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Texas Tax

Tax Exemption Forms

Sales Tax Forms

Form 01-339 Texas Sales and Use Tax Exemption Certification

Form 01-156 Texas Use Tax Return

Form 01-117 Texas Sales and Use Tax Return (Short)

Property Tax Forms

Form 50-114 Application for Residence Homestead Exemption

Form 50-144 Business Personal Property Rendition of Taxable Property

The Texas tax burden, at 7.9% of income is well below the national average of 9.8%.  there is no state income tax, which leads to higher sales and property taxes.  There are also property taxes that must be given consideration.  Tax returns are due on April 15.

Texas state sales/use tax – 6.25%, prescription and non-prescription drugs and non-prepared food exempt, local sales tax can add 2%.

Texas personal income tax

There is no state income tax

Texas excise taxes

Taxes will be assessed on alcohol, tobacco, gasoline and other miscellaneous items, at the discretion of the state.

– $1.41 per package of 20 cigarettes

– $2.40/gallon on spirits

– $.204 per gallon on table wine

– $.20 per gallon of beer

– Fireworks are taxed at 2% + sales tax, which funds rural fire departments

– $.24/gallon on gasoline

Texas inheritance/estate tax

Only federal laws are in effect.  No state estate tax has been collected on deaths after Jan 1, 2005.  There is no Texas inheritance tax.

Texas payroll taxes

State Disability Insurance – none

State Unemployment Insurance – 0.66% to 8.25%, wage base is $9,000.  New employer contribution is 2.7%.  Construction employers use 5.4%.

State minimum wage follows federal standards.

Texas state property tax

Texas does not impose a property tax, but cities, counties and school districts will.  Vehicles that do not produce income are exempt from taxation.  Intangible property is not taxed.  There is a homestead exemption available for homeowners that live in their property as a primary residence.  Property taxes are comparatively higher to other states due to the absence of personal income taxes.

Texas state corporate tax

Although Texas does not levy a corporate income tax, there is a tax on gross receipts called the Texas margins tax.  Texas is only one of five states that has a gross receipts tax in lieu of a corporate tax rate.

Exemptions

There is a $10,000 property tax exemption to the property’s assessed value for school district taxations.  This can be in addition to a $15,000 homestead exemption.  $3,000 will be exempt from all other local taxes.  School distract taxes are frozen for seniors and the disabled.

The tax ceiling on properties that undergoes renovations is dropped to compensate for the cost of renovations and increased value of the property.

Primary Areas of Concern

Texas is the 2nd most populous American state and curiously, has a lower tax burden than other populated states like California & New York.

Sales Tax

Texas sales taxes are imposed on all sales, leases, and rentals on all goods and most taxable services. Food and clothing are subject to the Texas state sales tax. In addition to the Texas state sales tax, cities and counties reserve the right to add a fraction to revenue to their own coffers. The Texas sales tax rate currently stands at 8.25%. 8.25% percent is the combined total rate of city, county, and state government sales taxes. Texas also imposes various selective sales taxes. The Texas state sales tax on specific commodities mostly pertain to vices like alcohol, gambling

Texas Property Taxes

In Texas, the property tax burden is relatively high. Property taxes are high due to the high population of the state. Texas real estate demand is high; therefore, the government see this as an opportunity to generate revenue. The average Texas property owner pays approximately $1,400 a year in property taxes. This is staggering given the vast wealth of land comprises the state of Texas.

Texas is, geographically, the second largest state. Property taxes, in Texas are not imposed by the state, they are imposed by the county government. Texas is one of 13 states that do not impose property taxes at the state level. Texas property taxes are based on the taxable value of a commercial, industrial, or residential property. Property tax appraisers are county government workers. Texas property owners have a right to appeal real estate appraisals.

The Texas state government even approved the passing of the Property taxpayer’s Bill of Rights. The Texas Property Taxpayer’s Bill of Rights outlines the right of property owners to appeal the county government’s appraisal of land holdings. Equal and uniform property taxation is another right of property owners.


Introduction

Taxes are a part of every citizen’s life, and Texas is no exception. Texas tax is a complex system that is comprised of several different types of taxes, including sales tax, property tax, and income tax. However, despite its complexity, the state of Texas has consistently been one of the lowest taxed states in the United States. In this article, we will provide a brief overview of the Texas tax system, discussing the different types of taxes and their rates, including how the state revenue is allocated, and how the taxes affect the state’s economy.

Types of Texas Tax

Sales Tax

Texas has a state sales tax of 6.25%, and local municipalities can choose to add an additional sales tax of up to 2%, resulting in a maximum sales tax of 8.25%. However, not all goods and services are taxed equally. For example, grocery items and prescription drugs are exempt from sales tax, whereas prepared food, gasoline, and electricity are all taxed at a higher rate.

In addition, businesses in Texas are required to pay a sales tax on tangible personal property and some services. However, businesses can also receive exemptions on the tax, and there are several incentives for businesses to invest in the state.

Property Tax

Property tax is the primary source of revenue for local governments in Texas. It is collected by counties and is based on the value of the property. Every year, county appraisal districts appraise the value of the properties in their county and send out property tax bills based on the assessed value.

The property tax rate in Texas varies depending on where the property is located, but it is generally higher in urban areas. In 2019, the average property tax rate in Texas was 1.86%. The amount of property tax you pay depends on the value of your property, and the local tax rate.

It is worth noting that the state of Texas does not have a state property tax.

Income Tax

The state of Texas does not have a state income tax, meaning that residents are not required to pay an income tax to the state. Residents of Texas are only required to pay federal income tax. This lack of state income tax is what makes Texas an attractive place for individuals and businesses to live and operate.

However, it is important to note that Texas does have a “”margins tax”” that is applied to businesses that are subject to the state franchise tax. This tax is calculated based on the business’s gross receipts and is applied in addition to the federal corporate income tax.

Budget and Revenue Allocation

The state of Texas has a biennial, or two-year, budget cycle, and the budget is proposed by the governor and passed by the state legislature. The budget pays for essential things such as education, healthcare, and public safety, and it is funded by taxes, fees, and other sources of revenue.

One of the primary sources of revenue for the state is the sales tax. In 2019, sales tax revenue made up over half of the state’s total tax revenue. Other significant sources of revenue include the federal government, the franchise tax, and the state lottery.

Once the budget is passed, funds are allocated to the various state agencies for their programs and services. In the 2020-2021 biennium budget, education was allocated the highest amount of funding, followed by healthcare and public safety.

How Taxes Affect the Texas Economy

Taxes play a significant role in the economy of any state, and Texas is no exception. Understanding how taxes affect the state’s economy can help citizens and businesses understand the impact of various tax policies.

One of the primary ways taxes impact the state’s economy is through their effect on the cost of living and doing business. Because Texas has a relatively low tax burden, it is generally more affordable to live and do business in Texas than in states with higher taxes.

This affordability has helped to make Texas an attractive place for businesses to operate, which has resulted in job growth and economic development. In fact, Texas has consistently been one of the fastest-growing states in terms of job growth and population.

Another way that taxes impact the Texas economy is through their effect on state revenue. Taxes are a critical revenue source for the state, and reducing taxes can sometimes lead to a reduction in revenue. Depending on how the state chooses to allocate its funds, a reduction in revenue can have either positive or negative effects on the economy.

For example, reducing the sales tax rate could lead to an increase in consumer spending, which could lead to economic growth. However, reducing the property tax rate could lead to a reduction in revenue for local governments, which could result in reduced public services.

Conclusion

Texas tax is a complex system that is shaped by multiple factors, including the types of taxes, the state budget, and the economic impact of taxes. However, because of the state’s relatively low tax burden, Texas has consistently been one of the fastest-growing states in terms of job growth and population.

As the state continues to grow and change, it is likely that taxes will play an increasingly important role in shaping its future. Understanding the Texas tax system and its impact on the economy is essential for citizens, businesses, and policymakers alike.