Texas vs Federal Tax Comparison
| Tax Type | TX State Rate | Federal Rate | Notes |
|---|---|---|---|
| Personal Income Tax | None | Federal: 10–37% | No state layer |
| Corporate Income Tax | 0.75% | Federal: 21% | Franchise Tax 0.375–0.75% on gross receipts |
| State Sales Tax | 6.25% | No federal sales tax | Combined avg: 8.19% |
| Capital Gains Tax | None | Federal: 0–20% | Special rate may apply |
About Texas Taxes
No income tax; Franchise Tax on gross margin; major tech relocation hub.
As a no-income-tax state, Texas attracts remote workers, retirees, and high-income earners seeking to reduce their overall tax burden. The absence of state income tax does not eliminate federal income tax obligations, which remain 10–37% depending on filing status and income level.
Corporate activity in Texas faces a 0.75% state corporate tax rate. Franchise Tax 0.375–0.75% on gross receipts. Combined with the 21% federal corporate rate, businesses should plan accordingly.
Calculate Your Net Salary in Texas
See federal + TX state tax deductions, Social Security, Medicare, and take-home pay
Open US Salary CalculatorFrequently Asked Questions — Texas Taxes
Does Texas have a state income tax?
No. Texas (TX) does not impose a state income tax on wages or salaries. This makes it one of nine US states with no income tax, alongside Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.
What is the corporate income tax rate in Texas?
Texas imposes a corporate income tax at 0.75%. Franchise Tax 0.375–0.75% on gross receipts. Businesses should also account for federal corporate tax at 21% on top of the state rate.
What is the sales tax rate in Texas?
Texas has a state sales tax of 6.25%. When local city and county taxes are included, the average combined rate reaches 8.19%. Rates vary by locality so check the specific municipality for accurate figures.
How does Texas compare to neighboring states for taxes?
Texas's overall tax burden ranks favorably among US states. The state has no income tax. For individuals evaluating relocation or remote work, comparing the full picture — income, sales, and property taxes — is essential. Use our US Salary Calculator to estimate your net income in Texas.
Are there any special tax incentives or exemptions in Texas?
Texas offers notable tax characteristics: No income tax; Franchise Tax on gross margin; major tech relocation hub. Businesses and individuals should consult a qualified tax advisor to understand eligibility for available credits, deductions, and incentives specific to Texas.
Other No-Income-Tax States
Nine US states impose no state income tax on wages:
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