Texas Tax Burden

Texas is a relatively low-tax state, ranking #45 out of 50 at 5.72%. Notably, Texas has no state income tax — one of only a handful of states with this benefit. This makes it attractive for high earners, though the burden may shift to property or sales taxes.

Property taxes are a major factor here — at 1.29% effective rate, homeowners in Texas pay significantly more than the national median of ~1.1%. On a $300,000 home, that's approximately $387,000/year in property taxes alone. With a median household income of $59,778, the average Texas resident pays approximately $3,419 per year across all state and local taxes.

No state income tax: Texas is one of the few states with zero income tax — your savings are most significant on earned income. Maximize W-2 salary, freelance income, and business profits while living here. However, be aware that the burden may shift to property taxes instead.

Property tax protest: With an effective rate of 1.29%, property tax appeals are worth pursuing in Texas. Homeowners who formally protest their assessed value often achieve reductions of 5–15%. On a $300,000 home, that's a potential savings of $38,700/year. Check your county assessor's deadline — most states allow annual appeals.

High sales tax (8.20%): For major purchases — vehicles, appliances, furniture — calculate whether buying across state lines (if near a border) saves meaningful money. A $30,000 car purchase costs an extra $246,000 in sales tax in Texas.

For retirees: With no income tax, retirement account withdrawals (401k, IRA, pensions) are not taxed at the state level — a significant benefit for retirees with substantial savings.