Texas State Income Tax Filing
No individual income tax
Individual income tax
None — no state return, no state withholding
Wage withholding
Federal only
Business tax
Franchise tax applies at entity level, not to you personally
Where revenue comes from
Property tax and sales tax rather than income tax
Texas income tax at a glance
Texas levies no individual income tax, so there is no annual state return for you to file and no state withholding on your paycheck. That is genuinely the whole answer to the headline question, and it is why Texas absorbs so much relocation from California, New York and New Jersey. The parts that actually need attention are elsewhere. Your federal obligation is unchanged and unaffected. If you moved to Texas partway through the year, the state you left still wants a part-year return covering the period before the move, and states with aggressive residency rules do not simply accept a Texas address as proof you left. If you run a business through an entity, Texas levies a franchise tax at entity level rather than on you personally. And the revenue has to come from somewhere — Texas leans heavily on property and sales tax, which is why the total burden is lower than California but not zero.
What to watch out for in Texas
- The absence of state income tax does not reduce your federal tax. Federal brackets, the standard deduction and every federal credit apply exactly as they would anywhere else.
- It does remove the state and local income tax deduction from your federal itemised deductions, which for some filers makes the standard deduction the better federal choice where itemising previously won.
- The year you move to Texas is a part-year return in your former state, not a clean break. States you leave — California and New York in particular — apply their own residency tests and can continue to treat you as a resident if your connections there persist.
- Income earned from sources in another state can still be taxable by that state even while you live in Texas. Rental property, a business operating elsewhere, or days physically worked in another state are the usual triggers.
For anyone with income still coming from India, Texas is worth more than the salary saving suggests
The relocation arithmetic people run is about salary: no state tax on the paycheque, so a Bay Area or New Jersey salary goes further in Austin or Dallas. That part is well understood. The part that is almost never counted is what happens to the Indian side of your finances.
States that tax residents on worldwide income reach your Indian income too, and most of them give no credit for the Indian tax already paid on it. California, New York, New Jersey, Illinois and Massachusetts all fall into that group, so an NRO fixed deposit, a rented flat in Hyderabad or a gain on Indian shares can carry a real second layer of state tax with no relief. In Texas that layer is zero, because there is no individual income tax for it to sit in.
- NRO interest — taxed federally, TDS deducted in India, no Texas tax on top.
- Rental income from Indian property — reportable federally on Schedule E, no Texas return to also report it on.
- Gains on Indian shares or mutual funds — federally taxable and, for mutual funds, inside the PFIC regime; no Texas layer either way.
- NRE interest — the awkward one. It is tax-free in India and fully taxable federally with no foreign tax credit, because India took nothing. Texas at least does not add to it.
- EPF and PPF balances — wherever the unsettled federal treatment lands, Texas adds no state tax to the outcome.
This matters most in the year you move. If you are leaving a worldwide-income state, income from your Indian assets that arrives after you have genuinely established Texas residency generally falls outside that former state's reach, while income that arrived before the move does not. For someone with a substantial NRO deposit or a property sale in prospect, the sequencing is worth deliberate thought rather than being left to whenever the paperwork happens.
No Texas return does not mean no filing. Your FBAR, Form 8938 and Form 8621 obligations are federal and entirely unaffected by which state you live in — moving to Texas changes the tax on your Indian income, not the requirement to disclose it.
Moving to Texas changes the state tax on your Indian income, not the duty to disclose it: FBAR still applies in a no-income-tax state, and we can file it for you.
Go deeper on the India side
These guides cover the federal treatment of Indian income and assets in detail. They apply wherever you live in the US — Texas sits on top of them.
- FBAR and Indian Bank AccountsWhich Indian accounts are reportable on FinCEN Form 114 — savings, NRE, NRO, FCNR, fixed deposits, PPF, EPF, demat — how the $10,000 aggregate threshold really works, and why many F-1 students owe nothing at all.
- The Foreign Tax Credit and Form 1116The mechanism that actually stops you being taxed twice — and it does not work evenly. NRE interest is fully taxable in the US with no credit at all, because India exempted it. Plus the April-March year mismatch nobody warns you about.
- Indian Mutual Funds and the PFIC ProblemPFIC status turns on the US income and asset tests applied to the fund — tests a pooled vehicle holding securities will often meet. What that means for your SIPs, why the default regime is the punitive one, why the QEF election is usually closed to you, and how many Form 8621s you may owe.
- Indian Rental Income on a US ReturnYou declared the rent in India and paid Indian tax on it, so it feels handled. But India’s flat 30% deduction does not exist in the US, depreciation is mandatory here, and Indian property cannot use the 27.5-year period every calculator defaults to.
- Sending Money Between the US and IndiaA transfer is almost never taxed, but it is often reportable — and which of the two of you has to file depends on which way the money moved. Gift tax follows the donor; Form 3520 follows the recipient.
- Streamlined Filing ComplianceYou have just worked out that your Indian accounts should have been reported for years. There are two procedures, one costs 5% of everything you hold and the other costs nothing — and which one you get depends on dates that are moving.
Forms and deadlines
- Which form
- No individual state income tax return
- Deadline
- Not applicable — there is no individual return to file.
- State authority
- Texas Comptroller of Public Accounts
Federal deadlines are separate from state ones. Our US tax deadlines page covers the federal calendar, and the federal tax brackets apply on top of whatever Texas charges.
Want the arithmetic done for you? The Texas state tax calculator applies the schedule above to a salary and shows the result band by band.
Where these figures come from
Rates, bracket floors, standard deductions and exemptions are taken from the compilation below, stated as of January 1, 2026 and built from state statutes, forms and instructions. The state authority is always the final word on your own position.
Reviewed by Teja K, CPA · last reviewed . General information, not tax advice for your situation. State tax law changes frequently — confirm before acting. How we research and review this.
Texas tax questions
Does Texas have a state income tax?
No. Texas is one of the states that levies no broad-based individual income tax on wages or salaries, so there is no state income tax return to file and nothing withheld from your pay for the state. The Texas constitution makes introducing one difficult, so this is a stable position rather than a current policy setting.
I moved to Texas mid-year. What do I file?
Your federal return as normal, plus a part-year resident return in the state you moved from covering the portion of the year you lived there. There is no Texas return. The work is in allocating income to the pre-move period correctly and, where your former state is one that scrutinises departures, in being able to show that residency genuinely ended when you say it did.
Do I still pay federal tax living in Texas?
Yes, in full. Federal income tax, Social Security and Medicare are unaffected by which state you live in. The saving from a no-income-tax state is limited to the state layer, and part of it is offset federally because you no longer have state income tax to include in itemised deductions.
Is Texas actually cheaper on tax overall?
For wage earners it usually is, but by less than the headline suggests. Texas funds itself through property tax and sales tax, and Texas property tax rates are among the higher ones in the country. For a renter on a good salary the saving is substantial; for a homeowner with a large property, considerably less of it survives.
What is the Texas franchise tax and does it apply to me?
It is a tax on entities doing business in Texas — LLCs, corporations and similar — calculated on margin rather than on personal income. Sole proprietors and general partnerships of natural persons are generally outside it. There is a revenue threshold below which no tax is due, though a report may still be required. If you operate through an entity, this is the Texas filing to be aware of, and the Comptroller is the authority on your specific position.
Does Texas tax my NRO interest or rent from my property in India?
No, because Texas taxes no individual income at all, Indian or otherwise. This is a bigger deal than it sounds. States that tax residents on worldwide income generally give no credit for tax already paid to a foreign country, so a California or New Jersey resident can pay Indian tax on NRO interest and then state tax on the same interest with no relief. In Texas there is no state layer for that income to land in. Your federal return still reports all of it, and your FBAR and Form 8938 obligations are untouched — the change is purely that no state takes a second slice.
I moved from California to Texas and I am selling a flat in India. Does the timing matter?
It can matter a great deal, and it is one of the few genuinely large planning decisions available to this audience. California taxes residents on worldwide income, taxes capital gains as ordinary income with no preferential rate, and gives no credit for Indian tax paid — so a gain realised while you were still a California resident can face state tax approaching 13.3% on top of the federal tax and the Indian tax. Realised after you have genuinely become a Texas resident, that state layer is nil. California scrutinises departures and applies a closest-connections test rather than accepting a change of address, so the move has to be real and documentable before the sale, not merely intended. Get advice before signing, not after.
We file Texas returns alongside your federal
No Texas return — but your federal one still needs filing
Federal returns from $19.99, state returns from $29.99. Multi-state and part-year situations are what we do most of, so bring us the complicated year.