Quick Answer
Texas has no state income tax. You pay $0 in Texas state income tax regardless of your income level. However, Texas has a 6.25% state sales tax (up to 8.25% with local taxes) and property taxes averaging 1.6% of home value annually.
Best Answer
Sarah Chen, CPA
Workers in Texas who want to understand their total tax burden and take-home pay
Texas has no state income tax
Texas is one of nine U.S. states with no personal income tax. This means you pay $0 in Texas state income tax, regardless of whether you earn $30,000 or $300,000 per year.
Your Texas paycheck will only have federal income tax, Social Security, and Medicare withheld - no state income tax deduction.
What this means for your paycheck
Let's compare a $75,000 salary in Texas versus a state with income tax:
Living in Texas saves you nearly $4,000 per year compared to New York on a $75,000 salary.
How Texas funds government without income tax
Since Texas doesn't collect income tax, it relies heavily on other revenue sources:
Sales tax: 6.25% state rate, plus local taxes up to 2%, for a maximum of 8.25%. You'll pay this on most purchases except groceries and prescription drugs.
Property tax: Texas has some of the highest property tax rates in the U.S., averaging 1.6% of assessed value annually. On a $300,000 home, that's about $4,800 per year.
Business taxes: Texas imposes a franchise tax on most businesses, which can indirectly affect wages and prices.
Example: Total tax burden for $75,000 earner in Texas
Let's calculate the full tax picture for someone earning $75,000 in Dallas:
Income-based taxes:
Property tax (if homeowner):
Sales tax (estimated):
Total estimated tax burden: ~$20,376 (27.2% of gross income)
This is still typically lower than high-income-tax states when you factor in all taxes.
Benefits of no state income tax
What you should do
Use our paycheck calculator to see exactly how much you'll take home in Texas. Since there's no state income tax, your calculation is simpler - just federal withholding, Social Security, and Medicare.
If you're considering moving to Texas for tax reasons, factor in the higher sales and property taxes. For most people, the lack of income tax still results in overall tax savings, especially at higher income levels.
Key takeaway: Texas has zero state income tax, giving you a higher take-home pay than most other states, though you'll pay higher sales and property taxes instead.
Key Takeaway: Texas has zero state income tax, saving a $75,000 earner about $4,000 annually compared to states like New York or California.
Tax comparison: $75,000 salary in Texas vs. other states
| State | State Income Tax | Take-Home Pay | Annual Savings vs. Texas |
|---|---|---|---|
| Texas | $0 | $60,523 | $0 |
| California | ~$2,476 | $58,047 | $2,476 |
| New York | ~$3,961 | $56,562 | $3,961 |
| Florida | $0 | $60,523 | $0 |
| Tennessee | $0 | $60,523 | $0 |
More Perspectives
Sarah Chen, CPA
Remote workers considering Texas residency or working for Texas companies from other states
Texas residency can provide significant tax savings for remote workers
If you work remotely, establishing Texas residency can eliminate state income tax entirely. This is particularly valuable for high earners who would otherwise pay substantial state taxes.
Establishing Texas residency
To become a Texas resident for tax purposes, you generally need to:
Unlike some states, Texas doesn't have a statutory residency test - it's based on your intent and actions.
Working for a Texas company from another state
If you work remotely for a Texas-based company but live in another state, good news: Texas won't tax your income since it has no income tax. However, your state of residence will likely tax your full income.
Example: Working for a Texas company while living in California
The remote work arbitrage opportunity
Some remote workers establish Texas residency specifically for tax savings:
Before (living in New York):
After (Texas resident, same job):
This strategy works best if you can truly work from anywhere and don't need to maintain ties to your previous high-tax state.
Caution: Domicile audits
High-tax states like New York and California aggressively audit people claiming to have moved to no-tax states. Keep detailed records of your move, including:
Key takeaway: Remote workers can potentially save thousands in state taxes by establishing genuine Texas residency, but must carefully document their domicile change.
Key Takeaway: Remote workers can potentially save thousands in state taxes by establishing genuine Texas residency, but must carefully document their domicile change.
Sarah Chen, CPA
People who moved to or from Texas and need to understand their tax obligations
Moving to Texas simplifies your state tax situation
If you moved to Texas during the tax year, you'll generally need to file a part-year resident return in your previous state, but no Texas return since Texas has no income tax.
Timeline matters for tax savings
Your Texas residency date determines when you stop owing income tax to your previous state:
Example: Moved from California to Texas in July
Tax calculation:
Common moving scenarios
Moving TO Texas:
Moving FROM Texas:
Don't forget to update withholding
When you move to Texas, immediately update your Form W-4 with your employer. Since Texas has no state income tax, you should:
Property tax considerations
While you won't pay income tax in Texas, be prepared for property taxes if you buy a home. Texas property tax rates are among the highest nationally, though there's a homestead exemption that can reduce your tax burden.
Texas homestead exemption (2026):
Key takeaway: Moving to Texas eliminates state income tax from your move date forward, but you must file a part-year return in your previous state and update your withholding immediately.
Key Takeaway: Moving to Texas eliminates state income tax from your move date forward, but you must file a part-year return in your previous state and update your withholding immediately.
Sources
- IRS Publication 505 — Tax Withholding and Estimated Tax
- Tax Foundation State Tax Data — State and Local Tax Burdens by State
Related Questions
Reviewed by Sarah Chen, CPA on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.