Texas No Income Tax 2026: What You Actually Pay — Property Tax, Sales Tax, and the Full Picture

Texas is one of only nine US states with no state income tax — and its prohibition is constitutional, making it exceptionally durable. Article 8, Section 24-a of the Texas Constitution bars the legislature from taxing individuals’ net incomes, so repeal would take a constitutional amendment (two-thirds of each chamber plus voter approval). This gives Texas workers a significant advantage: at $100,000 income, a Texan saves approximately $4,900 in state income tax compared to a Californian (single filer, 2026), and approximately $3,500–$4,200 compared to a resident of North Carolina or Georgia.

But the no-income-tax story is only half the picture. Texas funds its state and local governments heavily through property taxes and sales taxes. Texas property taxes average approximately 1.40% of assessed value statewide — among the highest effective rates in the country — though effective rates in large counties run from about 1.3% (Travis) to 1.8% (Fort Bend, El Paso), per Tax Foundation 2024 county data. A $400,000 Texas home generates an annual property tax bill of roughly $5,600 at the statewide average, or about $5,200 to $7,200 at those county rates. Understanding the full tax picture — income, property, sales, and beyond — is essential for anyone considering a Texas relocation or evaluating the state's true tax burden.

Texas's Constitutional No-Income-Tax Provision

Texas's prohibition on personal income tax is embedded in the state constitution and cannot be changed by the legislature alone — it requires voter approval in a statewide referendum. Texas voters approved Proposition 4 in 2019, adding Section 24-a to Article VIII, which prohibits the legislature from imposing a tax on the net incomes of individuals (the franchise tax on businesses is separate). Repeal would take a constitutional amendment: a two-thirds vote in each chamber plus voter approval. This makes Texas's no-income-tax status one of the most secure in the country.

The practical result for workers: every dollar of employment income is taxed only at the federal level. At $150,000 income (single filer), a Texan pays approximately $24,700 in federal income tax plus FICA payroll taxes — but nothing to Texas. A comparable California resident pays the same federal tax plus approximately $9,560 in California state income tax. That annual saving compounds if invested, with the total depending on the return you assume — a common argument in corporate relocation pitches.

Texas Property Tax: The Tradeoff

Texas property taxes are assessed by county appraisal districts and levied by school districts, city/county governments, and special purpose districts. Unlike California's Prop 13 (which resets value only at sale and limits increases to 2% a year), Texas appraises property annually at market value, subject to caps: the appraised value of a homestead cannot rise more than 10% a year (Tax Code 23.23) and most non-homestead property valued at $5.32 million or less in 2026 is capped at 20% a year (Tax Code 23.231). Rapidly appreciating non-homestead property and newly purchased homes can still see large increases. The statewide average effective rate is approximately 1.40%, though effective rates in large counties range from about 1.3% to 1.8% (Tax Foundation, 2024 county data).

Tax Foundation's 2024 county data puts Travis County (Austin) at about 1.31%, Harris (Houston) at about 1.50%, Dallas at about 1.45% and Bexar (San Antonio) at about 1.55%. The school district levy is typically the largest part of the bill, reflecting Texas's school funding model that relies heavily on local property tax revenue.

Sales Tax in Texas 2026

Texas levies a 6.25% state sales tax on most goods and services. Cities, counties, transit authorities, and special purpose districts can add up to a combined 2% in local sales taxes, bringing the maximum combined rate to 8.25%. Most major Texas cities — Houston, Dallas, San Antonio, Austin — are at or near the 8.25% maximum. The sales tax applies to most goods but notably exempts food products for home consumption (groceries), making the effective burden somewhat lower for households that cook at home.

For a household spending $50,000 per year on taxable goods and services, the sales tax burden at 8.25% amounts to approximately $4,125 per year. This is a real tax, but it is also partially controllable — higher-income households typically save a larger share of income and spend less proportionally on taxable consumption, making the sales tax regressive in nature (hitting lower-income households harder as a percentage of income).

Texas Homestead Exemption — How to Reduce Your Property Tax

Texas law provides a Homestead Exemption that reduces the taxable value of a primary residence for property tax purposes. As of 2023 (Proposition 4), the school district homestead exemption increased from $40,000 to $100,000 in 2023, then to $140,000 by Proposition 13 in November 2025 — a significant change that reduces the taxable value of every Texas homeowner's primary residence by $140,000 for school district purposes (the largest component of most Texas property tax bills).

To claim the homestead exemption, you must own and occupy the property as your primary residence as of January 1 of the tax year, and file an application with your county appraisal district (usually only required once). Additional exemptions are available for homeowners aged 65 and over (an extra $60,000 school district exemption plus a tax ceiling that freezes school taxes), disabled individuals, and veterans. For a homeowner with a $400,000 home in a district with a $1.17 per $100 school tax rate, the $140,000 homestead exemption saves approximately $1,638 per year on the school tax alone.

Texas vs California: Total Tax Burden Comparison

The headline comparison between Texas and California focuses on income tax, but the full picture includes all tax categories. Here is an illustrative comparison for a professional earning $150,000 and owning a $500,000 home:

The comparison narrows when accounting for California's lower property taxes (thanks to Prop 13) and the fact that Californians generally live in higher-valued homes. For renters, the comparison is starker: renters get no property tax benefit and fully absorb the income tax differential. Texas is clearly advantageous for high-income earners and particularly for renters, while the property tax tradeoff can offset some of the income tax saving for homeowners in rapidly appreciating Texas markets.