Research Areas
Texas
The Facts on Texas’s Tax Climate
Here are some basic facts on Texas’s tax system and how it compares to other states:
Tax Freedom Day Arrives on April 12 in Texas
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Texas taxpayers had to work until April 12 to pay their total tax bill, ranking it 40th highest in the nation. That's 11 days before national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states are: New Mexico, April 12 (ranked 42nd nationally); Oklahoma, April 11 (ranked 43rd nationally); Arkansas, April 17 (ranked 30th nationally); and Louisiana, April 13 (ranked 38th nationally).
Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state
Texas' State/Local Tax Burden Among Nation's Lowest
During the past three decades Texas' state and local tax burden has been consistently below the national average. Estimated at 8.4% of income, Texas's state and local tax burden percentage ranks 43rd highest nationally, well below the national average of 9.7%. Texans pay $3,580 per capita in state and local taxes.
Texas's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Texas' 2008 Business Tax Climate Ranks 8th
Texas ranks 8th nationally in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: New Mexico (23rd), Oklahoma (19th), Arkansas (35th) and Louisiana (32nd).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)
Texas Levies No Personal Income Taxes
Texas levies no individual income taxes, joining six other states with the same policy.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Texas Levies a Gross Receipts Tax
The state of Texas, in addition to collecting no personal income taxes, collects no corporate income taxes. However, Texas recently instituted a gross receipts tax called the Texas Margins tax. It went into effect January 1, 2007. Texas joins Washington, Delaware, Michigan and Ohio as the only states that levy an economy-wide gross receipts tax.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006
Texas Levies Sales Tax above National Median
Texas levies a 6.25% general sales or use tax on consumers, above the national median of 5.4%. State and local governments combined collected $1,362 per capita in general sales taxes in 2005, which ranks 15th highest nationally. Texas' gasoline tax stands at 20 cents per gallon, ranking 36th highest nationally. Texas' cigarette tax stands at $1.41 per pack of twenty and ranks 18th highest nationally. The sales tax was adopted in 1961, the gasoline tax in 1923 and the cigarette tax in 1931.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005
Texas Property Taxes: Comparatively High
Texas's local governments collected $28,176,329,000 in property taxes during fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. Texas is one of the 13 states that collect no state-level property taxes, meaning its per capita property tax collections equaled $1,254 for all levels of government in FY2004, ranking it 13th nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Texas is a Donor State
Texas taxpayers receive less federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, Texas citizens received approximately $0.94 in the way of federal spending. This ranks the state 35th nationally and represents a slight decrease from 1995, when Texas received $0.95 per dollar of federal taxes paid (ranking them 37th nationally). Neighboring states and the amount of federal spending they received per dollar of federal taxation paid were as follows: New Mexico ($2.03), Oklahoma ($1.36), Arkansas ($1.41), and Louisiana ($1.78).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
Articles from the Tax Foundation
- State Business Tax Climate Index Rankings , October 6, 2008
- 2009 State Business Tax Climate Index (Sixth Edition), by Josh Barro, October 6, 2008
- Would the Proposed Bailout Affect Local Property Tax Collections?, by Joseph Henchman, September 29, 2008
- Property Taxes on Owner-Occupied Housing, by County, 2007, Ranked by Property Taxes Paid, September 23, 2008
- New Census Data on Property Taxes on Homeowners, by Gerald Prante, September 23, 2008
- Property Taxes on Owner-Occupied Housing by State, 2007, September 23, 2008
- Property Taxes on Owner-Occupied Housing by County, 2007, Ranked by Taxes as Percentage of Home Value, September 23, 2008
- State and Local Individual Income Tax Collections Per Capita and Per Household, Fiscal Year 2006 , September 15, 2008
- Tax Foundation Urges Texas Court to Avoid Sparking an Interstate Tax War, by Joseph Henchman and Paul Galindo, August 25, 2008
- Local Property Tax Collections Per Capita and Per Household, Fiscal Year 2006 , August 25, 2008
- National and State Corporate Income Tax Rates, U.S. States and OECD Countries, 2008 , August 13, 2008
- Urging Texas Court to Avoid Sparking an Interstate Tax War�First American Title Ins. Co. v. Combs, by Joseph Henchman, August 12, 2008
- Tax Foundation State and Local Tax Burden Estimates for 2008: An In-Depth Analysis and Methodological Overview, August 7, 2008
- State-Local Tax Burdens Dip As Income Growth Outpaces Tax Growth, by Gerald Prante, August 7, 2008
- Texas' State and Local Tax Burden, 1977-2008, August 7, 2008
- State and Local Tax Burdens: All States, One Year, 1977-2008, August 7, 2008
- State and Local Tax Burdens: All Years, One State, 1977-2008, August 7, 2008
- Summary of Federal Individual Income Tax Data by State, 2006 , August 1, 2008
- State and Local Debt Outstanding Per Capita, Fiscal Year 2006 , July 23, 2008
- State and Local Property Tax Collections Per Household and Per Capita by State, Fiscal Year 2006, July 20, 2008
- State Property Tax Collections Per Capita and Per Household, Fiscal Year 2006 , July 20, 2008
- Local Wage, Income, and Occupational Privilege Taxes, 2008, July 15, 2008
- County and City Income Taxes Clustered in States with Poor Tax Climates, by Joseph Henchman, July 11, 2008
- State Government General Revenue* by Source, Fiscal Year 2006 , June 4, 2008
- State Tax Collections Per Capita and Per Household, Fiscal Year 2006 , June 4, 2008
- State and Local Spending Per Capita and Per Household, Fiscal Year 2006 , June 4, 2008
- State General Sales Tax Collections Per Capita and Per Household, Fiscal Year 2006 , June 3, 2008
- Local Government General Revenue by Source, Fiscal Year 2006 , June 3, 2008
- State and Local Corporate Income Tax Collections Per Capita and Per Household, Fiscal Year 2006 , June 3, 2008
- State Corporate Income Tax Collections Per Capita and Per Household, Fiscal Year 2004-2006 , June 3, 2008
- States Should Avoid Sales Taxes on Nonprofit Hospital Purchases, by Joseph Henchman, April 11, 2008
- Tax Freedom Day by State, 1970-2008, March 26, 2008
- Tax Freedom Day by State, 2008, March 26, 2008
- America Celebrates Tax Freedom Day, by Gerald Prante and Scott A. Hodge, March 26, 2008
- State Corporate Income Tax Rates, 2000-2008, March 22, 2008
- State Sales, Gasoline, Cigarette, and Alcohol Tax Rates by State, 2000-2008, March 7, 2008
- State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005, February 5, 2008
- State Selective Sales Tax Collections Per Household, 2006, February 5, 2008
- State and Local General Sales Tax Collections Per Household, Fiscal Year 2005, February 5, 2008
- State Individual Income Tax Rates, 2000-2008, February 3, 2008
- Corporate Tax Burden by Metropolitan Statistical Area (MSA), 2005 , October 24, 2007
- Corporate Income Taxes Paid by Congressional District, October 24, 2007
- Federal Spending Received Per Dollar of Taxes Paid by State, 2005, October 9, 2007
- New Census Data Shows Where Property Taxes Hit Homeowners Hardest, by Gerald Prante, September 12, 2007
- State Lottery Sales Per Household, Fiscal Year 2006 , August 1, 2007
- Lottery Revenue as a Percentage of Own-Source Revenue by State, Fiscal Year 2005 , August 1, 2007
- Implicit Tax Rates on State Lottery Sales by State, Fiscal Year 2006 , August 1, 2007
- Itemization Rates by State, 2005, July 24, 2007
- Most Americans Don�t Itemize on Their Tax Returns, by Gerald Prante, July 23, 2007
- General Sales Tax Collections by State, Fiscal Year 2006, June 28, 2007
- State and Local Debt Per Capita, 2005, June 28, 2007
- State and Local Revenues Per Capita, 2005, June 22, 2007
- State Individual Income Tax Collections, 2006, June 18, 2007
- Toll Revenue vs. Motor Fuel Taxes by State, 2005, June 11, 2007
- State Motor Fuel Tax Collections by State, 2006, June 7, 2007
- State Estate and Gift Tax Collections, by State and Per Capita, 2006, June 5, 2007
- Change in Per Capita State and Local Property Taxes from 2000 to 2005, May 15, 2007
- Phone Company Sends Text Message: Remit Payment for Service and Taxes, by William Ahern and Curtis S. Dubay, February 13, 2007
- Higher Cigarette Taxes Mean More Smuggling, by Patrick Fleenor, May 15, 2006
- Reforming Property Taxes in the Lone Star State, by Chris Atkins and Jonathan Williams, May 11, 2006
- Telecommunications Deregulation in Texas: An Analysis of the 2005 Competition Act, by Donald L. Alexander, Ph.D., December 8, 2005
- Telecommunications Deregulation in Texas Promises Increased Competition, Innovation and Efficiency, by Alicia Hansen, December 6, 2005
- More Gambling for the Children?, by Alicia Hansen, March 1, 2005
- Links to Other Tax Policy Resources, January 1, 1937