Texas has no state income tax
Texas levies no individual income tax on wages, salaries or self-employment income. Your only income-based withholding is federal, plus Social Security and Medicare. On a $100,000 salary that is worth about $3,600 a year against neighboring New Mexico, which taxes the same income at a top marginal rate of 5.9%.
It joins Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee and Wyoming in this group.
What a Texas salary actually keeps
Because there is no state income tax, the only deductions from a Texas paycheck are federal. On an $85,000 salary a single filer pays roughly $9,900 in federal income tax and $6,503 in FICA, keeping about $68,600.
The same salary just over the line in New Mexico would give up about $2,800 a year to that state, roughly $109 out of every biweekly paycheck. That gap is the whole of what living in Texas saves a wage earner, before any of the offsetting costs below.
Texas trades income tax for property tax
Texas voters wrote the ban into the state constitution in 2019, so introducing an income tax would now require another constitutional amendment. That permanence is part of the state's pitch.
The revenue has to come from somewhere, and in Texas it comes substantially from property tax, among the highest effective rates in the nation. This is the single most common miscalculation people make when relocating: a household saving $6,000 a year in income tax can hand back more than that in property tax on an equivalent home. Homestead exemptions and an over-65 assessment freeze soften it, but the arithmetic still needs doing before you move, not after.
Businesses pay a franchise tax, a margin tax on revenue above a threshold, so "no income tax" is not quite the same thing for a business owner as it is for an employee.
Texas has no state property tax, which is the problem
The property tax that pays for so much of Texas is levied entirely by local entities: school districts, counties, cities, hospital and community college districts, each setting its own rate against the same appraised value. There is no state property tax at all. That is why two houses of identical value in different parts of the state can carry very different bills, and why a single county-level figure never tells you what you will actually pay.
It also makes the appraisal the thing to watch. Values are set annually by the county appraisal district, homeowners have a formal right to protest, and a large share of those who do get some reduction. Protesting is an ordinary annual task here in a way it is not in most states, and not doing it is a decision with a price.
The homestead exemption reduces the taxable value on a primary residence and caps how fast the appraised value may rise while you keep it, and taxpayers over 65 can freeze their school district taxes. Anyone relocating for the absence of an income tax should get an estimate of the total local rate for the specific address before signing, not the county average.
What Texas charges instead
Texas's statewide sales tax is 6.25% (the 14th highest of the 51 jurisdictions), and local jurisdictions add more on top of that.
Living or working across the Texas border
Because Texas withholds no state income tax, a resident of a neighboring state who works here still owes tax at home, and nothing is withheld to cover it. A New Mexico resident commuting into Texas on $85,000 owes New Mexico roughly $2,800 for the year with nothing taken out along the way, so quarterly estimated payments are not optional. Living in Texas and working remotely for an employer elsewhere is the reverse and usually the better case.
Retirement income in Texas
With no tax on wage income, Texas also takes nothing from Social Security benefits, pensions, IRA withdrawals or 401(k) distributions.
Put a number on it: a retiree drawing $60,000 a year from a pension and an IRA would owe New Mexico about $1,700 on that income, and owes Texas nothing. New Mexico is also one of the minority of states that still taxes part of Social Security itself, so the gap widens for a retiree whose income is mostly benefits.
How Texas compares
Against neighboring states the contrast is stark. Oklahoma taxes income up to 4.5%. Louisiana taxes income up to 3%. New Mexico taxes income up to 5.9%. Arkansas taxes income up to 3.7%.
Filing and deadlines
Texas's return is due in mid-April with your federal return. Deadlines and extensions covers the off-cycle states and what an extension does not buy you.
What this estimate covers
The figure applies Texas's published 2026 rates and deductions to wage income, alongside federal tax and FICA (a well-sourced estimate, not a return). See what these calculators do and do not model.