🇺🇸 Texas Income Tax — 2026 UPDATE

Texas Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

⚠️Informational only — not legal or tax advice.

Tax year covered: 2025 (returns filed in 2026)
Applies to: Income earned January 1 – December 31, 2025
Returns filed: N/A – Texas has no state income tax
Last verified: February 12, 2026

Texas State Income Tax

Table of Contents

Click any item below to jump to the relevant section

Quick Reference

Does Texas have income tax? No
Tax structure: None
Tax rates: 0% (no state income tax)
Standard deduction (Single): N/A
Standard deduction (Married): N/A
Local income tax: No
Official source: https://statutes.capitol.texas.gov/Docs/CN/htm/CN.8/CN.8.24-a.htm

Key Takeaways

  • No state income tax: Texas is one of only nine states with no state income tax on individuals
  • Constitutional prohibition: The Texas Constitution explicitly prohibits the legislature from imposing an individual income tax
  • Federal taxes still apply: Texas residents still pay federal income taxes to the IRS
  • Alternative revenue sources: Texas funds state government through sales taxes, franchise taxes on businesses, and other fees
  • Property and sales taxes: While Texas has no income tax, it has relatively high property and sales taxes compared to other states

Quick Questions About Texas Income Tax

Does Texas have state income tax?

No. Texas does not have a state income tax on individuals. Article 8, Section 24-a of the Texas Constitution prohibits the Texas Legislature from imposing a tax on the net incomes of individuals, including an individual’s share of partnership and unincorporated association income.

Source: https://statutes.capitol.texas.gov/Docs/CN/htm/CN.8/CN.8.24-a.htm

What is the Texas income tax rate for 2025?

There is no Texas state income tax rate. Texas does not tax individual income at the state level. However, Texas residents are still required to pay federal income taxes to the Internal Revenue Service.

What are the income tax brackets in Texas?

Texas does not have income tax brackets because the state does not levy an individual income tax. There are no state-level tax brackets, rates, or filing requirements for Texas residents regarding state income tax.

Is Social Security taxed in Texas?

No. Social Security benefits are not taxed in Texas because Texas does not have a state income tax. However, depending on your total income, your Social Security benefits may still be subject to federal income taxation.

Does Texas tax retirement income?

No. Texas does not tax retirement income including pensions, 401(k) distributions, IRA withdrawals, or any other form of retirement income because Texas has no state income tax. All retirement income is exempt from state taxation in Texas.

Do I need to file a Texas income tax return?

No. Texas residents are not required to file a state income tax return because Texas does not have a state income tax. However, Texas residents must still file federal income tax returns with the IRS if they meet federal filing requirements.

Source: https://comptroller.texas.gov/taxes/

Texas Income Tax Status

Constitutional Prohibition

Texas does not impose a state income tax on individuals. This is not merely a policy choice but a constitutional requirement.

Article 8, Section 24-a of the Texas Constitution states:

“The legislature may not impose a tax on the net incomes of individuals, including an individual’s share of partnership and unincorporated association income.”

This constitutional amendment was approved by Texas voters on November 5, 2019, as Proposition 4. The amendment strengthened the existing prohibition against state income taxes, which had previously required voter approval before any income tax could take effect. The 2019 amendment made it even more difficult to ever impose an income tax by requiring a constitutional amendment (approved by two-thirds of both legislative chambers and a majority of voters) rather than just a simple legislative majority and voter approval.

Source: https://statutes.capitol.texas.gov/Docs/CN/htm/CN.8/CN.8.24-a.htm

Historical Context

  • Original Constitution (1876): The Texas Constitution has historically allowed but not required income taxation
  • 1993 Amendment: Added requirement that any personal income tax be approved by voters
  • 2019 Amendment (Proposition 4): Explicitly prohibited the legislature from imposing any individual income tax, removing even the possibility of voter-approved income taxation

The 2019 amendment passed with 74.71% voter approval, repealing Section 24 (which had allowed voter-approved income taxes) and adding Section 24-a (which prohibits income taxes entirely).

Legislative History:

  • House Joint Resolution 38 (HJR 38) proposed the constitutional amendment
  • Passed Texas House of Representatives: 100 votes
  • Passed Texas Senate: 22 votes
  • Approved by voters: November 5, 2019

Source: https://capitol.texas.gov/tlodocs/86R/analysis/html/HJ00038E.htm

Federal Income Tax Still Applies

While Texas has no state income tax, Texas residents are still subject to federal income taxation by the United States government.

Federal Tax Obligations for Texas Residents

Texas residents must:

  • Pay federal income taxes on all income from any source
  • File federal income tax returns with the Internal Revenue Service (IRS)
  • Pay federal employment taxes (Social Security and Medicare)
  • Make estimated quarterly tax payments if self-employed

Federal Filing Requirements

Texas residents must file a federal income tax return if their income exceeds the following thresholds for Tax Year 2025:

  • Single: $14,600
  • Married Filing Jointly: $29,200
  • Head of Household: $21,900
  • Married Filing Separately: $5 (if spouse itemizes)
  • Qualifying Surviving Spouse: $29,200

Additional filing requirements apply for:

  • Self-employment income over $400
  • Household employees paid over threshold amounts
  • Special circumstances (health savings account distributions, additional Medicare tax, etc.)

Source: IRS Publication 501, Dependents, Standard Deduction, and Filing Information

Federal Tax Forms

Texas residents use standard federal tax forms:

  • Form 1040: U.S. Individual Income Tax Return
  • Form 1040-SR: U.S. Tax Return for Seniors (age 65 and older)
  • Schedules: As applicable for specific types of income or deductions

IRS Resources:

Rate Snapshot
Tax Attribute Amount/Status
State Income Tax None
Lowest Tax Rate 0%
Highest Tax Rate 0%
Tax Structure None
Number of Brackets 0
Local Income Tax None
Standard Deduction N/A
Personal Exemption N/A
Constitutional Authority Article 8, Section 24-a (Prohibition)

Source: https://statutes.capitol.texas.gov/Docs/CN/htm/CN.8/CN.8.24-a.htm

Statutory Authority

State income tax in Texas is explicitly prohibited under the following constitutional framework:

Constitutional Prohibition

Texas Constitution, Article 8, Section 24-a: “The legislature may not impose a tax on the net incomes of individuals, including an individual’s share of partnership and unincorporated association income.”

Adopted: November 5, 2019 (Proposition 4)
Voter Approval: 74.71% yes, 25.29% no
Effective: Upon adoption (November 5, 2019)

Full constitutional text: https://statutes.capitol.texas.gov/Docs/CN/htm/CN.8/CN.8.24-a.htm

Constitutional Authority for Other Taxes

While individual income taxes are prohibited, the Texas Constitution does authorize other forms of taxation:

Texas Constitution, Article 8, Section 1:

  • Authorizes the legislature to tax incomes of corporations (other than municipal)
  • Provides for property taxation
  • Establishes equal and uniform taxation requirements

Note: The 2019 amendment to Section 1 removed previous language that allowed taxation of individual incomes (subject to voter approval).

Source: https://statutes.capitol.texas.gov/docs/cn/htm/cn.8.htm

Legislative Framework

Because individual income tax is constitutionally prohibited, there is no statutory framework in the Texas Tax Code for individual income taxation.

Texas Tax Code, Chapter 171 – Franchise Tax: Texas does impose a franchise tax on certain business entities (commonly called the “margins tax”), but this is a business tax, not an individual income tax. It applies to entities doing business in Texas based on their “taxable margin” rather than on individual income.

Business franchise tax information: https://comptroller.texas.gov/taxes/franchise/

Texas Government Code, Section 659.002: Addresses federal income tax withholding for state employees but does not establish any state income tax withholding system.

Source: https://statutes.capitol.texas.gov/Docs/TX/htm/TX.171.htm

Administrative Structure

Texas Comptroller of Public Accounts: The Texas Comptroller’s office administers state taxes but does not administer or collect any individual income tax.

Comptroller’s Office:

The Comptroller’s office is responsible for:

  • Sales and use tax administration
  • Franchise tax administration
  • Property tax oversight
  • Revenue estimation
  • Other state taxes and fees (but not individual income tax)

Source: https://comptroller.texas.gov/taxes/

States Without Income Tax

Texas is one of nine states that do not impose a state income tax on individuals:

  1. Alaska – No state income tax; relies on oil revenue
  2. Florida – No state income tax; constitutional prohibition
  3. Nevada – No state income tax
  4. New Hampshire – No tax on earned income; taxes only interest and dividends (being phased out)
  5. South Dakota – No state income tax
  6. Tennessee – No state income tax (formerly taxed only interest and dividends until 2021)
  7. Texas – No state income tax; constitutional prohibition
  8. Washington – No state income tax; relies on sales tax
  9. Wyoming – No state income tax; relies on mineral extraction taxes

Note: While these states do not tax individual income, they fund government operations through alternative revenue sources such as sales taxes, property taxes, excise taxes, franchise taxes, and natural resource taxes.

How Texas Funds State Government

Without an income tax, Texas relies on other revenue sources to fund state operations:

Primary Revenue Sources

1. Sales and Use Tax (Largest source of state tax revenue)

2. Franchise Tax (Business Tax)

  • Imposed on businesses doing business in Texas
  • Calculated based on taxable margin (revenue minus certain deductions)
  • Generated $3.8 billion during 2018-19 budget cycle
  • Not an income tax on individuals
  • Source: https://comptroller.texas.gov/taxes/franchise/

3. Federal Funding (Largest overall source)

  • More than one-third of state revenue
  • $75+ billion during 2018-19 budget cycle
  • Primarily for healthcare programs (Medicaid)

4. Severance Taxes

  • Oil production tax: 4.6% of market value
  • Natural gas production tax: 7.5% of market value
  • Generated $4.9 billion during 2018-19 budget cycle

5. Motor Vehicle Sales and Rental Taxes

  • Significant revenue source
  • Includes vehicle sales, rentals, and related fees

6. Excise Taxes

  • Alcohol taxes
  • Tobacco taxes
  • Other selective sales taxes on specific goods

7. Fees, Licenses, and Penalties

  • Various state fees and licensing requirements
  • Generated $12.6+ billion during 2018-19 budget cycle

8. Lottery Revenue

  • Netted $4+ billion during 2018-19 budget cycle
  • Dedicated primarily to education funding

Source: Texas Legislative Budget Board, Fiscal Size-up 2018-19 Biennium

Property Taxes in Texas

While Texas has no income tax, it has relatively high property taxes compared to other states.

Property Tax Structure

  • Authority: Local governments (counties, cities, school districts)
  • State role: The Texas Comptroller provides oversight and equalization
  • No state property tax: All property taxes in Texas are levied by local jurisdictions

Average Property Tax Rates

Texas property tax rates vary significantly by location but are generally higher than the national average:

  • State average: Approximately 1.60% of home value annually
  • National average: Approximately 0.99% of home value annually
  • Actual rates: Vary by county, city, and school district

Property Tax Exemptions

Texas offers various property tax exemptions:

  • Homestead exemption: At least $100,000 exemption for school district taxes
  • Age 65 or older: Additional exemptions and tax ceiling
  • Disabled persons: Additional exemptions
  • Veterans: Various exemptions for disabled veterans
  • Agricultural use: Special valuation for qualified agricultural property

Property tax information: https://comptroller.texas.gov/taxes/property-tax/

Multi-State Tax Considerations

Living in Texas, Working Remotely for Out-of-State Employer

As a Texas resident with no state income tax obligation to Texas, the primary concern is whether you owe income tax to another state.

General rule: Your employer’s location does not automatically create a tax obligation to that state for remote workers.

Physical presence rule: Most states tax income based on where work is physically performed, not where the employer is located.

What this means for Texas residents:

  • If you live in Texas and work remotely from home for an employer in another state, you generally do not owe that other state income tax
  • Exception: A few states (New York, some others) may attempt to tax remote workers under “convenience of the employer” rules

Source: Texas Comptroller – https://comptroller.texas.gov/taxes/

“Convenience of the Employer” Risk States

Texas residents working remotely for employers in these states should investigate potential tax obligations:

New York:

  • Applies aggressive “convenience of the employer” rule
  • May attempt to tax remote workers if employer is based in New York
  • Requires that remote work be for employer’s necessity, not employee’s convenience
  • Risk level: High for remote workers with NY employers

Pennsylvania:

  • Some local jurisdictions may attempt to tax remote workers
  • Over 200 local income tax jurisdictions complicate compliance
  • Risk level: Medium

Delaware:

  • Has convenience of employer rule for non-residents
  • May apply to remote workers
  • Risk level: Medium

Nebraska:

  • Has convenience of employer provisions
  • May apply to certain remote work situations
  • Risk level: Low to Medium

Arkansas:

  • Has some convenience of employer provisions
  • Limited application
  • Risk level: Low

Important: If you are a Texas resident working remotely for an employer in one of these states, you may need to:

  1. File a non-resident return in the employer’s state
  2. Document that your remote work location is required by your employer
  3. Maintain records proving you work from Texas
  4. Consult with a tax professional familiar with multi-state taxation

Source: State revenue department guidance and case law from respective states

Military Personnel

Servicemembers Civil Relief Act (SCRA) and Texas

Texas residents serving on active duty military orders maintain their Texas residency and benefit from Texas’s no-income-tax status regardless of where they are stationed.

Key benefits for Texas military personnel:

  • No state income tax on military pay
  • No state income tax on other income while maintaining Texas residency
  • Ability to maintain Texas residency while stationed elsewhere
  • Vehicle registration and driver’s license can remain Texas-based

Source: https://comptroller.texas.gov/taxes/

Military Spouses Residency Relief Act (MSRRA)

The Military Spouses Residency Relief Act allows spouses of active duty military members to maintain their state of residence (including Texas) even when living in another state due to military orders.

Benefits for Texas military spouses:

  • Can maintain Texas residency (and no-income-tax status) while living in another state
  • Not subject to income tax in the state where stationed if:
    • Spouse is there solely to be with the servicemember
    • Servicemember is there under military orders
    • Spouse maintains Texas domicile

Example scenario:

  • Military member is a Texas resident stationed in California
  • Spouse moves to California to be with servicemember
  • Spouse earns income from California employer
  • Spouse can elect to remain a Texas resident and avoid California income tax on that income

Important: The spouse must actively elect to maintain Texas residency and follow all requirements of the MSRRA.

Source: 50 U.S.C. § 4001 (Military Spouses Residency Relief Act)

What Texas Military Members Still Owe Federally

While Texas military members pay no state income tax, they are still subject to:

  • Federal income tax on all income
  • Federal employment taxes (Social Security and Medicare)
  • Federal income tax on non-military income

Establishing or Maintaining Texas Residency

Military members can establish or maintain Texas residency by:

  • Designating Texas as state of legal residence with military
  • Obtaining Texas driver’s license
  • Registering vehicles in Texas
  • Registering to vote in Texas
  • Maintaining Texas address (can be family member’s address)

Texas Department of Motor Vehicles – Military: https://www.txdmv.gov/military

Texas Secretary of State – Military Voting: https://www.sos.texas.gov/elections/laws/military-overseas-voting.shtml

Military Retirement Pay

Texas does not tax military retirement pay because Texas has no state income tax.

This means:

  • 100% of military retirement pay is exempt from state taxation in Texas
  • No state tax on disability retirement pay
  • No state tax on survivor benefit plan (SBP) payments
  • Only federal income tax applies to military retirement income (if applicable under federal law)

Comparison advantage: Many states that do have income taxes offer partial exemptions for military retirement pay. Texas’s no-income-tax status provides a complete exemption automatically.

VA Benefits

All VA benefits received by Texas residents are free from Texas state income tax:

  • VA disability compensation
  • VA pension payments
  • GI Bill education benefits
  • Other VA benefits

Note: Most VA benefits are also exempt from federal income tax under federal law.

Resources for Military Personnel

Texas Veterans Commission:

IRS Military Tax Information:

Retirees

Texas is often considered one of the most tax-friendly states for retirees due to its lack of income tax.

Social Security Benefits

Texas does not tax Social Security benefits because Texas has no state income tax.

This means:

  • 100% of Social Security retirement benefits are exempt from Texas state taxation
  • Social Security disability benefits (SSDI) are exempt from Texas state taxation
  • Supplemental Security Income (SSI) is exempt from Texas state taxation

Federal taxation of Social Security: Social Security benefits may still be subject to federal income tax depending on your combined income. Up to 85% of benefits can be federally taxable for higher-income recipients.

Source: https://comptroller.texas.gov/taxes/

Pension Income

Texas does not tax pension income of any kind because Texas has no state income tax.

Pension types exempt from Texas state taxation:

Private pensions:

  • Corporate pension plans
  • Union pension plans
  • Private employer pension plans
  • Multi-employer pension plans

Public pensions:

  • Federal government pensions (including military retirement)
  • State government pensions (Texas and other states)
  • Local government pensions
  • Teacher pensions
  • Police and fire department pensions

Railroad Retirement benefits: Also exempt from Texas state taxation

Source: https://comptroller.texas.gov/taxes/

Retirement Account Distributions

All retirement account distributions are exempt from Texas state income tax.

Tax-free distributions in Texas (from state perspective):

401(k) Plans:

  • Traditional 401(k) distributions not subject to Texas state tax
  • Roth 401(k) distributions not subject to Texas state tax
  • Only federal tax applies per IRS rules

IRA Distributions:

  • Traditional IRA distributions not subject to Texas state tax
  • Roth IRA distributions not subject to Texas state tax (qualified distributions also federally tax-free)
  • SEP-IRA distributions not subject to Texas state tax
  • SIMPLE IRA distributions not subject to Texas state tax

Other Retirement Accounts:

  • 403(b) plan distributions not subject to Texas state tax
  • 457 plan distributions not subject to Texas state tax
  • Thrift Savings Plan (TSP) distributions not subject to Texas state tax
  • Annuity distributions not subject to Texas state tax

Federal taxation: Traditional retirement account distributions are generally subject to federal income tax. Roth account distributions are federally tax-free if qualified. Texas imposes no additional state tax.

Source: IRS Publication 590-B (Distributions from Individual Retirement Arrangements)

Investment Income

Texas does not tax investment income because Texas has no state income tax.

Investment income types exempt from Texas state taxation:

  • Interest income (savings accounts, CDs, bonds)
  • Dividend income (stocks, mutual funds)
  • Capital gains (short-term and long-term)
  • Rental income from real property
  • Royalty income

Only federal taxation applies: All investment income is subject to federal income tax according to IRS rules, but Texas imposes no state income tax on any form of investment income.

Estate and Inheritance Taxes

Texas has no state estate tax or inheritance tax.

Texas repealed its state estate tax in 2015. There is no Texas tax on:

  • Inherited property
  • Estate assets
  • Gifts received
  • Trust distributions

Federal estate tax: The federal estate tax may still apply to very large estates (over $13.61 million for individuals in 2024, adjusted annually for inflation).

Source: Texas Tax Code (no estate or inheritance tax provisions)

Property Tax Considerations for Retirees

While Texas has no income tax, retirees should consider Texas property taxes, which are relatively high compared to other states.

Property tax exemptions for retirees:

Age 65 or older:

  • Additional $10,000 homestead exemption for school district taxes
  • School district tax ceiling (tax amount frozen at age 65 level)
  • Optional additional exemptions offered by some local jurisdictions

Disabled persons:

  • Similar exemptions to those 65 and older
  • May qualify regardless of age

Application required: File exemption application with county appraisal district.

Source: https://comptroller.texas.gov/taxes/property-tax/

Students

College students attending school in Texas do not automatically become Texas residents for tax purposes or any other purpose simply by attending school in Texas.

Out-of-State Students in Texas

Students from states with income tax:

Students who maintain legal residence (domicile) in another state while attending school in Texas:

  • Remain residents of their home state for tax purposes
  • Owe home state income tax according to home state rules
  • Do not owe Texas state income tax (because Texas has none)
  • Should file income tax returns in their state of legal residence

Income earned in Texas: Students who work in Texas while attending school generally:

  • Do not owe Texas state income tax on wages (Texas has no income tax)
  • May owe their home state income tax on all income including Texas earnings
  • Should consult their home state’s tax rules

Texas Students Attending School in Other States

Texas residents attending college in states with income tax:

Texas residents who maintain Texas domicile while attending school in another state:

  • Remain Texas residents
  • Benefit from Texas’s no-income-tax status
  • Generally do not owe the other state income tax if present only for educational purposes
  • May owe the other state income tax on income earned in that state

Important: Some states attempt to tax income earned within their borders even by students. Texas residents should:

  • Maintain clear evidence of Texas domicile
  • File non-resident returns in the school state only if income was earned there
  • Document temporary nature of presence in other state

Source: General state tax residency principles

Establishing Texas Residency as a Student

Students can establish Texas residency if they take affirmative steps:

Actions that can establish Texas residency:

  • Obtain Texas driver’s license or state ID
  • Register vehicles in Texas
  • Register to vote in Texas
  • Purchase property in Texas
  • Maintain employment in Texas beyond academic periods
  • Declare intent to remain in Texas permanently
  • Establish Texas as center of financial and social life

Benefits of establishing Texas residency:

  • No state income tax on any income
  • Potential in-state tuition at Texas public universities (separate requirements apply)
  • Texas residency for other legal purposes

Maintaining previous state residency: Students who wish to maintain residency in another state should:

  • Keep driver’s license from home state
  • Keep vehicle registration in home state
  • Maintain voter registration in home state
  • Maintain address in home state
  • Return to home state during breaks and summers
  • Document temporary nature of Texas presence

Scholarships and Fellowships

Texas treatment: Because Texas has no income tax, there is no Texas state taxation of scholarships or fellowships.

Federal treatment: Scholarships and fellowships may be partially taxable at the federal level if used for non-qualified expenses (room, board, travel).

Source: IRS Publication 970 (Tax Benefits for Education)

Part-Year Residents

Moving TO Texas During the Year

If you moved to Texas during 2025 and established Texas domicile, you benefit from Texas’s no-income-tax status from the date you became a Texas resident.

Tax obligations when moving TO Texas:

State income tax:

  • No Texas state income tax return required (Texas has no income tax)
  • May need to file part-year resident return in former state
  • Former state may tax income earned while you were a resident there

What you owe your former state: Most states will require a part-year resident return for the portion of the year you were a resident of that state. The return typically includes:

  • Income earned while a resident of that state
  • Prorated standard deduction/exemptions
  • Income from that state’s sources even after you moved

Example scenario – Moving from California to Texas:

  • Lived in California January 1 – May 31, 2025
  • Moved to Texas June 1, 2025
  • California requires part-year resident return (Form 540NR)
  • Report California income from January 1 – May 31
  • No Texas return required
  • Report all income on federal return (Form 1040)

Moving FROM Texas During the Year

If you moved from Texas to another state during 2025, you must determine when you established residency in the new state.

Tax obligations when moving FROM Texas:

State income tax:

  • No Texas state income tax return (Texas has no income tax)
  • Must file part-year resident return in new state
  • New state will tax income earned after you became a resident there

What you owe your new state: The new state will generally:

  • Require a part-year resident return
  • Tax income earned while a resident of that state
  • Tax income from that state’s sources for entire year
  • Prorate standard deduction/exemptions

Example scenario – Moving from Texas to Virginia:

  • Lived in Texas January 1 – August 31, 2025
  • Moved to Virginia September 1, 2025
  • No Texas return required (no income tax)
  • Virginia requires part-year resident return (Form 760PY)
  • Report income from September 1 – December 31 as Virginia resident
  • Report all income on federal return (Form 1040)

Determining Date of Residency Change

The date you change residency is typically the date you:

  • Physically move to the new state with intent to remain
  • Establish domicile in the new state
  • Begin treating the new state as your permanent home

Evidence of residency change:

  • Moving truck receipts/records
  • Lease or purchase agreement in new state
  • Driver’s license/state ID application date
  • Vehicle registration transfer date
  • Voter registration date
  • Employment start date in new state
  • Utility service start date

Source: General state tax residency principles

Multi-State Income Allocation

When moving to or from Texas, you must allocate income between states:

Wage income: Generally sourced to the state where work was performed Business income: Allocated based on various factors (location of business, where services performed) Investment income: May be sourced to state of residence when earned Rental income: Sourced to location of rental property

Part-Year Resident Advantages for Texas

Moving TO Texas mid-year:

  • Immediate benefit from no state income tax
  • Income earned after establishing Texas residency is not subject to state income tax
  • Only former state can tax income earned while resident there

Moving FROM Texas mid-year:

  • Benefit from no state income tax for portion of year as Texas resident
  • New state can only tax income after you establish residency there
  • Income earned in Texas while Texas resident remains free of state income tax

Common Tax Filing Situations

These are factual clarifications based on Texas’s no-income-tax status and general tax principles.

Situation: “I work remotely for a California company, do I owe California tax?”

Texas law: As a Texas resident, you do not owe Texas state income tax regardless of where your employer is located (because Texas has no income tax).

California law: If you are a Texas resident working remotely from Texas for a California employer, you generally do not owe California income tax. California taxes based on where work is physically performed, not employer location.

Exception: If you physically work in California for part of the year, income earned while physically present in California is subject to California income tax.

Source: California Franchise Tax Board guidelines on non-resident taxation

Situation: “I live in Texas but travel to New York for work sometimes”

Texas position: No Texas state income tax on any income.

New York position: New York may attempt to tax income earned while physically present in New York, even for brief business trips. New York has aggressive sourcing rules for non-residents.

What this means:

  • Days worked in New York: That income may be taxable to New York
  • Days worked from Texas: Not taxable to New York
  • May need to file New York non-resident return (Form IT-203) if you earned significant New York-sourced income

Source: New York Tax Law and regulations on non-resident income sourcing

Situation: “I’m retired and collecting Social Security and pension income in Texas”

Texas treatment: None of your retirement income is subject to Texas state income tax because Texas has no state income tax.

Federal treatment:

  • Social Security: May be partially federally taxable depending on total income
  • Pension: Generally fully federally taxable
  • IRA/401(k) distributions: Generally fully federally taxable (unless from Roth accounts)

No state return required: Texas residents receiving only retirement income do not file any Texas state income tax return.

Situation: “I inherited money from a relative in another state”

Texas treatment: No Texas state income tax or inheritance tax applies to inherited money or property. Texas has no inheritance tax or estate tax.

Other state treatment: Generally, the state where the deceased person lived may impose estate taxes (depending on that state’s law), but the heir living in Texas does not separately owe Texas tax.

Federal treatment: Inherited money is generally not subject to federal income tax for the heir. The estate itself may owe federal estate tax if it exceeds the federal exemption amount ($13.61 million in 2024).

Source: Texas Tax Code (no inheritance or estate tax provisions); IRS Publication 559 (Survivors, Executors, and Administrators)

Situation: “I sold my home in Texas for a large gain”

Texas treatment: No Texas state capital gains tax (because Texas has no income tax).

Federal treatment: Capital gains from sale of primary residence may be excluded from federal income tax:

  • Up to $250,000 gain excluded (single)
  • Up to $500,000 gain excluded (married filing jointly)
  • Must meet ownership and use tests

Gains exceeding exclusion amount: Subject to federal capital gains tax only, no Texas state tax.

Source: IRS Publication 523 (Selling Your Home)

Situation: “I received a large bonus from my employer”

Texas treatment: No Texas state income tax on bonus income.

Federal treatment: Bonuses are fully taxable as ordinary income at the federal level. Your employer will withhold federal income tax (often at a flat 22% rate for federal withholding on supplemental wages).

No additional state withholding: Texas employers do not withhold state income tax because Texas has no state income tax.

Situation: “I won money gambling”

Texas treatment: No Texas state income tax on gambling winnings.

Federal treatment: All gambling winnings are subject to federal income tax. Casinos and other gambling establishments may withhold federal income tax on large winnings.

Losses: Gambling losses can only be deducted on federal returns up to the amount of gambling winnings, and only if you itemize deductions.

Source: IRS Publication 529 (Miscellaneous Deductions)

Multi-State Taxation Scenarios

Working in Multiple States

Because Texas has no income tax, Texas residents who work in multiple states face simpler scenarios than residents of states with income tax.

Scenario: Texas resident works in both Texas and another state

  • Income earned in Texas: No state tax (Texas has no income tax)
  • Income earned in other state: May be subject to that state’s income tax
  • Required filings:
    • Federal return reporting all income (Form 1040)
    • Non-resident return in the other state reporting income earned there
    • No Texas return (Texas has no income tax)

Example:

  • Texas resident works from home in Texas most of year
  • Travels to Illinois for business meetings 10 days
  • Illinois portion of income may be subject to Illinois non-resident tax
  • Must file Illinois non-resident return (Form IL-1040)
  • No Texas return required

Reciprocal Agreements

Texas has no reciprocal tax agreements with other states because Texas has no income tax.

Reciprocal agreements are mutual arrangements where residents of one state working in another state only pay tax to their state of residence. Since Texas doesn’t tax income, there is no basis for reciprocity.

What this means:

  • Texas residents working in other states cannot use reciprocal agreements
  • Must file non-resident returns in states where they work (if those states tax non-resident income)
  • Cannot avoid other states’ taxes by citing reciprocity with Texas

Source: Texas Comptroller guidance

Tax Credits for Taxes Paid to Other States

Texas offers no credit for taxes paid to other states because Texas has no income tax. There is no Texas tax liability from which to claim a credit.

However, Texas residents who pay income tax to another state:

  • Cannot recover that tax through a Texas credit
  • Cannot reduce federal tax liability based on state taxes paid (except through federal itemized deduction for state taxes, subject to $10,000 cap)

Comparison to residents of states with income tax: Residents of states with income tax can typically claim a credit against their home state tax for taxes paid to other states, preventing double taxation. Texas residents don’t have this option because there is no Texas tax to credit against, but also don’t need it for Texas purposes.

Convenience of the Employer Rules

Some states apply “convenience of the employer” rules that may attempt to tax income earned by remote workers even when those workers live in states like Texas.

What is “Convenience of the Employer”?

“Convenience of the employer” is a tax rule applied by a few states that taxes income of non-residents who work remotely for employers based in that state, even when the work is performed outside the state, unless the remote work arrangement is for the employer’s necessity rather than the employee’s convenience.

States Applying This Rule

New York (most aggressive):

  • Taxes non-residents working remotely for New York employers
  • Unless the employee can prove the remote arrangement is for employer’s necessity (not employee’s convenience)
  • Burden of proof is on the taxpayer
  • Very difficult to meet the “employer necessity” standard

Delaware:

  • Has convenience of employer rule
  • Less aggressively applied than New York
  • May apply to certain non-resident employees

Nebraska:

  • Has convenience of employer provisions
  • Limited application in practice

Pennsylvania:

  • Some local jurisdictions apply convenience rules
  • Complex due to multiple local tax jurisdictions

Arkansas:

  • Has some convenience of employer provisions
  • Limited scope

Risk for Texas Residents

High risk scenarios:

  • Working remotely from Texas for New York-based employer
  • No employer requirement to work remotely
  • Could work from employer’s New York office but choose not to

Lower risk scenarios:

  • Employer has no office where you could work
  • Job was always remote/work-from-home
  • Employer closed offices and required remote work
  • You have documentation of employer’s business necessity for remote arrangement

Documentation to Protect Against Convenience Rule

Texas residents working remotely for employers in “convenience rule” states should maintain:

  1. Written remote work agreements stating employer’s business reasons for remote arrangement
  2. Evidence employer has no suitable workspace available
  3. Email/communications showing remote work is employer-mandated
  4. Employment contract specifying remote work location
  5. Proof of Texas residence (driver’s license, lease, utility bills)
  6. Day count logs showing days worked from Texas vs. days in employer’s state

Challenging Convenience of the Employer Rules

If a “convenience rule” state assesses tax on your remote work income:

Options:

  1. Provide documentation of employer necessity
  2. File protective claims in the other state
  3. Seek professional tax advice from attorney or CPA experienced in multi-state tax disputes
  4. Consider legal challenges (some convenience rules face constitutional challenges)

Important: Convenience of the employer rules are controversial and subject to ongoing legal challenges. Some argue they violate constitutional protections against taxation without physical presence.

Forms & Publications

Texas State Tax Forms

Texas has no individual income tax forms because the state does not tax individual income.

Other Texas tax forms (not income tax):

Federal Tax Forms Used by Texas Residents

Texas residents use standard federal forms to file their federal income taxes:

Primary Federal Tax Forms:

Form 1040:

Form 1040-SR:

Common Federal Schedules:

Schedule 1 (Form 1040):

  • Title: Additional Income and Adjustments to Income
  • Use: Report additional types of income and claim adjustments to income

Schedule 2 (Form 1040):

  • Title: Additional Taxes
  • Use: Report additional taxes such as self-employment tax, household employment taxes

Schedule 3 (Form 1040):

  • Title: Additional Credits and Payments
  • Use: Report additional tax credits and payments

Schedule A (Form 1040):

  • Title: Itemized Deductions
  • Use: Claim itemized deductions instead of standard deduction

Schedule B (Form 1040):

  • Title: Interest and Ordinary Dividends
  • Use: Required if interest or dividend income exceeds $1,500

Schedule C (Form 1040):

  • Title: Profit or Loss from Business
  • Use: Report income from self-employment or small business

Schedule D (Form 1040):

  • Title: Capital Gains and Losses
  • Use: Report sales of capital assets (stocks, bonds, real estate)

Schedule E (Form 1040):

  • Title: Supplemental Income and Loss
  • Use: Report rental income, royalties, partnerships, S corporations, trusts

Schedule SE (Form 1040):

  • Title: Self-Employment Tax
  • Use: Calculate Social Security and Medicare tax for self-employed individuals

All federal forms: https://www.irs.gov/forms-instructions

Federal Withholding Forms

Form W-4:

  • Title: Employee’s Withholding Certificate
  • Use: Give to employer to determine federal income tax withholding
  • Texas note: No state withholding form needed (Texas has no income tax)
  • Download: https://www.irs.gov/forms-pubs/about-form-w4

Form W-2:

Key Federal Publications for Texas Residents

Publication 17 – Your Federal Income Tax:

Publication 505 – Tax Withholding and Estimated Tax:

Publication 501 – Dependents, Standard Deduction, and Filing Information:

Publication 554 – Tax Guide for Seniors:

Publication 590-B – Distributions from Individual Retirement Arrangements:

Publication 523 – Selling Your Home:

Publication 3 – Armed Forces’ Tax Guide:

Where to File Federal Returns

Electronic Filing (Recommended)

IRS e-file:

  • Fastest and most secure method
  • Can receive refund in as little as 21 days
  • Available through tax software, tax preparers, and IRS Free File

Tax software supporting federal filing:

IRS Free File: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

Paper Filing (Not Recommended Unless Necessary)

If you must file by mail, use the address for your location in Texas without a payment:

Austin IRS Service Center: Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215

If including payment: Internal Revenue Service
P.O. Box 1214
Charlotte, NC 28201-1214

Note: Mailing addresses may vary by form and circumstance. Check the instructions for your specific form.

Source: IRS Form 1040 Instructions

Common Questions About Texas and Taxes

“Why doesn’t Texas have income tax?”

Texas has historically relied on other revenue sources rather than income taxation. The state generates revenue through:

  • Sales taxes (largest source of state tax revenue)
  • Property taxes (local level)
  • Franchise taxes on businesses
  • Severance taxes on oil and gas production
  • Federal funding
  • Various fees and licenses

The 2019 constitutional amendment (Proposition 4) explicitly prohibited income taxation, reflecting Texas’s long-standing opposition to individual income taxes and making it much harder for any future legislature to impose one.

Source: Texas Constitution Article 8, Section 24-a

“Could Texas ever have an income tax?”

Yes, but it would be very difficult. To impose an income tax, Texas would need to:

  1. Amend the Texas Constitution (requires two-thirds vote in both legislative chambers)
  2. Get approval from majority of Texas voters

This is a much higher bar than in most states, where the legislature can impose taxes with simple majority votes.

Historical note: Prior to the 2019 amendment, a legislative majority could have proposed an income tax subject to voter approval. The 2019 amendment made this constitutional-level change required, adding an extra layer of difficulty.

“Do I pay more in other taxes because Texas has no income tax?”

Possibly. Texas must fund government services through other means:

Sales tax: Texas has a 6.25% state sales tax, with local jurisdictions adding up to 2% more (total up to 8.25%). This is higher than some states with income taxes.

Property tax: Texas property taxes are among the highest in the nation (averaging about 1.60% of home value annually, compared to 0.99% national average). Property taxes fund local services, especially public schools.

Franchise tax: Businesses pay Texas franchise tax, which may be passed on to consumers through higher prices.

Overall tax burden: Studies show Texas has a moderate overall tax burden when combining all state and local taxes. The lack of income tax benefits high-income earners more than low-income residents due to the regressive nature of sales and property taxes.

“Should I move to Texas to avoid income tax?”

This is a personal financial decision that should consider multiple factors:

Potential advantages:

  • No state income tax on wages, investments, pensions, retirement accounts
  • Particularly beneficial for high-income earners and retirees with significant income
  • No estate or inheritance taxes

Potential disadvantages:

  • Higher property taxes than most states
  • Higher sales taxes than some states
  • May pay more in total taxes depending on income level and spending patterns
  • Other quality-of-life factors (climate, job opportunities, cost of living, etc.)

Professional advice recommended: Consult with a tax professional or financial advisor to evaluate whether moving to Texas would reduce your overall tax burden based on your specific circumstances.

Where to Check for Updates

Texas Constitutional and Statutory Changes

Texas Constitution:

Texas Legislature:

Texas Comptroller:

Federal Tax Changes

IRS Updates:

Federal Legislation:

Multi-State Tax Developments

Federation of Tax Administrators:

Note: This page will be reviewed and updated in January 2027. For real-time updates on federal tax matters, consult the IRS website. For Texas constitutional or statutory changes, consult the Texas Legislature or Comptroller websites.

Tax Glossary

Adjusted Gross Income (AGI): Total income minus specific deductions (e.g., IRA contributions, student loan interest). Used to calculate federal tax liability. Not applicable to Texas state taxes (no state income tax exists).

Convenience of the Employer Rule: Tax rule applied by some states (e.g., New York) that may tax non-residents working remotely for employers based in that state, even when work is performed outside the state. Does not apply to Texas taxes (Texas has no income tax), but may affect Texas residents working for out-of-state employers.

Domicile: Your permanent legal home – the place you intend to return to indefinitely. Important for determining which state’s tax laws apply to you. Texas residents are not subject to Texas income tax regardless of domicile (Texas has no income tax).

Federal Income Tax: Income tax imposed by the United States government on individuals. All Texas residents are subject to federal income tax even though Texas has no state income tax.

Filing Status: Category determining federal tax rates and standard deduction (Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Surviving Spouse). Only applies to federal taxes for Texas residents.

Franchise Tax: Texas business tax imposed on entities doing business in Texas based on taxable margin. This is a business tax, not an individual income tax. Also called the “margins tax” or “Texas business tax.”

Non-Resident: Individual who does not meet a state’s residency requirements but may have income from that state’s sources. Texas has no income tax, so non-resident status is not relevant for Texas tax purposes, but Texas residents may be non-residents of other states.

Part-Year Resident: Individual who moved into or out of a state during the tax year. Not applicable to Texas income taxes (Texas has no income tax), but Texas residents who move to/from states with income tax may need to file part-year returns in those states.

Reciprocity: Agreement between states where residents working across state lines pay tax only to their state of residence. Texas has no reciprocity agreements because Texas has no income tax.

Resident: Individual who maintains domicile in a state or meets that state’s statutory residency test. Texas residents are not subject to any Texas income tax (Texas has no income tax).

Standard Deduction: Fixed dollar amount subtracted from income before calculating federal tax. Alternative to itemizing deductions. Only applicable to federal taxes for Texas residents. For Tax Year 2025: $14,600 (Single), $29,200 (Married Filing Jointly), $21,900 (Head of Household).

Tax Credit: Dollar-for-dollar reduction in federal tax owed. Only applicable to federal taxes for Texas residents (Texas has no state income tax and therefore no state tax credits).

Tax Deduction: Reduces taxable income for federal tax purposes. Only applicable to federal taxes for Texas residents.

Taxable Income: Income amount used to calculate federal tax liability. Generally equals Adjusted Gross Income minus standard deduction or itemized deductions. Not applicable to Texas state taxes (no state income tax).

Withholding: Federal income tax deducted from your paycheck by your employer and sent to the IRS on your behalf. Texas employers do not withhold state income tax (Texas has no state income tax).

Information Verification Log

Texas — Information Verification Log
Information Type Source Last Verified
Constitutional prohibition Texas Constitution Article 8, Section 24-a February 12, 2026
Historical amendments Legislative analysis HJR 38 February 12, 2026
Federal filing requirements IRS Publication 501 February 12, 2026
Comptroller tax information Comptroller.texas.gov February 12, 2026
Business franchise tax Texas Tax Code Chapter 171 February 12, 2026

Official Texas Income Tax Resources

Since Texas has no state income tax, Texas residents deal only with federal income tax obligations.

Internal Revenue Service (IRS)

IRS National Resources:

IRS Taxpayer Assistance Centers in Texas:

Austin:

  • Address: 825 E. Rundberg Lane, Austin, TX 78753
  • Appointments required: (844) 545-5640

Dallas:

  • Address: 4050 Alpha Road, Dallas, TX 75244
  • Appointments required: (844) 545-5640

Fort Worth:

  • Address: 819 Taylor Street, Suite 9A28, Fort Worth, TX 76102
  • Appointments required: (844) 545-5640

Houston:

  • Address: 1919 Smith Street, Houston, TX 77002
  • Appointments required: (844) 545-5640

San Antonio:

  • Address: 5430 Fredericksburg Road, San Antonio, TX 78229
  • Appointments required: (844) 545-5640

Additional locations: https://www.irs.gov/help/contact-your-local-irs-office

Note: IRS Taxpayer Assistance Centers require appointments. Call ahead or schedule online.

Free Tax Filing Programs

IRS Free File:

VITA (Volunteer Income Tax Assistance):

  • Eligibility: Generally for those making $64,000 or less, persons with disabilities, or limited English speakers
  • Services: Free tax preparation help
  • Find locations: https://irs.treasury.gov/freetaxprep/ or call (800) 906-9887

TCE (Tax Counseling for the Elderly):

  • Eligibility: Age 60 and older
  • Services: Free tax preparation help, specializing in pension and retirement issues
  • Find locations: https://irs.treasury.gov/freetaxprep/ or call (888) 227-7669

AARP Foundation Tax-Aide:

Texas-Specific IRS Resources

Earned Income Tax Credit (EITC) Information:

The Texas Comptroller’s office is designated as the lead agency to promote awareness of the federal Earned Income Tax Credit for working families in Texas.

Update History

This section documents material changes to Texas income tax information on this page.

February 2026 – Initial Publication

  • Published comprehensive Texas income tax guide (3 parts)
  • Documented constitutional prohibition on individual income tax
  • Verified Article 8, Section 24-a of Texas Constitution
  • Confirmed no state income tax forms, filing requirements, or obligations
  • Documented federal filing requirements for Texas residents
  • Verified Texas revenue sources and structure
  • All sections verified from official sources

Constitutional provision status: Article 8, Section 24-a – Active and in force
Last constitutional verification: February 12, 2026
Next scheduled review: January 2027

Verification Schedule

Annual Review: January each year to verify:

  • Constitutional provision remains in force
  • No legislative changes affecting Texas tax structure
  • Federal filing requirements and standard deduction amounts updated
  • IRS contact information and forms remain current

Mid-Year Review: June each year to verify:

  • No emergency legislation affecting Texas tax status
  • No federal tax law changes requiring updates
  • All website links remain functional

Continuous Monitoring:

  • Texas Legislature sessions (odd-numbered years)
  • Federal tax law changes
  • IRS guidance updates
  • Constitutional amendment proposals

Last comprehensive verification: February 12, 2026
Next scheduled comprehensive review: January 2027

Additional Resources

Texas-Specific Resources

Texas Comptroller of Public Accounts:

Texas Legislature:

Texas Veterans Commission:

Texas Secretary of State:

Federal Tax Assistance

IRS Resources:

Free Tax Help:

Professional Tax Assistance

Finding a Tax Professional:

When to Seek Professional Help:

  • Complex multi-state tax situations
  • Large capital gains or investment income
  • Business income or self-employment
  • Residency disputes with other states
  • Tax debt or IRS disputes
  • Estate planning involving multiple states

Others