What Are the Texas Income Tax Brackets?

Introduction

Texas is known for its business-friendly environment, wide-open spaces, and—most notably—its lack of a state income tax. If you're wondering about Texas income tax brackets, the answer is simple: there are none. Here’s what that means for residents and how it impacts your overall tax burden.

No State Income Tax in Texas

Texas is one of only a few states in the U.S. that does not impose a personal income tax. As a result, there are no Texas-specific income tax brackets for individuals or businesses. Whether you earn $30,000 or $300,000, you won't pay a dime in state income taxes.

This policy makes Texas especially attractive to high-income earners, retirees, and business owners looking to maximize their take-home pay or profits. The lack of income tax simplifies tax filing for residents and can result in significant savings compared to states with high tax rates.

How Texas Generates Revenue

Instead of taxing income, Texas relies heavily on property taxes and sales taxes to fund public services such as schools, infrastructure, and law enforcement.

• Property Tax: Texas has some of the highest property tax rates in the nation. Rates vary by county but can significantly impact homeowners.

• Sales Tax: The statewide sales tax rate is 6.25%, with local governments allowed to add up to 2%, bringing the maximum rate to 8.25% in some areas.

Federal Income Tax Still Applies

Even though Texas doesn't collect income tax, residents must still pay federal income tax based on IRS brackets. These brackets are adjusted annually and depend on your income and filing status (single, married filing jointly, etc.).

Conclusion

Texas does not have income tax brackets because it does not levy a state income tax at all. While residents save on income tax, they should be mindful of other taxes like property and sales tax. Overall, the tax-friendly policies of Texas remain a key benefit for many individuals and businesses choosing to call the state home.