Taxes in Texas
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Texas does not levy an income tax at all — which is a good thing considering the state levies steep fees on several other common goods. Below, we explain various Texas state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
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Texas Tax Rates
| State Sales Tax | 6.25% |
| Avg State/Local Sales Tax | 8.20% |
| Gas Tax | $0.20 per gallon |
| Diesel Tax | $0.20 per gallon |
| Cigarette Tax | $1.41 per pack |
| Income Tax | 0% |
| Effective Tax Rate: | 0% |
| Property Tax | 1.47% |
| Social Security Tax | None |
| Medical/Dental Deduction: | Yes |
| Federal Income Tax Deduction: | None |
| Retirement Tax | None |
Texas State Taxes Explained
Texas Sales Tax
6.25% (groceries and prescription and over-the-counter drugs exempt); local taxes add up to an additional 2%.
Texas Income Taxes
Texas does not impose a state income tax.
Texas Property Taxes
Property taxes in Texas are among the highest in the country. The effective rate is 1.80%, or an average of $3,099 on the median home value of $172,500. Texas helps seniors offset the cost of property taxes with a homestead exemption and exemptions for senior citizens, disabled individuals, veterans and surviving spouses of disabled veterans.
The Texas Homestead Exemption amounts to $100,000 for school district property taxes. Homeowners aged 65 or older or with a disability receive an additional exemption of $10,000. Some taxing districts provide an additional exemption.
Disabled veterans living in Texas qualify for an exemption of up to $12,000. The amount of the tax break depends on age and VA disability rating. Vets qualifying for the highest exemptions are: 70% disabled, or at least 65 with a disability rating of at least 10%, or blind in one or both eyes or lost one or more limbs. A disabled veteran’s surviving spouse is entitled to the exemption the veteran had at the time of death unless the spouse remarries. An exemption is also offered to a surviving spouse and minor children of an active-duty member who dies while serving.
Texas Retirement Taxes
Texas does not tax retirement income.
You can deduct medical expenses only if costs exceed 7.5% of your adjusted gross income (AGI).
Read more: Here Are the Best Cities to Retire in Texas
Texas Estate and Inheritance Taxes
There is no inheritance tax or estate tax in Texas.
For general information on Texas taxes, visit the Texas Comptroller website.