Texas has no state income tax. The rate on wages, salaries, retirement income, investment income, and self-employment earnings at the state level is 0%, and that zero is written into the Texas Constitution rather than ordinary law. You will not file a state return, and nothing comes out of your paycheck for a state income tax line. You will, however, still owe federal income tax, and Texas makes up the missing revenue through some of the highest property and sales taxes in the country.
Why the Zero Rate Is Locked In
Article 8, Section 24-a of the Texas Constitution prohibits the legislature from taxing the net incomes of individuals, including an individual’s share of partnership and unincorporated association income. Voters added that section in November 2019.1State of Texas. The Texas Constitution Article 8 Because the ban sits in the constitution, the legislature cannot create a personal income tax by passing a regular bill. Repealing the prohibition would take a constitutional amendment: two-thirds of both chambers, followed by a majority of Texas voters in a statewide election.
In practical terms, there is no Texas income tax return. You send no personal earnings paperwork to the Texas Comptroller of Public Accounts, and no state agency withholds income tax from your wages. Wage earners, retirees, freelancers, and investors all keep the full state-level share of their income.
Federal Income Tax Still Applies
Living in a no-income-tax state does not change what you owe the IRS. Every Texas resident who meets the federal filing thresholds must file a Form 1040 each year, generally due in mid-April. The federal government uses a progressive bracket system with rates from 10% to 37%, depending on your taxable income and filing status.2Internal Revenue Service. Federal Income Tax Rates and Brackets Only the portion of your income that falls within a given bracket is taxed at that bracket’s rate; crossing into a higher bracket does not raise the rate on the dollars below it.
If you work for an employer, federal income tax, Social Security tax (6.2%), and Medicare tax (1.45%) come out of each paycheck. If you are self-employed, you handle those obligations through estimated quarterly payments. Missing a federal filing or payment deadline brings penalties and interest from the IRS no matter where you live.
What If You Work Across State Lines?
If you live in Texas and work for a Texas employer, your wages face only federal tax. The picture changes once another state is involved. Some states tax income based on where the employee physically performs the work; a few tax based on where the employer is located.
Texas itself will never tax your income, regardless of where your employer sits. But you can still owe tax to another state if that state treats some of your earnings as sourced there. Traveling to an employer’s office in New York for part of the year is the kind of situation that can trigger a filing obligation elsewhere. If you split work time between Texas and a state with an income tax, it is worth talking to a tax professional before filing season.
Property Tax Is Where Texas Catches Up
Because there is no personal income tax, Texas leans harder on property tax than most states. The effective property tax rate on owner-occupied homes runs around 1.36%, among the highest in the country. Your bill is set by multiplying your local appraisal district’s assessed value by the combined rates of your county, city, school district, and any special districts.
The main offset is the homestead exemption, which reduces the taxable value of your primary residence for school district taxes. As of 2025, applicable to the 2026 tax year, that exemption is $140,000. Homeowners who are 65 or older or who have a disability qualify for an additional $10,000. To claim it, the property must be your principal residence and you must have an ownership interest in it, and the exemption can cover up to 20 acres of land.
Property taxes are the primary funding source for local schools and services, so Texas homeowners often see much larger annual bills than homeowners in states that spread revenue across income, property, and sales. Renters feel it indirectly, through rent that reflects what landlords owe.
Sales and Use Tax
Sales tax is the other heavy lifter. Texas charges a 6.25% state sales and use tax on retail sales, leases, and rentals of most goods, as well as many taxable services. Cities, counties, transit authorities, and special districts can add up to 2% more, pushing the combined rate to 8.25% in many urban areas.3Texas Comptroller. Sales and Use Tax
Use tax is the mirror image. If you buy a taxable item from an out-of-state retailer that does not collect Texas sales tax at checkout, you owe the same 6.25% plus any local rate. Most large online retailers now collect it automatically; smaller out-of-state sellers may not.
What’s Not Taxed
Grocery staples such as bread, milk, fresh produce, and canned goods are exempt. Prescription medications and certain medical supplies are exempt. Items bought with SNAP or WIC benefits are not taxed regardless of category. Prepared foods sold by restaurants are generally taxable.
Texas also holds annual sales tax holidays. The ENERGY STAR Sales Tax Holiday in 2026 runs from Saturday, May 23, through midnight on Monday, May 25, when qualifying energy-efficient appliances and products can be purchased free of state and local sales tax.4Texas Comptroller – Texas.gov. ENERGY STAR Sales Tax Holiday A back-to-school holiday typically happens in August for clothing, footwear, school supplies, and backpacks under set price limits; the Comptroller’s website posts the current dates and eligible items each year.
No State Estate or Inheritance Tax
Texas does not impose a state estate tax or inheritance tax. When a Texas resident dies, heirs and beneficiaries owe no state tax on what they receive. Federal estate tax rules still apply, though the federal exemption is high enough that most estates owe nothing there either.
The Real Bottom Line
The 0% state income tax is real, but it is not the whole picture. Sales tax, property tax, and the business franchise tax do the funding work that income tax does in other states. Texas’s combined state and local sales tax rate is among the highest in the country, and property tax bills frequently surprise new homeowners relocating from lower-property-tax states. Whether moving to Texas lowers your overall tax burden depends on how much you earn, whether you own a home, and how much you spend on taxable goods, not on the headline rate alone.