Both Nevada and Texas charge zero state income tax, making them popular destinations for high earners leaving California and New York. The real difference shows up on your property tax bill: Texas has the second-highest effective property tax rate in the country at roughly 1.60%, while Nevada sits at around 0.60%. On a $400,000 home that gap is more than $4,000 a year. Texas also imposes a 0.75% franchise tax on business margins above $2.47 million, which can bite growing companies. Nevada wins on property ownership costs; Texas can be better for businesses comfortable with the franchise tax in exchange for a larger economy and more diverse job market.

By CountryTaxCalc Research Team

Last Updated: April 2026

The Big Picture

🎰 Nevada

0%

No Income Tax

Constitutional prohibition on personal income tax

🤠 Texas

0%

No Income Tax

State constitution bars personal income tax

Typical Annual Savings

At $100,000 income:

$0

That is $0/month back in your pocket!

Tax Savings by Income Level

IncomeNV TaxTX TaxSavings10-Year
$50,000 $0$0$0$0
$75,000 $0$0$0$0
$100,000 $0$0$0$0
$150,000 $0$0$0$0
$250,000 $0$0$0$0
$500,000 $0$0$0$0

Nevada Pros and Cons

✅ Pros

  • 0% income tax (constitutionally protected)
  • Low property tax (~0.60% effective rate)
  • No corporate income tax or franchise tax
  • Gaming revenue funds public services, reducing other tax pressure

❌ Cons

  • Smaller economy and fewer Fortune 500 headquarters
  • High summer heat and limited water resources
  • Higher combined sales tax (~8.24%) than some states
  • Fewer major airports and direct international routes

Texas Pros and Cons

✅ Pros

  • 0% income tax (constitutional prohibition)
  • Large, diversified economy with major job market
  • No personal property tax on vehicles
  • Lower cost of living than coastal metros

❌ Cons

  • High property tax (~1.60% effective rate, 2nd highest in USA)
  • 0.75% franchise tax on business gross margins
  • Extreme summer heat and hurricane risk on the coast
  • High combined sales tax (~8.25% average)
💡

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Frequently Asked Questions

Q: Do Nevada and Texas really both have 0% income tax?

Yes. Both states have constitutional prohibitions on personal income tax. Nevada’s ban dates to its constitution (Article 10, Section 1) and Texas’s constitution (Article 8, Section 24) likewise bars it. Neither state can add an income tax without a voter-approved constitutional amendment, providing strong long-term certainty.

Q: Why does Texas have higher property taxes than Nevada?

Texas relies heavily on property taxes to fund public schools and local government because it has no income tax and caps local sales taxes. The result is an effective property tax rate of roughly 1.60%, compared to Nevada’s 0.60%. On a $400,000 home, Texans pay roughly $6,400/year versus $2,400 in Nevada—a $4,000 annual difference.

Q: What is the Texas franchise tax and who does it affect?

The Texas franchise tax (also called the margin tax) is a 0.75% tax on a business’s taxable margin. Businesses with annualised revenue below the no-tax-due threshold ($2.47 million in 2026) owe nothing. Larger businesses—especially service firms—can face a meaningful bill. Nevada has no equivalent business margin tax, making it slightly friendlier for growing companies.

Q: Which state is better for retirees: Nevada or Texas?

Both are strong retirement destinations due to zero income tax, meaning Social Security, pensions, and IRA withdrawals are not taxed at the state level. Nevada edges ahead on property tax costs for homeowners. Texas can make sense for retirees who prioritise proximity to family in the South or Midwest. Cost of housing varies significantly by city in both states.

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