Texas: No State Income Tax Explained
Quick Answer
Texas charges no state income tax, which means your paycheck is only reduced by federal income tax and FICA — no state tax line on your pay stub. This can save you thousands per year compared to states like California or New York. However, Texas compensates with higher sales taxes (6.25% state + up to 2% local = 8.25% total) and some of the highest property taxes in the country (averaging 1.6%).
How Much You Save in Texas
Here is the state income tax you avoid by living in Texas instead of other states:
| Income | CA Tax | NY Tax | TX Tax | Savings vs CA | Savings vs NY |
|---|---|---|---|---|---|
| $50,000 | ~$1,600 | ~$2,400 | $0 | $1,600 | $2,400 |
| $75,000 | ~$3,000 | ~$3,800 | $0 | $3,000 | $3,800 |
| $100,000 | ~$5,000 | ~$5,200 | $0 | $5,000 | $5,200 |
| $150,000 | ~$9,500 | ~$8,500 | $0 | $9,500 | $8,500 |
At $100,000, living in Texas saves you over $400/month compared to California. See your exact savings at the relocation tool.
Real Example With Actual Numbers
James earns $85,000 in Austin, Texas. He is single with no dependents.
| Deduction | Annual | Per Biweekly Paycheck |
|---|---|---|
| Federal income tax | ~$10,300 | ~$396 |
| Social Security (6.2%) | $5,270 | $202.69 |
| Medicare (1.45%) | $1,232.50 | $47.40 |
| State income tax | $0 | $0 |
| Total tax | $16,802.50 | $646.09 |
| Take-home pay | $68,197.50 | $2,623.14 |
James keeps about 80.2% of his gross pay. In California, he would keep about 74.5%. In New York City, about 71.2%. Try the SalaryHog calculator to compare.
What Texans Pay Instead
Sales Tax
The combined state and local sales tax in Texas can reach 8.25%. If you spend $30,000/year on taxable goods and services, that is about $2,475 in sales tax. Groceries, medicine, and certain essentials are exempt.
Property Tax
Texas property taxes average 1.6% but can exceed 2% in some counties:
| Metro Area | Avg Property Tax Rate | Tax on $350K Home |
|---|---|---|
| Houston | 1.8% | $6,300 |
| Dallas | 1.9% | $6,650 |
| Austin | 1.6% | $5,600 |
| San Antonio | 1.7% | $5,950 |
For homeowners, property tax can partially or fully offset the income tax savings. Renters benefit most from Texas's no-income-tax policy because property tax is less directly felt.
Texas vs Other No-Tax States
| State | Sales Tax | Avg Property Tax | Other |
|---|---|---|---|
| Texas | 6.25% (+ local) | 1.6% | High property tax |
| Florida | 6.0% (+ local) | 0.8% | Lower property tax |
| Nevada | 6.85% (+ local) | 0.53% | Very low property tax |
| Wyoming | 4.0% | 0.55% | Lowest overall |
| Washington | 6.5% (+ local) | 0.87% | Has capital gains tax |
For homeowners, Florida and Nevada may offer a lower total tax burden than Texas because of property tax differences. For renters and high earners, Texas is very competitive.
Who Benefits Most from Texas
- High-income earners: The more you earn, the more you save in state income tax
- Renters: You avoid high property tax directly
- Remote workers: Keep a high out-of-state salary while paying no state tax. See remote work tax rules
- Self-employed workers: No state income tax on self-employment earnings either. Try the freelance calculator
Considering a Move to Texas?
Use the relocation tool to compare your current state to Texas, factoring in cost of living and tax differences. Or plug your salary into the SalaryHog calculator and select Texas to see your full take-home breakdown.