Overview of Texas Taxes
Texas is often considered tax-friendly because the state does not collect any income taxes. But there are other taxes that Texans have to pay, such as significant property and sales taxes.
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Your Income Taxes Breakdown
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* These are the taxes owed for the 2024 - 2025 filing season.
Your 2024 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2024 Tax BurdenIncome Tax $ Sales Tax $ Fuel Tax $ Property Tax$ Total Estimated Tax Burden $ Percent of income to taxes = % | $ |
- About This Answer
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2025
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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Taxes in Texas
Texas State Tax Quick Facts
- Income tax: None
- Sales tax: 6.25% - 8/25%
- Property tax: 1.63% average effective rate
- Gas tax: 20 cents per gallon of regular gasoline
The Lone Star State is one of only a few states that collect no income taxes of any kind. For that reason, it often ranks high on lists of the most tax-friendly states, but its sales and property taxes aren’t quite as kind to the average taxpayer’s wallet. In fact, the maximum sales tax rate in a county is 8.25%. The 1.74% average effective property tax rate in Texas is higher than all but five states.
A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Texas Income Taxes
Don’t mess with Texas. And once you’re there, you won't have to mess with a state income tax return, either. It is one of a handful states that do not levy taxes on income of any kind. Of course, you’ll still need to pay federal income taxes and file a federal income tax return.
Texas Sales Tax
While Texas’ statewide sales tax rate is a relatively modest 6.25%, total sales taxes (including county and city taxes) of up to 8.25% are levied. To make matters worse, rates in most major cities reach this limit. Dallas, Houston and San Antonio all have combined state and local sales tax rates of 8.25%, for example. Below are the rates for every county in Texas.
Texas also charges a number of additional fees and taxes on the sales of certain goods. Notable examples include its hotel occupancy tax, which is 6% of the cost of a hotel room, and a manufactured housing tax that equals 5% of a home's sale price.
Some services are also subject to sales tax in Texas. Among the types of services for which you might have to pay sales tax are entertainment like live music or movie tickets, television service (whether cable or satellite) and any kind of automobile parking or storage services. Texas did, however, stop charging sales taxes on internet access services as of July 1, 2020.
Texas Alcohol and Tobacco Taxes
Texas taxes liquor at $2.40 per gallon, and beer at 19 cents per gallon. The Lone Star State also taxes a pack of 20 cigarettes totals $1.41.
Texas Property Tax
Property taxes in Texas are among the highest in the country. Effective property tax rates average 1.63%, meaning Texan households pay a median of $3,872 in property taxes each year on a median home value of $238,000.
Property tax rates have become a contentious issue between local governments and the state. Some state representatives want to cap rates, while cities and counties oppose that measure. That’s because, in most areas, property taxes are the primary source of local revenue.
In Dallas County, for example, the average effective rate is 1.73%. In Harris County, where Houston is located, the average effective property tax rate is 1.77%. That means thousands of dollars a year in property taxes for the typical Texas homeowner.
But high property taxes don’t necessarily mean you should be a renter for life. If you are thinking about purchasing a home in Texas, take a look at our mortgage guide for rates and other information about getting a mortgage in Texas.
Texas Gasoline Tax
The Texas excise taxes on regular and diesel gasoline total 20 cents per gallon, good for one of the lowest rates in the nation.
Texas Estate Tax
As of Jan. 1, 2005, there is no estate tax in Texas.
Other Notable Taxes in Texas
Texas has an oyster sales fee. Shellfish dealers in Texas are required to pay a tax of $1 per 300 pounds of oysters taken from Texas waters.
- Cameron County, Texas is located at 26.15° North, and contains the most southern point along the US-Mexico border.
- Four of the 10-most populous cities in the country are in Texas. These include Houston, San Antonio, Dallas and Austin.
- Texas is the largest oil producer in the U.S. In 2014, it produced more oil than any country in the world except Saudi Arabia.
