Texas does not require you to file a state tax return on your personal income. The state has no individual income tax, so wages, investment gains, and retirement distributions never get reported to a Texas revenue agency. You still owe a federal return to the IRS if your income clears the filing threshold, and if you own property or run a business in Texas, separate state and local filings can apply.
Why There Is No State Return to File
The absence of a personal income tax is written into the Texas Constitution. Article 8, Section 24 does not outright ban an income tax. It says any income tax passed by the legislature cannot take effect unless a majority of voters approve it in a statewide referendum during a general election, and the ballot must specify the exact rate.1State of Texas. Texas Constitution Article 8 – Taxation and Revenue
The same provision ties any future income tax to property tax relief. Revenue would have to reduce school district property taxes, and taxpayers would receive a deduction or credit for the school property taxes on their home. Those combined requirements have kept Texas from ever enacting one.1State of Texas. Texas Constitution Article 8 – Taxation and Revenue
One boundary to note: Section 24 restricts taxes on natural persons only. It does not stop the legislature from taxing corporations and other legal entities, which is why Texas businesses face a franchise tax even though individuals do not.
You Still Have to File a Federal Return
No state return does not mean no return. Every Texas resident whose income clears the federal threshold must file with the IRS, the same as someone living anywhere else. Texans just file one return instead of two.
Whether you have to file depends on gross income, filing status, and age. For the 2026 tax year, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. If your gross income falls below your standard deduction, you generally do not owe a federal return, though filing anyway makes sense if taxes were withheld and you want the refund.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Self-employed Texans face a lower bar. If you earn $400 or more in net self-employment income, you must file regardless of your total income, because you owe self-employment tax on those earnings. That catches many freelancers and gig workers who assume their earnings are too small to matter.
Other situations require a federal return no matter your income, including owing alternative minimum tax, receiving advance premium tax credits through the Health Insurance Marketplace, or owing tax on a health savings account distribution. The IRS keeps an interactive tool at irs.gov to check whether you need to file.3Internal Revenue Service. Check if You Need to File a Tax Return
What Homeowners Owe Instead
The tradeoff for having no income tax is heavy reliance on property taxes. The state’s average effective property tax rate is roughly 1.40%, among the highest in the country. School districts, cities, counties, and special districts each set their own rates, so the bill depends on where the property sits.
Property taxes become delinquent on February 1 of the year following the tax year. Miss that date and a 6% penalty applies immediately for the first month, with an additional 1% for each month after. On July 1 the penalty jumps to 12% and stops climbing, but interest keeps running at 1% per month. A 20% collection attorney fee can also apply if the delinquency triggers legal action.4Texas Comptroller of Public Accounts. Penalty Tax Bills
Claiming the Homestead Exemption
If you own and live in your home, the residence homestead exemption removes $100,000 of appraised value from school district taxes. Homeowners 65 or older or disabled qualify for an additional $10,000 school district exemption on top of that, and local units may offer more.5State of Texas. Texas Tax Code TAX 11.13 – Residence Homestead
You apply once. After your county appraisal district approves the exemption, it carries forward as long as you keep living in the home. New homeowners should file with their county appraisal district after moving in.
Protesting Your Appraisal
If you believe your appraised value is too high, you can file a protest with the local appraisal review board. The deadline is May 15 or 30 days after the appraisal district mailed your notice, whichever is later.6Texas Comptroller of Public Accounts. Appraisal Protests and Appeals Most county appraisal districts let you file online, and you do not need an attorney or tax consultant to do it.
Filings That Apply if You Run a Business
The “no state return” answer changes once you have a business entity or a payroll. Three filings show up most often.
Sales and Use Tax
Any business selling taxable goods or services in Texas must obtain a Texas Sales and Use Tax Permit before making sales, then collect and remit tax to the Comptroller.7Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions – Obtaining a Sales Tax Permit The state rate is 6.25%, and local jurisdictions can add up to 2% for a combined maximum of 8.25%. Most unprepared grocery items, prescription medications, and certain medical devices are exempt.8Texas Comptroller of Public Accounts. Sales and Use Tax
The Comptroller assigns you to a monthly, quarterly, or annual filing schedule based on how much you collect. Monthly filers submit by the 20th of the following month. Quarterly deadlines fall on April 20, July 20, October 20, and January 20. A late report draws a $50 penalty, and late payment adds 5% (1 to 30 days late) or 10% (more than 30 days).8Texas Comptroller of Public Accounts. Sales and Use Tax
Out-of-state sellers get pulled in once total Texas revenue exceeds $500,000 in the prior 12 calendar months, counting taxable and nontaxable sales shipped into the state. After crossing that threshold, the seller has until the first day of the fourth month to start collecting.9Texas Comptroller of Public Accounts. Remote Sellers
Franchise Tax
The Texas franchise tax applies to most legal entities including corporations, LLCs, partnerships, banks, and trusts. Sole proprietorships and general partnerships owned entirely by individuals are exempt.10Texas Comptroller of Public Accounts. Taxable Entities – Franchise Tax Frequently Asked Questions
The annual report is due May 15, shifting to the next business day when that date lands on a weekend or holiday.11Texas Comptroller of Public Accounts. Franchise Tax For reports due in 2026 and 2027, entities with total revenue of $2.65 million or less owe no franchise tax, but they still have to file a Public Information Report or Ownership Information Report. Skipping the report leads to penalties and can eventually cause the state to forfeit your right to do business in Texas.12Texas Comptroller. 2026 Texas Franchise Tax Report Information and Instructions A late filing draws a $50 penalty, with the same 5% or 10% late-payment add-ons that apply to sales tax.
Unemployment Tax and New Hire Reporting
Employers pay into state unemployment insurance through the Texas Workforce Commission. For 2026, rates range from 0.32% to 6.32% on the first $9,000 in wages paid to each employee. New employers use a default rate until they build enough claim history for an experience-based rate.13Texas Workforce Commission. Your 2026 Tax Rates
Every Texas employer must also report new hires and rehires to the Texas Workforce Commission within 20 calendar days of the hire date. Employers who report electronically submit approximately twice a month, spaced 12 to 16 days apart.14Texas Workforce Commission. New Hire Reporting
Texas employers still handle federal withholding, Social Security, and Medicare on the federal side. The state simply drops out of the payroll equation.