Texas Tax Guide
Explore Texas's state tax rates for income, sales, property, retirement, and more. Learn how Texas compares nationwide.
Navigating the complexities of state taxes can be daunting, but understanding the Texas tax landscape is essential for residents and newcomers.
In this guide, we'll explore key components of The Lone Star State's tax system, from income and sales taxes to property taxes and retirement benefits.
Texas state tax: Overview
Overall, Texas offers pros and cons when it comes to taxes.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The statewide sales tax starts at 6.25 percent, and local areas can tack on up to 2% more, which can make shopping a little pricey.
Meanwhile, property taxes in the Lone Star State are also relatively high, but some homeowners have recently seen relief due to legislative changes.
But: Two Texas property tax bills will be on the state's ballot this fall. So, more relief could be on the way. This includes increased homestead exemptions and a property tax cut for businesses.
If approved by voters in November, homeowners and business owners could receive $10 billion in tax relief funds.
For more information, see Property Tax Relief Bill in Texas: What to Know for 2025.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Texas income tax
Texas is one of nine U.S. states with no income tax.
Texas retirement taxes
There is no personal income tax in Texas. That means none of your retirement income will be taxed at the state level. There are no estate or inheritance taxes in Texas either.
- Social Security: Not taxable
- Pensions: Not taxable
- 401(k) and IRA Distributions: Not taxable
Texas sales tax
Texas has a 6.25% state sales tax rate, but not all items are taxable.
- Groceries: Exempt
- Prescription drugs: Exempt
- Over-the-counter medications: Exempt
- Clothing: Taxable
However, Texas holds three sales tax holidays every year, one of which focuses on back-to-school essentials. For more information, check out Kiplinger's report, Texas Sales Tax-Free Weekend 2025.
How much are property taxes in Texas?
In Texas, the average effective property tax rate is 1.36%. A Texas property tax relief measure enacted last year lowered property taxes for many Texans, partially due to an increase to the state's homestead exemption.
Texas Property Tax Breaks for Retirees
Homestead Exemption: Homeowners age 65 or older may be eligible for a special homestead exemption for their principal residence. For qualified homeowners, $10,000 of the property's assessed value is exempt from school taxes (in addition to the regular homestead exemption of $100,000). Other taxing units may also offer an exemption of at least $3,000 to qualified homeowners.
Texas gas tax
Gasoline | $0.20 per gallon |
Diesel | $0.20 per gallon |
Source: Sales Tax Handbook
Texas taxes on alcohol and tobacco
Product | Tax Amount |
|---|---|
Cigarettes | $1.41 per pack |
Cigars | $0.01-$0.15 per pack of 10 |
Tobacco/Snuff | $1.22 per ounce |
Medical Marijuana | 0% |
Source: Sales Tax Handbook
Product | Tax Amount |
Wine | $0.20 per gallon |
Beer | $0.20 per gallon |
Liquor | $2.40 per gallon |
Source: Sales Tax Handbook
Texas estate and inheritance taxes
Texas has no inheritance or estate tax.
Related Content
-
Why Some Michigan Tax Refunds Are Taking Longer Than Usual This YearState Taxes If your Michigan tax refund hasn’t arrived, you’re not alone. Here’s what "pending manual review" means and how to verify your identity if needed.
-
If You'd Put $1,000 Into Caterpillar Stock 20 Years Ago, Here's What You'd Have TodayCaterpillar stock has been a remarkably resilient market beater for a very long time.
-
Good Stock Picking Gives This Primecap Odyssey Fund a LiftOutsize exposure to an outperforming tech stock and a pair of drugmakers have boosted recent returns for the Primecap Odyssey Growth Fund.
-
Why Some Michigan Tax Refunds Are Taking Longer Than Usual This Year
State Taxes If your Michigan tax refund hasn’t arrived, you’re not alone. Here’s what "pending manual review" means and how to verify your identity if needed.
-
3 Smart Ways to Spend Your Retirement Tax RefundRetirement Taxes With the new "senior bonus" hitting bank accounts this tax season, your retirement refund may be higher than usual. Here's how to reinvest those funds for a financially efficient 2026.
-
5 Retirement Tax Traps to Watch in 2026Retirement Even in retirement, some income sources can unexpectedly raise your federal and state tax bills. Here's how to avoid costly surprises.
-
2026 Tax Refund Delays: 5 States Where Your Money Is StuckState Tax From New York to Oregon, your state income tax refund could be delayed for weeks. Here's what to know.
-
First the Penny, Now the Nickel? The New Math Behind Your Sales Tax and TotalRounding Tax A new era of "Swedish rounding" hits U.S. registers soon. Learn why the nickel might be on the chopping block, and how to save money by choosing the right way to pay.
-
Trump Tariffs Supreme Court Ruling: What's Next for Consumers and RetailersTax Law This landmark decision will reshape U.S. trade policy and could define the outer boundaries of presidential economic power for years to come.
-
Over 65? Here's What the New $6K Senior Tax Deduction Means for Medicare IRMAATax Breaks A new tax deduction for people over age 65 has some thinking about Medicare premiums and MAGI strategy.
-
U.S. Congress to End Emergency Tax Bill Over $6,000 Senior Deduction and Tip, Overtime Tax Breaks in D.C.Tax Law Here's how taxpayers can amend their already-filed income tax returns amid a potentially looming legal battle on Capitol Hill.
