Texas Tax Rates 2026
Income tax, property tax, and estimated take-home pay for Texas residents.
Income Tax in Texas
Texas is one of the few states with no state income tax. Residents keep more of their paycheck, though the state may make up revenue through higher sales tax, property tax, or other fees.
| Tax Component | Rate / Amount | On $75K Salary |
|---|---|---|
| Federal Income Tax | 10-37% (marginal) | $10,238 |
| Texas State Tax | 0% | $0 |
| FICA (SS + Medicare) | 7.65% | $5,738 |
| Total Tax Burden | $15,976 | |
| Annual Take-Home | $59,024 |
Property Tax in Texas
Texas's effective property tax rate is 1.8%, which is above the national average of 1.07%. On the national median home value of $405,300, Texas homeowners pay approximately $7,295 per year ($608/month) in property taxes.
Property tax is deductible on your federal return if you itemize, but the SALT deduction is capped at $10,000 total (combined state income tax + property tax). In Texas, a $75K earner paying $7,295 in combined state/local taxes stays within the $10,000 SALT cap.
Cost of Living Considerations
Tax rates are only one piece of the puzzle. States without income tax often compensate with higher sales taxes, property taxes, or fees. When comparing Texas to other states, also consider housing costs, healthcare expenses, grocery prices, and transportation costs. Use our calculators below to model your specific situation.
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Sales Tax in Texas
Texas has a state sales tax rate of 6.25%. Local jurisdictions may add additional sales tax on top of the state rate. On a $35,000 vehicle purchase, the state sales tax alone adds $2188. Groceries, prescription medications, and certain essentials may be exempt or taxed at a reduced rate depending on Texas law. When budgeting for large purchases, always factor in the combined state and local rate in your area.
Tax Planning Tips for Texas Residents
Maximize your no-tax advantage. Since Texas has no state income tax, Roth IRA conversions are especially powerful here — you pay federal tax on the conversion but no state tax, and all future withdrawals are completely tax-free at both levels.
Watch property taxes. With no income tax revenue, Texas relies more heavily on property taxes and sales taxes. Budget accordingly when purchasing a home, and explore homestead exemptions that may reduce your assessed value.
Remote work advantage. If you work remotely for a company in a high-tax state, living in Texas means you typically pay taxes based on where you live — saving you the state income tax entirely. Verify your specific situation with a tax professional, as some states have reciprocity agreements or "convenience of employer" rules.
Who Benefits from Living in Texas?
High earners benefit most from Texas — a $200,000 earner saves $10,000-$20,000+ annually compared to living in California or New York. The savings compound dramatically over a career.
Retirees with large portfolios — 401(k) withdrawals, pension income, and Social Security are all free from state taxation, potentially saving tens of thousands over retirement.
Self-employed individuals — freelancers and business owners already face the 15.3% self-employment tax; eliminating state income tax provides meaningful relief.
Texas Tax Reality 2026 — No Income Tax, But the 6th-Highest Property Tax in the US SB 4 / Prop 13
⌄Median Texas household take-home math
No State Income Tax — But Texas Funds Government Through Property & Sales
Texas is one of nine US states with zero state income tax, enshrined since 1845 and reinforced by Article 8 §24 of the Texas Constitution requiring a 2/3 legislative supermajority and statewide voter approval to ever impose one. The marketing story is simple: "Move to Texas, keep your paycheck." The honest story is more nuanced: Texas funds schools, counties, and cities almost entirely through property tax (~45% of state-and-local revenue) and sales tax (~30%), both of which are structurally regressive. Whether Texas is genuinely tax-friendly for you depends on whether you own a home, how much you spend on taxable goods, and what your income would have been taxed at elsewhere.
| Income (single filer, no kids) | TX state income tax | Equivalent CA tax (for comparison) | Net TX advantage |
|---|---|---|---|
| $50,000 | $0 | ~$1,200 | +$1,200/yr |
| $80,000 | $0 | ~$3,500 | +$3,500/yr |
| $120,000 | $0 | ~$7,500 | +$7,500/yr |
| $200,000 | $0 | ~$15,500 | +$15,500/yr |
| $500,000 | $0 | ~$45,000 | +$45,000/yr (before MHSA) |
Texas income tax history per Texas Comptroller of Public Accounts; constitutional requirement per Texas Constitution Art. 8 §24. Revenue mix per Tax Foundation State & Local Tax Burden 2025.
Want exact take-home with all federal withholding details? Use the Take-Home Pay Calculator.
Property Tax Reality — 1.60% Average, 6th Highest in the US
Texas's average effective property tax rate is 1.60% — sixth highest nationally and roughly triple the 0.52% national median. School districts account for 50–65% of a typical Texas property tax bill, with city, county, and special-district levies adding the rest. Effective rates vary dramatically by county: Austin's Travis County averages 1.8–2.0%, Houston's Harris County 2.0–2.3%, while rural counties can exceed 2.5%. The school-district homestead exemption rose to $140,000 for tax year 2026 (SB 4 / Prop 13, approved November 2025), up from $100,000.
| Home value | Pre-homestead tax (at 1.60%) | After $140K homestead | Annual savings |
|---|---|---|---|
| $200,000 | $3,200 | $960 | $2,240 |
| $300,000 (TX median area) | $4,800 | $2,560 | $2,240 |
| $500,000 | $8,000 | $5,760 | $2,240 |
| $750,000 | $12,000 | $9,760 | $2,240 |
| $1,000,000 | $16,000 | $13,760 | $2,240 |
Effective rates per Texas Comptroller Property Tax Assistance Division 2026. Homestead exemption $140K per SB 4 / Proposition 13 (Nov 2025). National ranking per Tax Foundation Facts & Figures 2026.
Sales Tax — 6.25% State + Up to 2% Local = 8.25% Maximum
Texas's state sales tax is 6.25%, with cities, counties, and special-purpose districts allowed to layer up to 2% additional local sales tax, capping the combined rate at 8.25%. Most major metros (Houston, Dallas, Austin, San Antonio) are at the 8.25% ceiling. Texas exempts unprepared groceries, prescription medications, and most over-the-counter medicines from sales tax, but taxes restaurant meals, prepared food, clothing, and most services. For a household spending $30K/year on taxable goods, sales tax adds roughly $2,000–$2,500/year to total tax burden.
| City | State + Local rate | Sales tax on $30K taxable spend |
|---|---|---|
| Houston (Harris County) | 8.25% | $2,475 |
| Dallas | 8.25% | $2,475 |
| Austin | 8.25% | $2,475 |
| San Antonio | 8.25% | $2,475 |
| Rural unincorporated areas | 6.25–7.25% | $1,875–$2,175 |
State and local sales tax rates per Texas Comptroller Sales & Use Tax. Sales tax holiday details per Tax Code §151.326. Combined rates verified against Tax Foundation State & Local Sales Tax Rates 2025.
The Over-65 Tax Freeze — School Property Tax Locked Forever
When a Texas homeowner turns 65 (or qualifies as disabled), they receive an additional $60,000 school district homestead exemption on top of the general $140,000 — for a combined $200,000 school exemption. More importantly, Tax Code §11.26 activates a school district tax ceiling that freezes the school-tax dollar amount at the year of qualification, regardless of future appreciation or rate changes. The freeze is portable to a new homestead within Texas (calculated as a percentage of the prior frozen tax). For a couple turning 65 with a $400,000 home in Austin, the school-tax freeze typically saves $3,000–$5,000/year for life.
| Scenario (Travis County, $400K home) | School tax pre-65 | After 65 freeze + $200K exemption | Annual savings |
|---|---|---|---|
| Year 65 qualifies | $2,600 | $2,000 (freeze) | $600 |
| Year 70 (5 yrs later) | $3,200 (appreciation) | $2,000 (frozen) | $1,200 |
| Year 75 (10 yrs later) | $3,800 | $2,000 (frozen) | $1,800 |
| Year 80 (15 yrs later) | $4,500 | $2,000 (frozen) | $2,500 |
| Lifetime savings (15-yr horizon) | Cumulative | ~$22,000+ | |
Senior exemption ($60K add'l) per Tax Code §11.13(c); school tax ceiling per §11.26; deferral per §33.06; portability per §11.26(g). All verified against Texas Comptroller Property Tax Exemptions 2026.
Use the Take-Home Pay Calculator to model exact paycheck withholding, or the Mortgage Affordability Calculator to factor Texas property taxes into your buying decision.
The Honest Net Comparison — Who Actually Wins By Moving to Texas
The "tax-free Texas" story is a half-truth that depends entirely on your income level, whether you own or rent, and which state you're comparing to. The Tax Foundation's State-Local Tax Burden ranks Texas 33rd nationally (16th lowest) at 9.8% of personal income — meaningfully better than CA (13.5%, ranked 5th highest) or NY (15.9%, ranked 1st highest), but only modestly better than mid-tax states like NC (10.4%) or GA (10.6%). The high-income, renting professional gets the largest TX advantage; the middle-income homeowner gets a much smaller one.
| Profile | Total tax in TX | Total tax in CA | TX advantage |
|---|---|---|---|
| Single, $80K, renter | ~$2,500 (sales) | ~$5,500 (income+sales) | +$3,000/yr |
| MFJ couple, $120K, $400K home | ~$8,900 (property+sales) | ~$11,000 (income+property+sales) | +$2,100/yr |
| MFJ, $250K, $700K home | ~$13,200 | ~$28,000 | +$14,800/yr |
| MFJ, $500K, $1M home | ~$18,500 | ~$58,000 (incl 9.3% bracket) | +$39,500/yr |
| MFJ, $1M+, $1.5M home | ~$26,000 | ~$143,000 (13.3% MHSA) | +$117,000/yr |
State-local tax burden rankings per Tax Foundation 2025 State-Local Burden Index. CA comparison brackets per CA FTB 2026 Tax Rate Schedules. MHSA surtax per Mental Health Services Act §17043 (Prop 63, 2004).
Save your numbers and track Texas vs other-state scenarios in a free FinCalcs account, or compare exact take-home across states with the Take-Home Calculator.
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