Texas collects no income tax and the state government is constitutionally prohibited from doing so.
The state instead funds its operations through a variety of consumption taxes and a tax on oil production. Local governments rely largely on property taxes.
Texans are still subject to pay federal income tax.
Article 8 Section 24-a of the state constitution says, “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 provision was added by constitutional amendment in 2019. All Republican members of the legislature voted for the constitutional amendment, as did 45% of Democrat members.
Voters then approved the amendment in a constitutional amendment election held November 5, 2019. The ballot measure, Proposition 4, passed with 1,477,373 votes for (74.4%) and 509,547 votes against (25.6%).
Supporters of Proposition 4 included Republican state officials and the Texas Republican Party. Opponents included the Texas State Teachers Association, the editorial boards of most major Texas newspapers, Progress Texas, and the left-leaning think tank Every Texan.
As a result of Proposition 4, it’s impossible for the legislature to impose an income tax in Texas without first passing another constitutional amendment repealing Article 8 Section 24-a. That would take the support of two-thirds of the members of each chamber of the legislature plus approval by a majority of voter at a statewide referendum.
Given the political difficulty of reaching this bar, it’s highly unlikely that there will be any state income tax in Texas in the foreseeable future.
