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.
5 min read
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
Tax avoidance is a natural consequence of tax policy. Policymakers should consider the unintended consequences, both to public health and public coffers, of the excise taxes and regulatory regimes for cigarettes and other nicotine products.
5 min read
Consumers legally wagered more than $100 billion on sporting contests in 2023, creating more than $1.8 billion in state revenue. Sports betting is now legal in 38 states and DC, and the landscape is rapidly evolving.
18 min read
Recent data suggest that tax competitiveness plays a significant role in residents’ relocation decisions.
3 min read
Growing cigarette tax levels and differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise.
16 min read
Over 500 million premium cigars were sold in the United States in 2023. With each sale comes a complex tax landscape.
4 min read
Policymakers can and should address taxpayers’ legitimate grievances about out-of-control property tax bills, but they should do so without upending a system of taxation that is more efficient, fair, and pro-growth, and better suited to municipal finance, than any of the alternatives.
39 min read
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.
115 min read
States that tax GILTI increase filing complexity, drive up the cost of tax compliance, and introduce unnecessary economic uncertainty and legal risk. 21 states and DC continue to tax GILTI despite these challenges.
6 min read
Sports stadium subsidies are salient political gimmicks designed to appear as if politicians are providing tangible benefits to taxpayers. The empirical evidence shows repeatedly that stadium subsidies fail to generate new tax revenue and new jobs or attract new businesses.
6 min read
Raising the combined US corporate rate to the second highest in the OECD would encourage corporations to depart from the US, reducing economic output and worker wages across the income spectrum.
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