Texas cannot impose a wealth tax. In November 2023, voters approved Proposition 3, which amended Article 8 of the Texas Constitution to prohibit the legislature from enacting any tax based on the wealth or net worth of an individual or family.1Texas State Law Library. Texas Voters Approve 13 New Constitutional Amendments Because the Texas wealth tax ban sits in the constitution rather than the Tax Code, no ordinary legislative majority can undo it.
What the Ban Actually Covers
The amendment prohibits any tax imposed on or measured by the difference between an individual’s or entity’s total assets and total liabilities.2State of Texas. Texas Constitution Article 8 – Taxation and Revenue In plain terms, the state cannot add up everything you own, subtract everything you owe, and tax what is left.
The language is deliberately broad. It does not matter what label a future legislature attaches to the levy. If the calculation uses net worth as its measure, the tax is unconstitutional.
“What you own” in this context reaches real estate, bank accounts, investment portfolios, retirement savings, vehicles, and business interests. Intangible holdings like stock in a private company or partnership equity fall within scope. Liabilities include mortgages, student loans, credit card balances, and other debts. The constitutional text carves out no asset class or ownership structure, so the protection runs across the economic spectrum.
Taxes You Still Owe in Texas
The amendment blocked one specific kind of tax. Every other form of state and local taxation remains in place, and the measure expressly preserves the legislature’s existing taxing authority under Article 8, Section 1.3Justia. Texas Constitution Article 8 Section 1 – Equality and Uniformity; Tax in Proportion to Value; Income Tax; Exemption of Certain Tangible Personal Property from Ad Valorem Taxation You still pay:
- Local property taxes assessed on the appraised value of real estate and tangible personal property.
- State and local sales and use taxes, with the state rate at 6.25 percent and local add-ons bringing the combined maximum to 8.25 percent.4Texas Comptroller of Public Accounts. Sales and Use Tax
- The franchise tax, which businesses operating in Texas pay on their taxable margin under Chapter 171 of the Texas Tax Code.
- Motor fuel taxes on gasoline and diesel, which operate under their own statutory authority.
People sometimes confuse property taxes with wealth taxes, and the distinction is worth keeping straight. A property tax bills you on the value of a single parcel or asset. A wealth tax would bill you on the net sum of everything you own minus everything you owe. The Texas prohibition reaches only the second kind.
How This Fits With Texas’s Other Tax Bans
The wealth tax prohibition is one layer in a stack of constitutional restrictions Texas voters have built over the years.
State Income Tax
Article 8, Section 24 does not flatly ban a state income tax on individuals, but it imposes steep conditions. Any such tax must first be approved by voters in a statewide referendum, revenues must go toward reducing school property taxes, and the rate cannot exceed what voters originally approved.2State of Texas. Texas Constitution Article 8 – Taxation and Revenue No legislature has attempted to clear those hurdles. The wealth tax amendment’s savings clause specifically leaves this framework undisturbed.
Capital Gains Tax
In November 2025, voters approved Proposition 2, adding Section 24-b to Article 8. That amendment prohibits the legislature from taxing realized or unrealized capital gains of individuals, families, estates, or trusts. It carves out exceptions so existing property, sales, and use taxes remain intact.
Estate and Inheritance Taxes
Texas repealed its state inheritance tax in 2015. Article 8, Section 24 had already limited the legislature to estate-type transfer taxes only to the extent of the maximum credit allowed under federal law, and federal law eliminated that credit years ago.2State of Texas. Texas Constitution Article 8 – Taxation and Revenue Voters reinforced that result in 2025 with Proposition 8, which explicitly banned state-level estate and inheritance taxes.
Taken together, these provisions mean Texas constitutionally forbids state-level taxes on wealth, capital gains, and estates, and conditionally forbids a personal income tax. The state funds itself primarily through sales taxes, local property taxes, and the franchise tax on businesses.
What a Repeal Would Require
Reversing the wealth tax ban would mean passing a new constitutional amendment, and that process has two demanding stages. The legislature would first need to pass a joint resolution by a two-thirds vote of all members elected to each chamber. A majority of voters would then need to approve the proposal at a statewide election.5Justia. Texas Constitution Article 17 Section 1
The two-thirds threshold is the real bottleneck. In a 150-member House and a 31-member Senate, that means 100 House votes and 21 Senate votes just to put the question on the ballot. The original amendment cleared the ballot box with nearly 68 percent voter support, so the political ground for repeal is not friendly. Any attempt to impose a wealth tax without first undoing the amendment would face immediate legal challenge and almost certain invalidation.
Federal Taxes Are a Separate Question
A state constitutional amendment has no authority over what Congress can tax. If the federal government ever enacted a wealth tax, the Texas prohibition would offer Texas residents no shelter. The amendment governs only the Texas Legislature.
A federal wealth tax faces its own constitutional obstacles. The U.S. Constitution requires “direct taxes” to be apportioned among the states by population, and the Sixteenth Amendment carved out an exception only for taxes on income. Whether accumulated wealth counts as “income” under that amendment is contested and would almost certainly reach the Supreme Court. Proposals surface in Congress from time to time, but no federal wealth tax has been enacted. The Texas ban locks the state door; the federal door runs on a separate set of hinges.