Taxes in Texas: Features and Advantages

Main Taxes in Texas

Income Tax

Texas has no personal income tax, which is one of the state’s key advantages.

Sales Tax

The base sales tax rate in Texas is 6.25%, but local surtaxes can raise it to 8.25% in some areas.

Determining the taxable base and applicable rate can be complex and requires professional expertise.

We provide services for obtaining a Sales Tax Certificate, preparing and filing Sales and Use Tax Returns, and advising business owners on registration, calculation, and reporting.

Property Tax

The average property tax rate in Texas ranges from 1.47% to 2.2% of housing value, which is relatively high.

Business Taxes

Texas has no corporate income tax, but it does levy a Franchise Tax.

The taxable base is gross revenue (Taxable Margin) above $2,470,000. Rates depend on the type of business. Companies must file an Annual Franchise Tax Report even if revenue is zero.

We provide services for preparing and filing Annual Reports.

Excise Taxes

Texas levies excise taxes on alcohol, tobacco, and fuel, which are important sources of state revenue.

Advantages of Texas’s Tax System

• No personal income tax — making the state especially attractive for residents of all income levels.
• Transparent business conditions: low Franchise Tax rates and a high threshold of $2,470,000 create favorable conditions for small and medium-sized businesses.

Taxes in Texas Compared to Other States

• No personal income tax.
• Simplified reporting and clear rules for LLCs and S corps.
• Relatively high property tax.
• Franchise Tax on gross revenue — can be burdensome for businesses with high turnover and low margins.