Income Taxes in Texas
Texas levies no personal state income tax, full stop -- a real, constitutional feature since a 2019 amendment, not just current policy, and this is the single most consequential tax fact for anyone relocating to Texas.
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Learn moreA real, constitutional ban, not just a current-policy choice
Texas has never levied a personal state income tax, and the Texas Constitution's Article VIII, Section 24-a (added by 2019's Proposition 4, which passed with 76% voter approval) converted what had been a referendum-required framework into an outright constitutional prohibition. Repealing it now requires a two-thirds vote in each chamber of the Texas Legislature AND a subsequent statewide voter referendum -- a substantially higher bar than a simple legislative majority, which is a meaningful, real difference from states where an income tax could be reinstated by ordinary statute.
This applies to every dollar of wage, salary, retirement, and investment income the same way
Because Texas's ban is total rather than partial, there is no separate treatment to research for wages versus retirement income versus investment income at the state level -- none of it is subject to a Texas personal income tax, regardless of source or amount. This is a genuinely different, simpler picture than most states, including states that exempt some income types (like Social Security) but tax others.
The honest trade-off: no income tax means comparatively higher reliance on property and sales tax
Texas funds state and local government substantially through sales tax (6.25% state base, combined local rates up to a statutory 8.25% cap) and, more consequentially, property tax -- whose statewide average effective rate (roughly 1.60%) consistently ranks among the nation's highest. This record does not present "no income tax" as if it were the whole tax picture; see the property-taxes and sales-tax topics for the rest of it before assuming Texas is a uniformly low-tax state.
Texas does levy a business franchise (margin) tax -- a separate, business-level tax outside this record's individual-relocation scope
Texas's lack of personal income tax does not mean Texas businesses are untaxed: the state levies a franchise tax (commonly called the "margin tax") on most businesses operating in Texas, calculated on a measure of business margin rather than personal income. This is a business-entity tax, distinct from anything an individual relocating for a job or retirement would personally owe, and this record does not detail its specific rates and thresholds here -- confirm directly with a tax professional if you are relocating a business, not just yourself, to Texas.
Key takeaways
- Texas has a real, constitutional ban on personal state income tax (2019 amendment, Art. VIII Sec. 24-a) -- not just current policy, and repeal requires a two-thirds legislative vote in each chamber plus a statewide referendum.
- The ban is total: wages, salaries, retirement income, and investment income are all equally untaxed at the state level -- a simpler picture than states with partial exemptions.
- The honest trade-off is a comparatively high property tax burden (statewide average roughly 1.60% effective rate, among the nation's highest) and a real sales tax -- Texas is not a uniformly low-tax state overall.
- Texas separately levies a business franchise (margin) tax on most businesses -- distinct from personal income tax and outside this record's individual-relocation scope; confirm directly if relocating a business.
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