Texas Income
Tax Rates & Rules

Texas does not impose an individual state income tax in 2026. The Texas Constitution expressly prohibits the Legislature from imposing a tax on the net incomes of individuals, including an individual's share of partnership and unincorporated association income.

Because Texas has no personal state income tax, there are no Texas individual income tax brackets, no Texas standard deduction for a personal state return and no Texas wage income tax withholding. Federal income tax and payroll taxes can still apply.

Source: Texas Constitution Article VIII

What Is the Texas Income Tax Rate for 2026?

The Texas individual state income tax rate is effectively 0% because Texas does not levy a personal income tax.

Texas workers still pay federal taxes when federal law applies. The absence of a Texas individual income tax should not be described as an absence of all taxes.

Why Does Texas Not Have an Individual Income Tax?

Texas law goes beyond simply choosing a 0% rate. Article VIII, Section 24-a of the Texas Constitution prohibits the Legislature from imposing a tax on the net incomes of individuals.

The constitutional language includes an individual's share of partnership and unincorporated association income. This is why Texas does not maintain a personal state income tax schedule similar to states with graduated or flat individual income tax.

Source: Texas Constitution, Article VIII, Section 24-a

Do Texas Residents File a State Income Tax Return?

Texas residents generally do not file a Texas individual income tax return because the state has no personal income tax.

They may still need to file a federal income tax return. A Texas resident can also have another state's income tax filing requirement when income is earned or sourced in that state.

Does Texas Tax Retirement or Investment Income?

Texas does not impose a general individual state income tax on Social Security, pensions, IRA distributions, 401(k) distributions, interest, dividends or personal capital gains.

Federal income tax rules can still apply to these forms of income. Business entities can also be subject to Texas franchise tax even when the owners themselves do not owe Texas personal income tax.

Texas Residents Working in Another State

Living in Texas does not automatically prevent another state from taxing income earned there.

A Texas resident who physically works in another state can have withholding and filing obligations in that state. The result depends on the work state's sourcing rules, reciprocity provisions and the nature of the work.

Texas itself generally does not provide an individual income tax credit for tax paid to another state because Texas does not impose a personal income tax against which such a credit would be applied.

Texas Income Tax vs. Federal Income Tax

Texas has no individual state income tax, but federal income tax and federal payroll taxes still apply when federal rules require them.

• Federal income tax withholding can reduce employee pay.
• Social Security tax can apply to covered wages.
• Medicare tax can apply to covered wages.
• Self-employed individuals can have federal income tax and self-employment tax obligations.
• Federal estimated payments can be required when federal withholding is insufficient.

Texas Franchise Tax Is Not an Individual Income Tax

Texas franchise tax is a business privilege tax imposed on taxable entities and should not be confused with personal income tax.

For 2026 reports, the Comptroller lists a no-tax-due revenue threshold of $2.65 million. The published 2026 rates are 0.375% for retail or wholesale businesses and 0.75% for other taxable entities, with a 0.331% EZ Computation rate when eligible.

These figures belong to the business franchise tax system. They should not be entered as employee state income tax rates on a paycheck.

Source: Texas Franchise Tax Rates and Thresholds

Source: Texas Franchise Tax Overview

Does a Sole Proprietor Pay Texas Franchise Tax?

A sole proprietorship that is not legally organized as a liability-limited entity is generally not a taxable entity for Texas franchise tax purposes.

A single-member LLC can be a taxable entity even when it is treated as a sole proprietor for federal income tax purposes. Business structure therefore matters when determining franchise tax obligations.

Source: Texas Franchise Tax Overview

Texas Income Tax Withholding and Paychecks

A normal Texas paycheck should not include a Texas individual income tax withholding deduction.

Federal income tax, Social Security, Medicare, benefits and other authorized deductions can still reduce take-home pay. Texas unemployment tax is also an employer-side obligation rather than an employee state income tax.

To estimate take-home pay without a Texas state income tax deduction, use the Texas Paycheck Calculator.