State Tax Guide

Texas State Taxes: A Simple Guide

Texas is known for having no state income tax, but that doesn't mean there are no state or local taxes. This guide gives a high-level overview of how Texas taxes typically work for individuals.

ℹ️Important: This is a general education guide. Tax rules and rates change, and local areas may have their own rules. Always verify details with official Texas sources or a tax professional.

✅No state income tax

Texas does not impose a state individual income tax on wages, salaries, or most other personal income. That means:

💰Your paycheck does not have Texas state income tax withheld

📋

Your main income tax filing is usually just your federal Form 1040

🚫You generally do not file a separate Texas income tax return as an individual

⚠️ Business Note: Businesses, however, may be subject to the Texas franchise (margin) tax, which is separate from personal income tax and not covered in detail here.

🛒Sales and use tax

Instead of taxing personal income, Texas relies heavily on sales and use taxes. Key points:

→There is a statewide base sales tax rate

→Cities, counties, and special districts can add local sales taxes on top of the state rate, up to a combined maximum

→Most physical goods are taxable; some items (like certain groceries or medicines) may be exempt or taxed differently

💼 Business owners: If you sell goods or certain services in Texas, you may need a sales tax permit and must collect and remit sales tax to the state and local authorities.

🏠Property taxes

Texas does not have a state-level property tax, but local governments (counties, cities, school districts, and special districts) levy property taxes to fund schools, roads, and other services.

📊Property tax bills are based on the appraised value of property

🏡Homeowners may qualify for exemptions (such as a homestead exemption) that can lower taxable value

💵Property taxes can be a significant part of the overall tax burden in Texas, especially for homeowners

📍 Local variation: Exact rates and exemptions depend on your local jurisdiction. Check with your county appraisal district or local tax office for details.

📌Other common Texas taxes

Beyond income, sales, and property-related taxes, Texas has several other taxes that may affect individuals indirectly, including:

🚗

Motor Vehicle

Sales and rental taxes

🏨

Hotel

Occupancy taxes

⛽

Fuel & Excise

Various excise taxes

💡 Note: These taxes are usually built into the price of specific transactions (car purchases, hotel stays, fuel, etc.).

🔗How Texas taxes fit with your federal return

Even though Texas has no personal income tax, you still file a federal tax return each year if you meet the filing requirements. Your overall tax picture as a Texas resident often looks like this:

1️⃣Federal income taxes (filed on Form 1040)

2️⃣Sales tax on purchases within the state

3️⃣Local property taxes if you own real estate

📚 New to filing? Start with How to File Your Taxes (Simple) and then layer on this Texas-specific knowledge for a clearer picture of your total tax situation.

Calculate your federal refund

Since Texas has no state income tax, focus on estimating your federal refund.

Estimate Your Refund→