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Texas State Tax Profile

A guide to Texas state taxes


Updated April 16, 2014

Texas is one of seven states that have no individual income tax.  Most of Texas's tax revenue comes from state sales taxes and taxes on businesses and specific industries.  Texas does have a property tax, but its collected by cities, counties, and school districts and can only be used for local needs. 

Texas Property Tax

Property taxes are based on the current market value of real estate and tangible personal property as appraised by the county appraisal district.  To determine value, the appraiser compares your home to others that have recently sold.  The appraised value of your property is then multiplied by the local property tax rate to determine your property tax bill.  These rates are set by counties and school districts and are based on the yearly budget and how much revenue will be needed to cover costs.  These local governments hold public hearings to discuss any tax increases.  If the tax rate increase exceeds certain limits, citizens have the option to petition for a public vote on the increase.

Owners of agricultural or timberland property can apply for special appraisals.  These appraisals are based on value of the crops, livestock, timber, etc. that the land produces, which can result in lower appraisals and lower property taxes.

Texas Property Tax Exemptions

Property tax exemptions reduce the appraisal value of your property, thereby reducing your property tax bill.  The following exemptions are available in Texas, and can be applied for using one application form.

  • Homestead Exemption: If your property is your principal residence as of January 1st of the tax year, you can qualify for a $15,000 reduction in your home's appraised value.
  • Exemption for seniors and disabled: Homeowners who are 65 or older or disabled qualify for an additional $10,000 exemption for school district taxes and a $3,000 exemption for other local property taxes.  Once you qualify for the over-65 or disabled exemption for school taxes, the school district cannot tax you any more than what you paid in the first year you qualified for the exemption.  Widows or widowers age 55 or older, whose deseased spouse qualified for the 65 or older exemption can continue to receive the exemption if they apply.
  • Exemption for disabled veterans: Veterans of the United States armed forces who have been disabled as a result of their service may be eligible for a disabled veteran’s exemption.  This exemption is equal to 100% of the appraised value of their primary residence, which means that those who qualify will not have to pay property taxes on their primary residence to any taxing entity.

Income Tax

Texas has no individual income tax.   Texas does, however, levy a franchise tax (a type of income tax) on some businesses.

Other State Taxes

Sales Tax: 6.25%.  Localities can add their own sales taxes, which can bring the sales tax rate up to 8.25% in some areas.  Unprepared food, prescription drugs, and over-the-counter drugs are exempt.  

Gas Tax: 20 cents/gallon on diesel and unleaded

Cigarette Tax: $1.41 per pack

Hotel Taxes: 6% of the cost of the room

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