employment earnings, retirement distributions, and investment income are all free of state income tax for Texas residents, and the state constitution bars the legislature from creating one. You still owe federal income tax to the IRS, and you still pay Texas sales tax and local property taxes, which is how the state and its cities fund themselves instead.
The Ban Is Written Into the Constitution
Article VIII, Section 24-a of the Texas Constitution prohibits the legislature from taxing the net incomes of individuals, including an individual’s share of partnership or unincorporated association income. Texas voters approved that amendment in November 2019, moving the prohibition out of ordinary statute and into the constitution itself.1State of Texas. Texas Constitution Article VIII
That matters because removing it would take another constitutional amendment: a two-thirds vote in both chambers of the legislature followed by a statewide ballot measure approved by a majority of voters. A personal income tax in Texas is not something that could appear in a single legislative session.
What Texas Taxes Instead
Without an income tax, Texas leans on sales tax, property tax, and a tax on businesses.
Sales Tax
The statewide sales and use tax rate is 6.25 percent on most retail sales, leases, rentals of goods, and taxable services. Cities, counties, transit authorities, and special-purpose districts can add up to 2 percent, so the combined rate you see at the register tops out at 8.25 percent.2Texas Comptroller. Sales and Use Tax
Not everything is taxed. Most grocery staples, such as bread, milk, eggs, fruits, vegetables, and flour, are exempt.3Texas Comptroller. Grocery and Convenience Stores Prescription drugs, over-the-counter drugs that carry an FDA “Drug Facts” panel, and insulin are also exempt.4LII / Legal Information Institute. 34 Texas Admin Code 3.284 – Drugs, Medicines, Medical Equipment, and Devices
Property Tax
Property tax is the other big one, and Texas rates run higher than the national average. There is no state-level property tax; the Comptroller does not collect it or set the rate.5Texas Comptroller. Property Tax Assistance Instead, school districts, counties, cities, and special-purpose districts each set their own rates and send their own bills, which fund schools, roads, police, and fire protection.
County appraisal districts value your property at market value as of January 1 each year and typically mail notices in April or May. If the appraised value looks too high, you can protest it before an appraisal review board.6Texas Comptroller. Texas Property Tax Basics
If the home is your primary residence, the homestead exemption cuts the bill. School districts must exempt $140,000 of a homestead’s appraised value from school taxes. On a home appraised at $300,000, school taxes are calculated on $160,000.7Texas Comptroller. Property Tax Exemptions Homeowners who are 65 or older or who have a disability get an additional $60,000 school district exemption, plus a school tax ceiling that freezes their school taxes at the amount owed in the year they qualified, unless they add improvements to the property.
All qualifying homesteads also get an appraisal cap: the appraised value cannot rise by more than 10 percent per year no matter what the market does. The cap kicks in on January 1 of the tax year after you first qualify for the homestead exemption.8Texas Comptroller. Valuing Property
Property tax bills are due by January 31. On February 1, a delinquent bill picks up a 6 percent penalty and 1 percent interest, with another 1 percent penalty and 1 percent interest added each month. By July 1, the penalty jumps to 12 percent, and each taxing unit holds a lien on the property that can lead to foreclosure if the debt is left unpaid.9State of Texas. Texas Tax Code Chapter 33 – Delinquency
Franchise Tax on Businesses
Texas does tax business entities through the franchise tax, sometimes called the margin tax. Corporations, LLCs, partnerships, banks, and most other legal entities formed in or doing business in Texas have to file; sole proprietorships and general partnerships owned entirely by individuals are exempt.10Texas Comptroller. Franchise Tax Overview
For the 2026 report year, the rate is 0.375 percent for retail and wholesale businesses and 0.75 percent for everyone else, calculated against the entity’s taxable margin. Entities with annualized total revenue at or below $2.65 million owe no franchise tax, though they still have a filing requirement to stay in good standing.11Texas Comptroller. Franchise Tax
Retirement Income and Estates
Texas does not tax any form of retirement income at the state level. Pensions, IRA withdrawals, 401(k) distributions, and Social Security benefits are all free from state tax. Federal tax may still apply, and a portion of Social Security can be federally taxable depending on your provisional income, but Texas itself takes nothing.
There is no state estate tax or inheritance tax either. The legislature repealed the state’s inheritance tax effective September 1, 2015.12Texas Legislature Online. 84th Session SB 752 Enrolled A Texas estate still owes federal estate tax if it exceeds the federal exemption, but nothing additional at the state level.
If You Live in Texas but Work for an Out-of-State Employer
No state income tax in Texas does not automatically mean no state income tax anywhere. If you work remotely from Texas for an employer in another state, that state may tax the wages.
New York, for example, applies a “convenience of the employer” rule. If your employer is based in New York and you work from home in Texas for your own convenience rather than because the employer requires it, New York can treat the income as New York-sourced and tax it. And because Texas has no income tax of its own, you cannot offset the bill with a credit on a Texas return; you owe the other state in full. If you work remotely for an out-of-state company, check that state’s nonresident filing rules before April.
You Still File Federal Taxes
Living in a no-income-tax state has no effect on your federal return. Texas residents file with the IRS and pay federal income tax like residents of any other state. For the 2025 tax year, filed in spring 2026, a single filer under 65 must file at $15,750 or more in gross income, and married couples filing jointly must file at $31,500 or more. Self-employed individuals have to file once net self-employment earnings reach $400.13Internal Revenue Service. Check if You Need to File a Tax Return
Itemizers get one adjustment worth knowing. Because there is no state income tax to deduct on Schedule A, you can elect to deduct state and local sales taxes paid during the year instead, using actual receipts or the IRS optional sales tax tables. The IRS lists Texas as one of the states where this election applies. The total deduction for all state and local taxes combined, including sales and property, is capped at $40,000 ($20,000 if married filing separately) for taxpayers with modified adjusted gross income of $500,000 or less, with the cap phasing down above that level.14Internal Revenue Service. Instructions for Schedule A Form 1040 – 2025