No, Texas does not have a state income tax. The Texas Constitution bans the legislature from taxing personal income, so wages, salaries, self-employment earnings, retirement distributions, and investment income all escape state-level tax. You still owe federal income tax, and Texas makes up the revenue through sales taxes, local property taxes, and a franchise tax on businesses.
The Constitutional Ban Makes It Permanent
Article VIII, Section 24-a of the Texas Constitution prohibits the legislature from taxing individual net incomes, including an individual’s share of partnership or unincorporated association income. Texas voters approved the amendment in November 2019, moving the ban out of ordinary statute and into the constitution itself.1State of Texas. Texas Constitution Article VIII
Reversing it would take a two-thirds vote in both the Texas House and Senate to put a repeal question on a statewide ballot, followed by a majority vote of Texans. That threshold makes a state income tax extremely unlikely under current law.
What Texas Taxes Instead
Sales and use tax is the workhorse of Texas revenue. The statewide rate is 6.25 percent on most retail sales, leases, and rentals of goods, as well as taxable services. Cities, counties, transit authorities, and special-purpose districts can add up to 2 percent more, so the combined rate tops out at 8.25 percent.2Texas Comptroller. Sales and Use Tax
Not everything is taxed. Most grocery staples — bread, milk, eggs, fruits, vegetables, flour, and similar food products — are exempt.3Texas Comptroller. Grocery and Convenience Stores Prescription and over-the-counter drugs carrying an FDA “Drug Facts” panel are also exempt, and insulin is exempt whether or not it’s dispensed by prescription.4LII / Legal Information Institute. 34 Texas Admin Code 3.284 – Drugs, Medicines, Medical Equipment, and Devices
Businesses that operate in Texas also owe a franchise tax on their taxable margin. Sole proprietorships and general partnerships owned entirely by individuals are exempt, and entities with annualized total revenue at or below $2.65 million owe nothing (though they still have to file an information report).5Texas Comptroller. Franchise Tax Overview6Texas Comptroller. Texas Franchise Tax Report Forms for 2026
Property Taxes Do the Heavy Lifting
Local property taxes are the other major bill Texas residents face, and they run higher than the national average. There is no state property tax; instead, school districts, counties, cities, and special-purpose districts set their own rates and collect the money to pay for schools, roads, police, and other local services.7Texas Comptroller. Property Tax Assistance
Homes are appraised at market value as of January 1 each year by the county appraisal district. Tax bills come due January 31, and unpaid amounts start accruing a 6 percent penalty plus 1 percent interest on February 1, climbing with each month of delinquency.8State of Texas. Texas Tax Code Chapter 33 – Delinquency
Homestead Exemption
If you own and live in your home, the residence homestead exemption removes $140,000 of the home’s appraised value from school district taxes. On a $300,000 home, school taxes apply to only $160,000 of value.9Texas Comptroller. Property Tax Exemptions
Homeowners who are 65 or older or who have a disability get another $60,000 school district exemption on top of the standard $140,000. They also benefit from a school tax ceiling that freezes their school district tax bill at the amount owed in the year they first qualified, unless they add improvements to the property.9Texas Comptroller. Property Tax Exemptions
Every qualifying homestead also gets an appraisal cap: the taxable appraised value can’t rise more than 10 percent per year, even if market value jumps more.10Texas Comptroller. Valuing Property
No State Estate or Inheritance Tax
Texas has no state estate tax and no inheritance tax. The legislature repealed the state’s inheritance tax, formerly Tax Code Chapter 211, effective September 1, 2015.11Texas Legislature Online. 84th Session SB 752 Enrolled The federal estate tax can still apply if an estate exceeds the federal exemption, but Texas itself adds nothing at death.
Retirement Income Is Not Taxed by Texas
Texas doesn’t tax any form of retirement income at the state level. Pension payments, IRA withdrawals, 401(k) distributions, and Social Security benefits are all free from state tax. Federal tax still applies to most retirement income, and depending on your provisional income a portion of your Social Security may be federally taxable, but no piece of it is taxed by Texas.
Federal Taxes Still Apply
Living in a no-income-tax state doesn’t change what you owe the IRS. 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 workers must file if net self-employment earnings reach $400.12Internal Revenue Service. Check if You Need to File a Tax Return
Deducting Sales Tax Instead of Income Tax
Texans who itemize on Schedule A can’t claim a state income tax deduction, because there isn’t one to claim. Instead, you can elect to deduct state and local sales taxes paid during the year, using either actual receipts or the IRS’s optional sales tax tables. The IRS lists Texas as one of the states where this election is available.13Internal Revenue Service. Instructions for Schedule A Form 1040 – 2025
The combined deduction for all state and local taxes, including your sales tax and property tax together, is capped at $40,000 ($20,000 if married filing separately) for taxpayers with modified adjusted gross income of $500,000 or less. Above that income level the cap phases down.13Internal Revenue Service. Instructions for Schedule A Form 1040 – 2025
Remote Work for Out-of-State Employers
Texas doesn’t tax income earned in the state regardless of where you live, but another state might tax you on income you earn while sitting in Texas. New York, for example, applies a “convenience of the employer” rule: if your employer is in New York and you work from home in Texas for your own convenience rather than because the employer requires it, New York may treat your wages as New York-sourced and tax them.
Because Texas has no income tax of its own, there’s no state return where you could claim a credit to offset that liability. You owe the other state the full amount. If you work remotely for an employer based outside Texas, check that state’s nonresident filing rules before tax season.