The short answer: no
Texas has no personal income tax. You don't pay state tax on wages, salaries, Social Security, pensions, retirement withdrawals, interest, dividends or capital gains. Federal income tax still applies.
It's written into the state constitution. Since voters approved Proposition 4 in November 2019, Article 8, Section 24-a says: "The legislature may not impose a tax on the net incomes of individuals." Changing that would take a constitutional amendment approved by two-thirds of the legislature and a majority of voters.
In November 2025, Texans went further and approved all 17 proposed amendments. Among them were new bans on taxing capital gains, on estate, inheritance and gift taxes, and on taxes on securities transactions. Earlier amendments already ban a wealth tax (2023) and a real estate transfer tax (2015).
How Texas makes up for it
| Tax | Rate | Who pays |
|---|---|---|
| Property tax | Set locally; combined rates of about 1.7% to 2.6% in major cities | Property owners (and renters, indirectly) |
| Sales and use tax | 6.25% state, plus up to 2% local, for a maximum of 8.25% | Everyone |
| Franchise ("margin") tax | 0.75% of margin (0.375% for retail and wholesale); none below $2.65 million in revenue | Businesses |
Texas also collects severance taxes on oil and gas, which cover a meaningful share of state spending in good years.
Texas property taxes: the real trade-off
Property tax is where Texas gets you. The median Texas homeowner paid $4,108 in 2024, about 28% more than the national median of $3,211, even though the median Texas home ($313,200) is worth less than the national median ($360,600). As a share of home value, that's about 1.31%, roughly one and a half times the national figure. Among the nine states without an income tax, only New Hampshire is higher.
Texas has no state property tax. Your bill is the sum of rates set by your county, city, school district and special districts such as hospital, community college and utility districts. In 2025, the combined rate was about $2.13 per $100 of value in Houston, $2.23 in Dallas, $2.05 in Austin and $2.64 in El Paso. See our Texas property tax rates by city.
What Texas does offer homeowners:
- A $140,000 homestead exemption from school taxes, plus another $60,000 if you're 65 or older or disabled, along with a freeze on school taxes at 65. Both amounts were raised by voters in November 2025. See the Texas homestead exemption guide and how to file Form 50-114 in your county.
- The right to protest your appraisal every year by May 15. Many homeowners get a reduction. See how to protest property taxes in Texas.
Who comes out ahead in Texas
No income tax helps most when you earn a lot relative to the value of the home you own. A high-earning renter or a couple with a modest house usually pays far less total tax in Texas than in California or New York. A retiree with a paid-off, valuable home and little income may find the property tax bill outweighs the income tax savings, though the age-65 exemption and school tax freeze help a lot.
Moving from another state? Our guide to moving states walks through the comparison, and states with no income tax compares all nine, including Florida.
Sources
Texas Constitution Article 8 (sections 24-a, 25, 26, 29 and 30), Texas Legislative Council; Texas Comptroller pages on sales tax and franchise tax (report years 2026–2027) and on property tax exemptions. Property tax figures are from the U.S. Census Bureau's 2024 American Community Survey (tables B25103 and B25077) and the Texas Comptroller's 2025 tax rate files. This is general information, not tax advice.