Texas State Income Tax 2023 - 2024
The Texas tax structure presents a complex web of advantages and disadvantages. Its lack of state income taxes can be a major boon for some residents, while the state's high sales and property taxes can bite harder than in other states.
Unlike most states, Texas does not have an individual state income tax. However, the state does have a variety of other taxes that are important to consider when determining your overall tax burden. These include sales and use taxes, franchise tax, property taxes and local taxes like hotel occupancy and mixed beverage taxes.
Texas has a low tax rate compared to the national average. This is due in part to the absence of a personal income tax, but also because the state relies heavily on sales and property taxes to generate revenue. These taxes can impact residents and businesses differently, and understanding the state’s tax system is critical to optimizing your overall tax liability.
For example, a couple in San Antonio’s gentrifying Dellview neighborhood saw their property tax bill drop 17% last year thanks to a legislative effort that included a boost to the homestead exemption. However, many homeowners still face one of the nation’s highest property tax rates. A review of the state’s tax system and a consultation with an expert can help you navigate these unique challenges.
Other Texas Taxes
The state of Texas does not tax individual income, but it does levy high sales and property taxes. Texas sales tax is 6.25%, and local governments can add up to 2%. This makes the total combined rate as high as 8.25%. The tax is charged on most goods and services, but some items are exempt, including groceries, vitamins, and over-the-counter medications.
A regressive sales tax system in Texas means that families in the lowest 20% of income pay 2.75 times as much as those in the highest 10% for sales, property, and other state/local taxes. However, the state does offer several sales tax exemptions, such as unprepared food and prescription drugs.
Living in the state of Texas can be expensive, but it is also a great place to live. However, you will need to consider all your state and local tax payments when managing your finances. Using calculators to estimate your take-home pay can help you better understand your salary after taxes.
You can apply for a payment plan with the Comptroller’s office if you owe back taxes. The office considers these requests on a case-by-case basis, so it is important to contact the field office directly to discuss your situation.
