Texas Taxes 2026

Texas is one of nine states that do not tax wages, but it is not a low-tax state for everyone. It raises money mainly through sales taxes and local property taxes, which together make up nearly four-fifths of state and local tax collections. Renters and high earners tend to come out ahead; owners of expensive homes pay more than they would in many income-tax states. Here is how each tax works in 2026.

0%state income tax
6.25%state sales tax; up to 8.25% with local taxes
8.20%average combined sales tax, 14th highest
~1.25%effective property tax rate on owner-occupied homes

Where Texas tax money comes from

Share of state and local tax collections, from the Tax Foundation.

  • Property taxes40.7%
  • Sales taxes37.7%
  • Everything else21.6%

“Everything else” includes the franchise tax, fuel and vehicle taxes, and severance taxes on oil and gas. There is no individual income tax.

Income tax: none

Texas does not tax wages, salaries, retirement income or investment income. In 2019 voters approved a constitutional amendment that prohibits a personal income tax. You still pay federal income tax, Social Security (6.2% of wages up to $184,500 in 2026) and Medicare (1.45%).

For a single filer earning $75,000 with no pre-tax deductions, take-home pay in 2026 compares like this:

StateState income taxTake-home pay
Texas$0$61,593
New York$3,453$58,140
Illinois$3,568$58,025
California *$3,763$57,830

From our Paycheck Calculator. * Includes California’s 1.3% State Disability Insurance. Local income taxes, such as New York City’s, are not included.

Sales tax

The state sales and use tax is 6.25%. Cities, counties, transit authorities and special districts can add local taxes of up to 2%, so the highest combined rate anywhere in Texas is 8.25%. Most large cities charge the full 8.25%. Across the state, the population-weighted average is 8.20% (6.25% state plus 1.95% local), 14th highest of the 50 states and D.C.

  • Exempt: most groceries (food to be prepared at home), prescription drugs and many over-the-counter medicines.
  • Taxed: most other goods, restaurant meals, and some services such as repairs, cleaning and data processing.
  • Cars: buying a vehicle carries a 6.25% motor vehicle sales tax instead of the regular sales tax, with no local add-on. New residents who bring a car pay a flat $90 new-resident tax instead.

See how Texas compares with every other state in our sales tax by state guide.

Property tax

Texas has no state property tax. School districts, counties, cities and special districts each set their own rates, and your county appraisal district sets the taxable value of your property every year. Homeowners pay an effective rate of about 1.25% of their home’s value, ninth highest in the country (the national figure is about 0.89%). At that rate, a home worth the Texas median of $283,800 pays roughly $3,500 a year.

Homestead exemption

  • If you own and live in your home, school districts must exempt $140,000 of its value from school taxes.
  • Owners age 65 or older, or with a qualifying disability, get another $60,000 off, and their school taxes are frozen at the level of the year they qualify.
  • A homestead’s taxable value cannot rise more than 10% a year, however fast the market value grows.
  • Apply to your county appraisal district by April 30 for a home you lived in on January 1. Buyers can apply once they own and live in the home; if the seller already had the exemption, the new owner’s exemption starts the next year.

Protesting your appraisal

Appraisal districts mail value notices in spring. If you think the value is too high, you can file a protest with the appraisal review board, generally by May 15 or 30 days after the notice was mailed, whichever is later.

Other Texas taxes

Tax2026 rateWho pays
Franchise tax0.375% (retail and wholesale) or 0.75% of taxable marginBusinesses with more than $2.65 million in annual revenue; smaller businesses owe nothing
Gasoline and diesel tax20 cents a gallonBuilt into the pump price
Motor vehicle sales tax6.25%Car buyers; $90 flat for new residents bringing a vehicle
Estate and inheritance taxNone—

Businesses with revenue up to $20 million can use the EZ computation at 0.331% of revenue. Franchise tax reports are due May 15.

Who comes out ahead

Because Texas taxes spending and property rather than income, the result depends on your situation:

  • Higher earners save the most, since income tax in other states grows with income while Texas sales and property taxes do not.
  • Renters pay property tax indirectly through rent, but generally keep most of the income tax savings.
  • Owners of expensive homes can pay more in Texas property tax than they would save on income tax, especially at moderate incomes.
  • Retirees pay no state tax on Social Security, pensions or IRA withdrawals, and get the extra homestead exemption and school tax freeze at 65.

Frequently asked questions

What is the sales tax rate in Texas?

The state rate is 6.25%. With local taxes, the combined rate can be up to 8.25%, which is what most large cities charge. The statewide average is 8.20%.

Does Texas tax retirement income?

No. Texas has no income tax, so Social Security, pensions, 401(k) and IRA withdrawals are not taxed by the state.

Why are Texas property taxes so high?

Without an income tax, local governments, and especially school districts, depend heavily on property taxes. Property taxes are about 41% of all state and local tax collections in Texas.

When is the homestead exemption deadline?

April 30 for a home you lived in on January 1. Apply through your county appraisal district; there is no fee.

Last updated: November 5, 2026.

Sources

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