What Taxes Do Texas Residents Pay?

 In BLOG

Texas is one of seven states that does not collect income tax. So, what taxes do Texas residents pay? According to an article posted recently on The Center Square, the average Texan pays 8.7% of their income in a combination of sales and property taxes.

According to that article “State residents pay $0 per capita annually in income tax collections, $1,872 in property taxes and $1,426 in general sales tax collections, 24/7 Wall St. reported.”

In November of 2019, the voters of Texas passed Prop 4 that made it even more difficult for a state income tax to be imposed in the future. The ban on income tax passed overwhelmingly.

The Percentages

Nationwide, tax payers pay 9.8% of their income in state and local taxes. This puts Texas in the lower portion of the statistics.

Property tax tends to make up the majority of state and local revenues nationwide. The states with the highest property taxes tend to have the largest levies.

Taxes Texas Residents Pay

So, where does the state get the money it needs to provide service to the residents of Texas? The Dallas Morning News asked this question in January of 2020.

In 2019 the state collected $34 billion in sales tax. An additional $25.4 billion, or roughly 19.8% of the net revenue, came from taxes on other goods and transactions, such as oil production, motor vehicles, cigarettes and natural gas.

Property taxes in Texas are higher than other states, but it is where most local governments obtain the money for services they provide. Property taxes collected by school districts pay for more than half of school funding.

So, what other taxes do residents pay? The sales tax applies not only to retail goods purchased, but also to most rentals and many services.

An additional $25.4 billion, or roughly 19.8% of the net revenue, came from taxes on other goods and transactions, such as oil production, motor vehicles, cigarettes and natural gas.

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