Texas does not have an individual income tax. Texas does not have a traditional corporate income tax but does impose a gross receipts tax (Franchise Tax). Texas has a 6.25 percent state sales tax rate and an average combined state and local sales tax rate of 8.19 percent. Texas has a 1.40 percent effective property tax rate on owner-occupied housing value. Texas does not have an estate tax or inheritance tax. Texas’s gas tax is 20 cents per gallon, and its cigarette excise tax is $1.41 per pack of 20 cigarettes.
Texas raises tax revenue primarily through property taxes (40.7 percent of total state and local tax revenue), general sales taxes (37.7 percent), and other taxes (21.6 percent). Texas collects $5,737 in state and local tax collections per capita, carries $12,170 in state and local debt per capita, and has an 82 percent funded ratio of public pension plans. Texas’s tax system ranks 7th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Texas is no exception. Use the tabs below to compare Texas taxes with other states and to see how Texas raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: 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.
122 min read
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.
2 min read
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
9 min read
The logic that has prevailed for local sales taxes should apply equally to other taxes that localities impose on multijurisdictional businesses, including local tourism taxes. The evidence is clear that central administration of local taxes reduces compliance costs without sacrificing local revenue.
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People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
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In times of high inflation, states should consider adopting permanent full expensing because it boosts long-run productivity, economic output, and wages.
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All corporate income taxes fall on capital investment, but the structure should not make matters worse, and policymakers should take care not to distort investment decisions through the use of targeted incentives for select firms or activities instead of a lower rate for all businesses.
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Remote and flexible work opportunities are here to stay, whether states like it or not. With enhanced opportunities to take their job with them wherever they please, more workers can factor tax burdens into their decision of where to live.
15 min read
While there are many ways to show how much is collected in taxes by state governments, our Index is designed to show how well states structure their tax systems by focusing on the how more than the how much in recognition of the fact that there are better and worse ways to raise revenue.
129 min read
IRS and Census data show that people and businesses favor states with low and structurally sound tax systems, which can impact the state’s economic growth and governmental coffers.
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When examining tax burdens on businesses, it is important to consider both federal and state corporate taxes. Corporate taxes are one of the most economically damaging ways to raise revenue and are a promising area of reform for states to increase competitiveness and promote economic growth, benefiting both companies and workers.
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Some tax ballot initiatives will be straightforward, some will be complex, and—let’s be honest—some will be a drafting nightmare.
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Property taxes are the primary tool for financing local government and generating state-level revenue in some states as well.
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