Texas Paycheck Calculator
See exactly what you take home after federal taxes, Social Security, and Medicare. Updated for 2026.
Texas Income Tax: What You Need to Know (2026)
Texas has no state income tax and is constitutionally prohibited from ever imposing one on individuals. Article VIII, Section 24 of the Texas Constitution requires a statewide referendum before any personal income tax could be enacted — a high bar that has kept Texas income-tax-free since before statehood. Texas workers pay only federal income tax, Social Security, and Medicare on their wages.
Instead of income taxes, Texas funds state services primarily through property taxes and sales taxes. Texas has a 6.25% state sales tax, and local governments can add up to 2% more, bringing the maximum combined rate to 8.25%. Texas property taxes are among the highest in the nation, averaging around 1.6–1.8% of assessed value annually — significantly above the national average of roughly 1.0%.
Texas vs other major states
A Texas resident earning $100,000 keeps roughly $6,200 more per year than a comparable California resident and roughly $6,800 more than a New York resident, purely from the absence of state income tax. This advantage grows with income — at $200,000, the gap versus California can exceed $15,000 annually.
What comes out of a Texas paycheck?
Texas W-2 employees see three deductions on every paycheck: federal income tax (calculated using 2026 IRS brackets from 10% to 37%), Social Security at 6.2% on the first $184,500 of annual wages, and Medicare at 1.45% on all wages. Earners above $200,000 also pay the 0.9% Additional Medicare Tax. There is no Texas state income tax line on a paycheck and no Texas individual income tax return to file.
Texas 1099 contractors and freelancers pay self-employment tax of 15.3% on net self-employment income in addition to federal income tax. Texas's lack of state income tax means freelancers only need to make federal estimated quarterly tax payments — no state estimated payments required.
Texas paycheck and tax tips for 2026
- No state withholding: Your Texas employer withholds only federal taxes. Your pay stub will show no state income tax deduction.
- No state return: Texas residents file only a federal Form 1040. There is no Texas individual income tax return.
- Property tax homestead exemption: Texas homeowners who use their property as a primary residence qualify for a $100,000 homestead exemption from school district property taxes — significantly reducing the annual property tax bill.
- Business taxes: While individuals pay no income tax, Texas businesses may owe the Texas Franchise Tax (also called the margin tax) if annual revenue exceeds $2.47 million.
- Maximize federal deductions: Since Texas has no state income tax deduction to worry about, focus energy on federal deductions — 401(k) contributions up to $23,000, HSA contributions up to $4,300 (individual) or $8,550 (family), and IRA contributions up to $7,000.