Texas is one of nine states with no state income tax. If you work in Texas, you won't see any state income tax withholding on your paystub, which means your paycheck deductions are limited to federal income tax and FICA (Social Security and Medicare).
No State Income Tax
Texas does not impose a personal income tax on wages, salaries, or other earned income. This means:
- No state income tax line on your paystub
- No state tax return to file for wages
- More take-home pay compared to states with income tax
- Simpler paystubs with fewer deduction lines
The Texas Constitution prohibits a personal income tax unless voters approve it in a referendum. A 2019 amendment further strengthened this prohibition by requiring a two-thirds majority in both chambers of the legislature before any income tax proposal can go to voters.
What You Will See on Your Paystub
While Texas has no state income tax, your paystub will still show federal income tax withholding and FICA deductions:
| Deduction | Rate | Notes |
|---|---|---|
| Federal Income Tax | Varies | Based on W-4 and income (10% - 37%) |
| Social Security | 6.2% | Up to $181,200 wage base |
| Medicare | 1.45% | No wage limit; additional 0.9% over $200,000 |
| State Income Tax | 0% | Not applicable in Texas |
A Texas worker earning $75,000 per year will see approximately 22% to 25% of gross pay withheld for federal income tax and FICA combined, with nothing going to state income tax. That contrasts sharply with a worker in California or New York, where state withholding adds another 4% to 6%.
Federal Tax Brackets for Texas Workers
Because Texas has no state income tax, your effective tax burden depends entirely on the federal brackets. For 2026, the federal rates are:
| Taxable Income (Single) | Federal Rate |
|---|---|
| $0 - $11,925 | 10% |
| $11,926 - $48,475 | 12% |
| $48,476 - $103,350 | 22% |
| $103,351 - $197,300 | 24% |
| $197,301 - $250,525 | 32% |
| $250,526 - $626,350 | 35% |
| Over $626,350 | 37% |
With no state income tax, Texas workers keep 100% of the difference. A single filer earning $100,000 saves roughly $3,200 to $5,000 per year compared to states like California or New York.
Other Texas Taxes
While Texas has no income tax, it generates revenue through other taxes:
- Sales Tax: 6.25% state rate, plus up to 2% local taxes (8.25% max)
- Property Tax: Among the highest in the nation, averaging around 1.6% of assessed value
- Franchise Tax: Applies to businesses, not individuals
No state income tax means simpler paystubs, but Texas residents should budget for higher property and sales taxes. A $350,000 home in Texas carries roughly $5,600 per year in property tax.
Texas Workforce Commission and Unemployment Insurance
The Texas Workforce Commission (TWC) administers the state's unemployment insurance program:
- Paid by: Employers only — no employee contribution
- Rate: 0.25% to 6.25% depending on the employer's experience rating
- New employer rate: 2.7% (general) or varies by industry
- Wage base: First $9,000 per employee per year
- Employee impact: None — this tax does not appear on your paystub
Unlike states such as New Jersey or Pennsylvania, Texas workers do not contribute to unemployment insurance through payroll deductions. Your employer bears the full cost.
Working Remotely for a Texas Employer
If you live in another state but work for a Texas-based employer:
- You pay income tax based on where you live, not where your employer is located
- Your employer may need to withhold taxes for your state of residence
- Texas employers with remote workers in other states must comply with those states' withholding requirements
Houston Metro Workers
Houston is the largest metro area in Texas and the fourth largest in the nation:
- Energy capital: ExxonMobil, Chevron, ConocoPhillips, and hundreds of oil and gas companies
- Texas Medical Center (the largest medical complex in the world)
- NASA Johnson Space Center
- Port of Houston (one of the busiest U.S. ports)
- No local income tax — Houston does not levy a city income tax
Dallas / Fort Worth Workers
The Dallas-Fort Worth metroplex is one of the fastest-growing regions in the U.S.:
- Financial services and insurance hub
- Telecom corridor (AT&T, Texas Instruments)
- Defense (Lockheed Martin in Fort Worth)
- Corporate relocations (Toyota, Charles Schwab, Caterpillar)
- No local income tax
Austin Workers
Austin is Texas's capital and a major tech hub:
- Growing tech sector: Dell, Tesla, Oracle, Samsung, and Apple expansion
- State government employment
- University of Texas (major research employer)
- Live music and tourism
- No local income tax
Austin's combination of no state income tax and a booming tech sector has attracted significant migration from California. Workers relocating from California to Texas can see an immediate increase in take-home pay of 5% to 10%.
San Antonio Workers
San Antonio has a major military and healthcare presence:
- Joint Base San Antonio (JBSA) — the largest joint base in the Department of Defense
- Healthcare corridor (Methodist, Baptist Health, University Health)
- Tourism (The Alamo, River Walk)
- Cybersecurity industry
- No local income tax
Energy and Oil/Gas Industry
Texas is the largest oil and gas producing state in the nation, employing hundreds of thousands of workers across the energy sector:
- Upstream (exploration and production), midstream (pipelines), and downstream (refining) roles
- No special state tax treatment for energy workers — because there is no state income tax on any wages
- Energy workers often earn premium wages, overtime, and per-diem pay, all of which are only subject to federal tax in Texas
- Severance taxes on oil and gas production (4.6% for oil, 7.5% for natural gas) are paid by producers, not employees
Military Personnel
Texas has one of the largest military footprints in the country:
- Fort Cavazos (formerly Fort Hood) — one of the largest active-duty Army posts
- Fort Bliss (El Paso) — Army, near the New Mexico border
- Joint Base San Antonio — includes Fort Sam Houston, Lackland AFB, and Randolph AFB
- Naval Air Station Corpus Christi and Fort Worth Naval Air Station / Joint Reserve Base
Military tax considerations in Texas:
- Active duty pay is not subject to state income tax (because Texas has no income tax)
- Military retirement pay is also free from state income tax
- Military spouses earn income in Texas with no state tax withholding
- Texas is consistently ranked as one of the most tax-friendly states for military families
Retirement Income
Texas does not tax any form of retirement income:
- Social Security benefits: Not taxed
- Pensions (public and private): Not taxed
- 401(k) and 403(b) distributions: Not taxed
- IRA withdrawals: Not taxed
- Military retirement pay: Not taxed
Texas is one of the most tax-friendly states for retirees. No form of retirement income is subject to state income tax.
Texas vs. Neighboring States
| State | Tax Structure | Top Rate |
|---|---|---|
| Texas | None | 0% |
| Louisiana | Progressive | 4.25% |
| New Mexico | Progressive | 5.9% |
| Oklahoma | Progressive | 4.75% |
| Arkansas | Progressive | 4.4% |
Comparing Take-Home Pay
Here is how annual state income tax compares for a single filer at different salary levels:
| Annual Salary | Texas | Louisiana | Oklahoma | California |
|---|---|---|---|---|
| $50,000 | $0 | ~$1,400 | ~$1,750 | ~$1,580 |
| $75,000 | $0 | ~$2,450 | ~$2,900 | ~$3,200 |
| $100,000 | $0 | ~$3,500 | ~$3,900 | ~$5,200 |
At $100,000, a Texas worker keeps roughly $3,500 to $5,200 more per year in take-home pay than workers in neighboring income-tax states. That translates to $290 to $433 more per month.
Key Takeaways
- Texas has no state income tax, constitutionally prohibited without voter approval
- Your paystub shows only federal income tax and FICA deductions — no state lines
- Unemployment insurance is employer-paid only; it does not appear on your paystub
- No city or local income taxes anywhere in the state
- All retirement income (Social Security, pensions, 401(k), IRA) is free from state tax
- Texas offsets lost income tax revenue with higher property taxes (averaging 1.6%) and sales taxes (up to 8.25%)
- Major military installations benefit from the zero state income tax on both active duty and retirement pay