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 7 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 2011, Texas taxpayers work until April 7 to pay their total tax bill, ranking it 25th highest in the nation. That's 5 days before national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states are: New Mexico, March 31 (ranked 45th nationally); Oklahoma, April 2 (ranked 41st nationally); Arkansas, April 3 (ranked 35th nationally); and Louisiana, March 30 (ranked 47th nationally).
Full study of Tax Freedom Day, nationwide and in each state
Texas' State and Local Tax Burden Among Nation's Lowest
Texas' state and local tax burden is currently estimated at 7.9% of income (45th nationally), below the national average of 9.8%. Compared to the 1977 data, Texas had a tax burden of 7.9% (48th nationally), remaining relatively constant. Currently Texas taxpayers pay $3,197 per capita in state and local taxes.
Texas's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009
Texas' 2012 Business Tax Climate Ranks 9th
Texas ranks 9th 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 rank as follows: New Mexico (38th), Oklahoma (33rd), Arkansas (31st) and Louisiana (32nd).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth 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
Texas, in addition to collecting no personal income taxes, collects no corporate income taxes. However, the state 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, 2000-2009
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 Sales and Excise Taxes
Texas levies a 6.25% general sales or use tax on consumers, slightly above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,624 per person, which ranks 14th 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 21st 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, cigarette, gas, beer, wine, and spirits tax rates
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita
Texas Property Taxes Comparatively High
Texas's local governments collected $1,404.76 per capita in property taxes during fiscal year 2006, 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. Its per capita property tax collections in FY2006 rank 13th highest 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
