state tax

Texas State Tax Guide

State tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact Texas residents.

Bottom Line

Middle-Class Families: Mixed Tax Picture (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Least Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)

How does a state with no income tax at all not end up on the "most tax-friendly" list? It starts by having the seventh-highest median property tax rate in the country.

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.

As befits a place that pumps a lot of oil out of the ground, at least fuel taxes are low.

Texas Income Taxes

Texas has no income tax.

Texas 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: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Texas Real Property Taxes

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

Texas Property Tax Breaks for Retirees

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.

Texas Motor Fuel Taxes

Gasoline: 20¢ per gallon.
Diesel: 20¢ per gallon.

Texas Sin Taxes

Cigarettes: $1.41 per pack
Snuff and chewing tobacco: $1.22 per ounce
Cigars: $0.01 to $0.15 per cigar, depending on weight

Beer: $0.20 per gallon
Wine: $0.20 per gallon ($0.52 if sparkling)
Liquor: $2.40 per gallon

Texas Estate and Inheritance Taxes

No estate or inheritance tax.

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