Texas does not have a state income tax on wages or salaries
Texas is one of nine states that does not collect income tax from residents on wages, salaries, or self-employment earnings. You will not owe Texas state income tax on money you earn from a job, a business, or freelance work. The state funds itself instead through sales tax, property tax, and business taxes.
This means your federal income tax obligation stays the same whether you live in Texas or another state—the IRS still requires you to file and pay federal tax. But you will have no state income tax return to file with Texas, and no state income tax withheld from your paychecks.
Key Takeaways
- Texas has no state income tax on wages, salaries, or self-employment income, so you will not file a state income tax return or owe state income tax to Texas.
- Federal income tax is still required; the absence of state income tax does not change what you owe to the IRS.
- Texas funds state services through sales tax (which is higher than in many other states), property tax, and business taxes instead.
- If you move to Texas from a state with income tax, you may see a change in your total tax burden depending on your income level and spending habits.
What taxes Texas does collect
Although Texas has no income tax, the state collects revenue through other means. Sales tax in Texas ranges from 8.25% to 8.875% depending on your location, and applies to most goods and some services. Property tax rates vary by county and school district but are a significant source of state and local funding.
Texas also collects a franchise tax (sometimes called a business tax) from corporations and certain partnerships. This is not an income tax—it is a tax on the right to do business in the state. Self-employed people and sole proprietors generally do not owe this tax unless they meet specific revenue thresholds.
How moving to Texas affects your tax situation
If you relocate to Texas from a state with income tax, your overall tax picture may change. You will no longer owe state income tax, which could mean more take-home pay. However, you may pay more in sales tax and property tax depending on where you lived before and what your income and spending patterns are.
The financial impact depends on your individual circumstances. A high-income earner moving from California or New York will likely see a significant reduction in total state and local taxes. Someone moving from a state with low sales tax but no income tax (like Oregon) might pay more overall in Texas because of the higher sales tax rate.
Federal income tax still applies in Texas
The fact that Texas has no state income tax does not change your federal tax obligations. You must still file a federal income tax return with the IRS if your income exceeds the threshold for your filing status. Federal tax withholding will still appear on your paychecks, and you will still owe federal self-employment tax if you are self-employed.
Your federal tax return is filed the same way whether you live in Texas or any other state. The IRS does not care which state you live in—only that you report your income and pay what you owe federally.
Other taxes you may owe in Texas
Beyond income and sales tax, Texas residents may owe property tax on real estate, vehicles, and other property. Property tax is assessed at the county and local level and varies widely. If you own a home or land in Texas, you will receive a property tax bill from your county appraisal district.
If you are self-employed, you will owe federal self-employment tax (Social Security and Medicare tax) to the IRS, just as you would in any state. Texas does not collect a separate self-employment tax. Some Texas cities also collect a local sales tax on top of the state rate, so your total sales tax can vary depending on where you shop.
Tax filing requirements for Texas residents
Because Texas has no state income tax, you will not file a state income tax return. You will only file a federal return with the IRS. If you are required to file federally based on your income, you file once per year by April 15 (or the next business day if April 15 falls on a weekend).
If you worked in another state during the year or moved to Texas partway through the year, you may need to file a return in your previous state for the months you lived there. Check with that state's tax authority to confirm. Texas will have no claim on your income for any period you lived there.
Frequently Asked Questions
Do I have to file a Texas state income tax return?
No. Texas does not have state income tax, so there is no state return to file. You will only file a federal return with the IRS if your income meets the threshold for your filing status.
If I move to Texas, do I get a refund of state income tax?
You do not owe Texas state income tax going forward, but you may owe income tax to the state you moved from for the months you lived there. Contact your previous state's tax authority about filing a part-year return.
Does Texas have any income-based taxes?
Texas has no income tax of any kind on wages, salaries, or self-employment earnings. The state funds itself through sales tax, property tax, and business taxes instead.
Will my federal tax withholding change if I move to Texas?
Your federal withholding is based on your W-4 form and your income level, not on which state you live in. You may want to review your W-4 after moving to see if your withholding is still correct, but the move itself does not automatically change it.
Are there any Texas cities that collect income tax?
No. No Texas city or local government collects income tax. Some cities collect additional local sales tax on top of the state rate, but not income tax.