State-by-State Guide to Taxes on Retirees
Tool | December 2021

Texas State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.


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The Bottom Line
Flag of Texas

Least Tax-Friendly

How does a state with no income tax at all end up on the "least tax-friendly" list? It starts by having the seventh-highest median property tax rate in the country. The Lone Star State does offer seniors some breaks from the heavy property tax burden, with an additional homestead exemption, a valuation freeze program, and the ability to defer property taxes. However, these benefits are not enough to make Texas a tax-friendly state for retirees.

Sales taxes in Texas are also high. The average combined state and local tax rate in the state is 8.2%, which is one of the steeper combined rates in the U.S.

Income Tax Range

Texas has no state income tax.

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

Texas has no income tax.

Sales Tax

6.25% state levy. Localities can add up to 2%, with an average combined rate of 8.2%, according to the Tax Foundation.

Groceries: ExemptClothing: Taxable
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

In Texas, the median property tax rate is $1,753 per $100,000 of assessed home value.

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 (this is in addition to the regular homestead exemption). Other taxing units may also offer an exemption of at least $3,000 to qualified homeowners.

School-district taxes are also frozen at the level imposed on a residence the year the owner turned 65. (Note: Starting in 2023, seniors with frozen school district taxes will be able to take advantage of property tax rate reductions passed in 2019.) Counties, cities, towns and junior-college districts can also establish a tax freeze.

In addition, a homeowner who is 65 or older may qualify to defer their property taxes until after he or she no longer owns or occupies the home as a residence. Property taxes (and interest) continue to accrue during the deferral period. Once the deferral ends, the taxes and interest must be paid.

Annual Car Taxes and Fees

An annual vehicle registration fee is imposed. Additional local fees may apply.

Estate and Inheritance Taxes

No estate or inheritance tax.