How does Texas’s tax code compare? Texas does not have an individual income tax. Texas does not have corporate income tax but does levy a state gross receipts tax. Texas has a 6.25 percent state sales tax rate and an average combined state and local sales tax rate of 8.20 percent. Texas has a 1.47 percent effective property tax rate on owner-occupied housing value.
Texas does not have an estate tax or inheritance tax. Texas has a 20 cents per gallon gas tax rate and a $1.41 cigarette excise tax rate. The State of Texas collects $4,822 in state and local tax collections per capita. Texas has $10,906 in state and local debt per capita and has a 77 percent funded ratio of public pension plans. Texas’s tax system ranks 7th overall on the 2025 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Texas is no exception. The first step towards understanding Texas’s tax code is knowing the basics. How does Texas collect tax revenue? Click the tabs below to learn more! You can also explore our state tax maps, which are compiled from our annual publication, Facts & Figures 2024: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 32 percent of state tax collections and 13 percent of local tax collections (24 percent of combined collections).
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Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
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Moving away from state gross receipts taxes would represent a pro-growth change to make the tax code friendlier to businesses and consumers alike, which is especially necessary in the wake of the coronavirus pandemic.
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Our updated 2021 edition of Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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