Texas Paycheck Calculator Guide

Why Texas Has No Income Tax

Texas funds its state government primarily through sales tax (6.25% state + up to 2% local = up to 8.25% total) and property taxes — which are among the highest in the nation. The Texas Constitution was amended in 1993 to require a two-thirds supermajority of the legislature and voter approval to enact an income tax, making one effectively impossible under current political alignment.

What Texas Workers DO Pay:

- Federal income tax (standard brackets)

- FICA (Social Security 6.2% + Medicare 1.45%)

- Potentially city/county property taxes

- State and local sales taxes

What Texas Workers Do NOT Pay:

- State income tax

- State capital gains tax

- State estate or inheritance tax

Texas Take-Home Pay at Every Salary Level (2026)

The Hidden Tax: Texas Property Taxes

While Texas has no income tax, its property tax rates are among the highest in the nation — averaging 1.7–2.3% of assessed value annually. This is a meaningful cost for homeowners:

- Median Texas home value (2026): ~$325,000

- At 1.8% property tax rate: $5,850/year ($488/month)

- In high-cost areas like Austin: median ~$550,000 → $9,900–$11,000/year

For renters, property taxes are effectively embedded in rent. For homeowners, this is the "price" of no income tax. A California homeowner on a $150,000 salary paying $18,330 more in income tax may pay less in property tax (CA property tax is typically 1.1–1.3%, with Prop 13 caps on increases).

The true financial comparison between living in Texas vs. California must account for total tax burden — income + property + sales — not income tax alone.

Texas vs. California: The Full Picture at $100,000

Let's compare the total cost of living in Austin, TX vs. Los Angeles, CA for a $100,000 earner:

| Item | Austin, TX | Los Angeles, CA |

|------|------------|------------------|

| State income tax | $0 | $9,975/yr |

| Federal + FICA | $21,705 | $21,705 |

| Property tax (own home) | ~$7,000/yr | ~$4,500/yr |

| Median rent (1BR) | ~$16,800/yr | ~$24,000/yr |

| Sales tax (avg purchases) | ~$2,400/yr | ~$2,100/yr |

| Auto insurance | ~$1,800/yr | ~$2,400/yr |

Net in Austin after income taxes and rent: ~$40,000/yr

Net in LA after income taxes and rent: ~$20,700/yr

The Austin worker has nearly double the annual discretionary income of their LA counterpart on the same salary.

Moving to Texas: What to Know for Your First Paycheck

If you've recently relocated to Texas from a state with income tax, here's what to expect:

First Paycheck in Texas: You'll notice no state income tax withholding line. Your W-2 at year-end will have no entry in Box 15 (state information). You will not need to file a Texas state income tax return.

Update Your W-4: If you've moved from a high-tax state, your previous W-4 additional withholding (line 4c) may have been set to cover state taxes you were paying to another state. Review your W-4 with your new Texas employer — you may be withholding more federal tax than necessary.

Residency Date Matters: If you moved mid-year, you may need to file a part-year resident return in your former state. Most states tax income earned while you were a resident, even if you moved to Texas. Check your former state's rules.

No-Tax Doesn't Mean No Forms: Even in Texas, check if your employer withholds city-level taxes (Houston, Dallas, San Antonio, and Austin do not have local income taxes). Some Texas-based workers with clients in other states may still owe those states' income taxes on income sourced there.

Frequently Asked Questions