Index
Texas No State Income Tax
Summary
The Texas Constitution explicitly forbids the state government from levying a personal income tax. This is considered a permanent feature of the state's economy.
Rights & Rules
- 01.You do not owe the State of Texas any percentage of your salary, hourly wages, or investment income.
- 02.To fund the government, Texas has incredibly high property taxes (often over 2% of the home's value annually) and a high state/local sales tax rate (up to 8.25%).
- 03.While individuals pay no income tax, corporations and LLCs must pay a 'Franchise Tax' if their total gross revenue exceeds roughly $1.2 million per year.
- 04.The prohibition on personal income taxes is written directly into the state constitution, meaning it would take a massive supermajority voter referendum to ever change it.
Penalties
- 01.If you fail to pay your high local property taxes in Texas, the county will aggressively pursue foreclosure and sell your home at auction, often much faster than in other states.
Verified Citations
Texas Constitution Article VIII, Section 24
Source"The legislature may not impose a tax on the net incomes of individuals, including an individual's share of partnership and unincorporated association income."