Texas tax guide
Texas maintains a business-friendly environment supported by its constitutional prohibition on personal income taxes. Instead of taxing labor, the state generates revenue primarily through sales and property taxes, which allows workers to keep 100% of their earned wages free from state-level income tax burdens.
Key tax highlights
Payroll
- Texas workers do not have recurring state wage withholding on standard W-2 paychecks.
- Changes to the federal W-4, bonus withholding, and pre-tax deductions often have the biggest visible paycheck impact.
Local taxes
- Texas cities generally do not use a separate local wage income tax, which keeps the paycheck estimate cleaner than in city-tax jurisdictions.
Deductions
- 401(k), HSA, and health-plan deductions are often the most important paycheck adjustments because there is no state income tax layer to offset.
Salary examples
Pre-computed take-home estimates at common salary levels — no state income tax applied. For example, a $75,000 salary in Texas yields about $61,592 after all deductions (82.1% take-home rate). Use the calculator above with your actual salary to see your specific estimate.
| Salary | Federal | State | FICA | Take-Home | Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $0 | $3,825 | $42,355 | 84.7% |
| $75,000 | $7,670 | $0 | $5,738 | $61,592 | 82.1% |
| $100,000 | $13,170 | $0 | $7,650 | $79,180 | 79.2% |
| $150,000 | $24,734 | $0 | $11,475 | $113,791 | 75.9% |
Neighboring states
How Texas compares with border states on income tax. At a $75,000 salary, a Texas worker keeps $61,592 — with no state tax deducted.
| State | Tax type | Top rate |
|---|---|---|
| Louisiana | flat tax | 3.00% |
| New Mexico | progressive | 5.90% |
| Oklahoma | progressive | 4.50% |
| Arkansas | progressive | 3.90% |
Cost of living context
The Dallas-Fort Worth-Arlington, TX area has a Regional Price Parity of 97.4, which is 2.6% below the national average. Your dollar stretches further here.
HUD Fair Market Rent estimates: Studio $1,121/mo, 1-BR $1,248/mo, 2-BR $1,556/mo.
Tax tips for Texas
- Redirect the funds you would have paid in state income tax toward high-interest debt or local retirement contributions.
- Review your federal W-4 form annually to ensure your federal withholding is accurate, as this is the only tax deduction affecting your Texas paycheck.
- Consider the impact of local property tax rates on your housing budget when evaluating take-home pay, as this is the primary way Texas collects local revenue.
Did you know?
- •The Texas Constitution explicitly forbids a state personal income tax, providing a stable financial environment for workers.
- •Texas remains one of only nine states that do not impose a personal income tax on its residents.
Filing guidance
Because Texas does not have a state income tax, you will not receive a state W-2 or equivalent form from your employer. Your tax filing obligations are limited to federal income tax, where you should report all income as required by the IRS. Always verify that your employer is withholding federal taxes correctly, as the absence of state-level oversight means the burden of federal tax compliance rests entirely on your annual federal return.
Relocation context
Texas is often used as a comparison point because moving from a high-tax state can increase net pay without changing gross salary.