State-by-State Guide to Taxes on Retirees
Tool | November 2019

State-by-State Guide to Taxes on Retirees


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The Bottom Line
Flag of Texas

Not Tax-Friendly

How does a state with no income tax at all not qualify as tax-friendly? By having the fifth-highest property taxes in the country, as well as the twelfth-highest sales taxes. 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.

State Sales Tax

6.25% state levy. Localities can add up to 2%, with an average combined rate of 8.19%, according to the Tax Foundation.

Income Tax Range

Texas has no state income tax.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Texas has no income tax.

Property Taxes

In Texas, residents pay an average $1,993 in taxes per $100,000 of assessed home value.

Tax breaks for seniors: If you are age 65 or older, or disabled, you qualify for the homestead exemption as soon as you turn 65; you need not own your home on January 1, but the home must be your principal residence. For homeowners who are 65 and older or who are disabled, $10,000 (in addition to the regular $12,000 homestead exemption) of the property’s assessed value is exempt from school taxes. Other taxing units may offer an exemption of at least $3,000 to homeowners who are age 65 or older or who are disabled (at the taxing unit's discretion or as a result of a voter petition).

Once a homeowner turns 65 or is disabled, the owner benefits from a tax ceiling for that home for school taxes. If the homeowner improves the home (other than normal repairs or maintenance), the tax ceiling is adjusted for the new additions. School-district taxes are frozen at the level imposed on the residence the year the owner turned 65 or became disabled. Counties, cities, towns and junior-college districts can establish a tax freeze on homesteads of people who are 65 or older or who are disabled.

A homeowner who is 65 or older or disabled may qualify to defer their property taxes until he or she no longer owns or occupies the home as a residence. Property taxes continue to accrue during the deferral period and are assessed interest at the rate of 8% a year. Once the deferral ends, the taxes and accrued interest must be paid.

Vehicle Taxes

Sales tax is due on purchases.

Inheritance and Estate Taxes