Texas — Personal Income Tax

Texas does not impose a personal income tax on individuals. The Texas Constitution expressly prohibits the state legislature from enacting such a tax.

Article 8, Section 24-a of the Texas Constitution states: "The legislature may not impose a tax on the net incomes of individuals, including an individual's share of partnership and unincorporated association income." Source: Tex. Const. art. 8, § 24-a

This constitutional prohibition was adopted by Texas voters on November 5, 2019, when Proposition 4 passed with 74.71% approval. The amendment added Section 24-a and simultaneously repealed the prior Section 24, which had allowed the legislature to propose an income tax subject to voter approval in a statewide referendum. Source: H.J.R. 38, 86th Leg., R.S. (2019)

Because the prohibition is embedded in the Texas Constitution, any future attempt to impose a personal income tax would require a constitutional amendment. That process requires a two-thirds vote in both the Texas House of Representatives and the Texas Senate to place a repeal measure on the ballot, followed by approval from a majority of voters in a statewide election.

Texas residents remain subject to federal income tax obligations under the Internal Revenue Code, but no Texas state income tax applies to wages, salaries, business income, investment income, retirement distributions, or any other form of personal income.

Caution / Review Status

Not yet human confirmed. This section addresses only the constitutional prohibition on individual income taxes; it does not address the Texas franchise tax (sometimes called the "margins tax"), which applies to certain business entities and is not classified as a personal income tax.

Although Texas has no personal income tax, the state imposes a franchise tax on business entities doing business in or organized in Texas. This franchise tax is legally distinct from an income tax and is not subject to the constitutional prohibition.

The franchise tax is imposed on each taxable entity that does business in Texas or is chartered or organized in Texas. "Taxable entity" includes partnerships, limited liability partnerships, corporations, limited liability companies, business trusts, professional associations, and other legal entities. The tax is calculated based on the entity's taxable margin, not net income, and is characterized as a privilege tax for doing business in the state.

Source: Tex. Tax Code § 171.001

Because the franchise tax applies to business entities rather than individuals, it does not violate the Texas Constitution's prohibition on taxing "the net incomes of individuals, including an individual's share of partnership and unincorporated association income."

Caution / Review Status

Not yet human confirmed. This section addresses the franchise tax only to distinguish it from personal income tax. Practitioners needing detailed franchise tax guidance should consult the Texas corporate income tax or gross receipts tax guide (the franchise tax is sometimes called the "margin tax"). Single-member LLCs and other pass-through entities may be subject to franchise tax even when the individual owner has no Texas personal income tax liability.

Texas employers have no obligation to withhold state income tax from employee wages. Because Texas does not impose a personal income tax, there is no state withholding requirement, no state withholding form equivalent to the federal W-4, and no state withholding tax return to file.

The Texas Comptroller's official payroll resource for state agencies addresses only federal income tax withholding obligations under the Internal Revenue Code and makes no reference to any state income tax withholding requirement, confirming the absence of such a requirement in Texas.

Employers must still withhold and remit federal income tax, Social Security, and Medicare taxes in accordance with federal law.

Source: Texas Payroll/Personnel Resource – Income Tax Withholding

Texas does not tax retirement income. Because the Texas Constitution prohibits the state from imposing any tax on the net incomes of individuals, retirement distributions—including pensions, 401(k) withdrawals, IRA distributions, annuities, and Social Security benefits—are not subject to Texas taxation. No separate exemption or exclusion is required; these forms of income are untaxed because Texas has no personal income tax.

Source: Tex. Const. art. 8, § 24-a

Repealing or amending the Texas constitutional prohibition on personal income tax requires a two-step process. First, the Texas Legislature must approve a joint resolution proposing the constitutional amendment by a two-thirds vote of all members elected to each chamber—at least 100 votes in the House of Representatives and 21 votes in the Senate. Second, a simple majority of voters must approve the amendment in a statewide election. The governor's signature is not required for constitutional amendments.

Source: Tex. Const. art. 17, § 1

Texas does not impose a personal income tax on individuals. The Texas Constitution expressly prohibits the Texas Legislature from enacting any tax on the net incomes of individuals, including an individual's share of partnership and unincorporated association income.

Constitutional prohibition

Article 8, Section 24-a of the Texas Constitution provides: "The legislature may not impose a tax on the net incomes of individuals, including an individual's share of partnership and unincorporated association income." This prohibition was adopted by Texas voters on November 5, 2019, as Proposition 4, with 74.71 percent approval. The amendment both repealed the prior Section 24 (which had allowed the legislature to enact an income tax subject to voter approval via referendum) and added Section 24-a, which categorically bars any individual income tax.

Effect of the prohibition

Because the prohibition is embedded in the Texas Constitution rather than merely in statute, any future attempt to impose a personal income tax would require a constitutional amendment. Under Article 17, Section 1 of the Texas Constitution, a constitutional amendment requires a two-thirds vote of all members of both the Texas House of Representatives and the Texas Senate, followed by approval by a majority of voters in a statewide election. Prior to the 2019 amendment, the legislature could have enacted an income tax with a simple majority vote in both chambers, contingent on voter approval; the 2019 amendment erected a significantly higher procedural barrier.

What is not taxed

Texas does not tax wages, salaries, self-employment income, capital gains (whether realized or unrealized), interest, dividends, pension distributions, Social Security benefits, IRA withdrawals, or any other form of individual income at the state level. A separate 2025 constitutional amendment (Proposition 2, approved November 2025) further prohibited any state tax on realized or unrealized capital gains for individuals, families, estates, and trusts, codified as Article 8, Section 24-b.

No administrative procedures for a nonexistent tax

Because Texas imposes no personal income tax, there are no Texas administrative procedures—no notices of deficiency, no administrative appeals, no statute of limitations on assessments or refunds, and no voluntary-disclosure or private-letter-ruling mechanisms—related to personal income tax. Texas residents remain subject to federal income tax administered by the Internal Revenue Service, but all state-level personal income tax procedures are inapplicable.

Historical note

Texas has never enacted a broad-based personal income tax. The state's revenue structure relies primarily on sales and use taxes, property taxes (levied by local jurisdictions), and the franchise tax (a business tax on certain entities' margins). The 1993 constitutional amendment (Senate Joint Resolution 49) first required voter approval before any personal income tax could take effect; the 2019 amendment replaced that requirement with an outright prohibition.

Source: Tex. Const. art. VIII, § 24-a