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Texas has no state income tax, but you're likely paying in other ways.
As of 2026, Texas is one of nine states that do not impose an individual income tax, along with Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Washington and Wyoming. Still, that doesn't mean life is tax-free in Texas, far from it.
Beyond federal income taxes, residents of the Lone Star State still pay plenty of taxes in other ways. The state levies dozens of taxes from sales taxes to gas taxes to utility taxes and insurance taxes. Locally, many Texans also have to contend with property taxes, which can be a significant cost for property owners.
Here's a look at some of the taxes and fees that generate major revenues for the state.
Sales tax
Texans' primary contribution to state revenues is through a 6.25% state sales and use tax on most goods and on taxable services, according to the state comptroller's website. Local jurisdictions like counties, cities and others can also impose up to a 2% sales and use tax, up to a maximum rate of 8.25% combined.
Dallas residents pay that maximum 8.25% rate, with 1% going to the city and the other 1% for funding Dallas Area Rapid Transit (DART) operations.
Sales tax made up a majority (57.6%) of the state's total tax revenue ($87.874 billion) in the fiscal year 2024, according to the Sources of Revenue publication from the state comptroller. The city of Dallas collected more than $450 million in sales tax for the fiscal year 2025, accounting for 16.36% of the city's revenues, according to its 2025 annual comprehensive financial report.
Property taxes
While property taxes are levied locally and not by the state, they represent a significant tax burden for property owners. Renters may also feel the impact of property taxes indirectly as a landlord may raise rents to help cover their tax burden.
Texas' effective property tax rate stood at 1.4% in 2024, according to the nonpartisan Tax Foundation. That ranked as the seventh-highest effective property tax rate in the country.
Related: Property taxes: Here's what Dallas-Fort Worth residents are paying, and where it goes
Dallas County taxes get allocated to various places, including school districts, cities and counties. Parkland Hospital and Dallas College also receive funds from across the county. For residents of the city of Dallas, an estimated 45% of their tax bill goes to Dallas ISD, 31% goes to the city, a little less than 10% goes to both the county and Parkland, and less than 5% goes to Dallas College, according to the city's 2025-26 budget.
All told, property taxes make up the largest portion of state and local tax collection in Texas, according to the Tax Foundation. Property taxes made up 40.7% of collections in the 2023 fiscal year, ahead of 37.7% in sales taxes and 21.6% for all other levies.
Other taxes
Texas collects a variety of other taxes, with the franchise tax on business being the second largest source of state revenue after sales taxes. Motor vehicle sales and rental taxes, an oil production tax and insurance taxes make up some of the other most lucrative levies collected by the state.
Texans may more directly feel the impact of gas taxes, alcoholic beverage and cigarette and tobacco taxes as well as hotel occupancy taxes.
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