Does Texas have a state income tax?
No. Texas does not tax wages or salaries, so there is no Texas income tax return, withholding or estimated payment for 2026. Source: Tex. Const. art. VIII §24.
Can you deduct Texas taxes on your federal return?
The federal deduction for state and local taxes (SALT) is capped at $40,400 for 2026 — $20,200 if married filing separately — and the cap shrinks toward $10,000 once modified AGI passes $505,000. With no Texas income tax, what counts toward it is property tax plus, if you choose it instead of income tax, general sales tax.
Itemize or take the standard deduction?What is the property tax rate in Texas?
Texas's average effective property tax rate is 1.49% — tied for the 7th highest of 51 jurisdictions and 1.7 times the national average of 0.9%. That is about $1,490 a year for every $100,000 of home value; the rate varies widely by county and school district.
Itemize or take the standard deduction?How much does an LLC cost to keep in Texas each year?
Deductsy's table has no annual report fee or minimum franchise tax for a Texas LLC. Fees change, so confirm with Texas's business filing office.
Texas S-corp tax calculatorHow do Texas taxes compare with neighboring states?
| State | Top income tax rate | Income tax on $100,000 (single) | Property tax (avg) |
|---|---|---|---|
| Texas | None | $0 | 1.49% |
| Arkansas | 3.7% | $3,620 | 0.55% |
| Louisiana | 3% | $3,000 | 0.55% |
| New Mexico | 5.9% | $4,358 | 0.7% |
| Oklahoma | 4.5% | $4,285 | 0.8% |
On $100,000 of taxable income a single filer pays no Texas income tax; in the neighboring states that tax income, the same filer would pay from $3,000 in Louisiana to $4,358 in New Mexico. Texas's average property tax rate is higher than in all 4.
Income tax is each state's own tax on the same state taxable income; local income taxes are not included.
More Texas tax notes
- Property and sales taxes do more of the work that an income tax does elsewhere.
- The Texas franchise (margin) tax applies only to businesses above a revenue threshold that is adjusted every two years.
- Homestead exemption + Sec. 25.18 caps annual assessment increases on primary residences.
Tax moves that matter most for Texas
Texas has no income tax on wages, so the SALT cap only matters for property tax. The bigger levers are federal: 401(k), Mega Backdoor Roth, HSA and, for the self-employed, an S-corp election.
That is tied for the 7th highest of 51 and 1.7 times the national average, so property tax does much of the work of filling the SALT cap. Bunching two years of property tax into one can push itemized deductions past the standard deduction in alternate years.
An S-corp election can cut self-employment tax once profit is large enough to pay yourself a reasonable salary and still cover payroll and filing costs. The Texas calculator adds Texas's own entity fees and taxes to that breakeven.
With 1099 income, a Solo 401(k) can take up to $72,000 a year (2026) — usually more than a SEP-IRA at the same income. Contributions lower your federal income tax.
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