Personal Income Tax Laws in General
Most states levy a personal income tax in addition to the taxes collected by the federal government. Personal income taxes make up about 20 percent of state revenue in states that levy it, but property taxes make up the largest portion of most state revenues, according to the U.S. Census Bureau. That means states that don't collect income tax must either make up the revenue elsewhere or spend less on public resources such as schools and libraries.
Texas Does Not Collect Personal Income Tax
Some states, including Texas, don't collect personal income taxes but states still require a steady flow of revenue to pay for public goods such as education and infrastructure. According to the Texas Comptroller's Office, the Lone Star state collects more than 60 different types of taxes, fees, and assessments. Much of these taxes are collected from local governments throughout the state.
Where Does Texas Get its Revenue?
Texas makes up for the lack of income tax through lower than average spending on social programs and public infrastructure, but also has higher than average sales tax. In fact, about half of its revenue is from sales tax. The current sales tax in Texas is 6.25 percent, which comes to an average of 8.15 percent when local taxes are added. It isn't the highest sales tax rate in the country, but is similar to rates in other states that lack an income tax.
Motor vehicle sales and use taxes make up the state's second-largest source of revenue, with the Texas Franchise Tax coming in third. Texas also has the third-highest property tax rate in the country, at 1.81 percent.
Learn more about Texas personal income tax laws (or the lack thereof) and income taxes in general in the links below. For information about federal personal income taxes, see FindLaw's Paying Taxes section.
|Code Section||No personal income tax|
|Who is Required to File||-|
|Federal Income Tax Deductible||-|
|Federal Income Used as Basis||-|
Note: State laws are constantly changing -- contact a Texas tax attorney or conduct your own legal research to verify the state law(s) you are researching.
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Texas Personal Income Tax Laws: Related Resources
Get Legal Help to Better Understand Personal Income Tax Laws in Texas
While there are no personal income taxes in Texas, you still are subject to sales tax, property taxes, and other forms of taxes. Of course, you're also still required to pay federal income taxes each year. If you have any legal questions about your tax obligations, you may want to consider discussing them with an experienced tax attorney in Texas.
Contact a qualified attorney.