Tax Lawyers in Texas

In Texas, the tax system is unique in several ways. Notably, there is no state income tax, making it a favorable state for residents seeking to avoid that burden​. However, Texas does have a 6.25% state sales tax, which can increase with local sales taxes, sometimes reaching up to 8.25%​. Texas also levies a franchise tax, which is a business tax assessed on entities doing business in Texas, based on gross revenue, with exemptions for smaller businesses.

The office of the Texas Comptroller of Public Accounts oversees tax administration, tax law compliance and collection​. Property taxes are significant in Texas, with an average effective rate of 1.47%​, but various exemptions like the homestead exemption can lower taxable values. Additionally, Texas imposes gasoline, alcohol, and tobacco taxes, but there are no estate or inheritance taxes.

In Texas, there is no state income tax, making it a tax-friendly state for residents and businesses. Instead, the state relies heavily on sales taxes, which are set at 6.25%, with local governments potentially adding more. Property taxes are levied at the local level, and while certain exemptions exist, they vary by county.

Additionally, businesses with revenues exceeding $2,470,000 (as of 2024) are subject to the franchise tax, typically 0.75% of their margin. Retirement income, including Social Security, pensions, and withdrawals from retirement accounts, is not taxed at the state level, making Texas especially attractive for retirees seeking to maximize their income.

Texas does not impose a state income tax, so several types of income are exempt at the state level:

• Wages and Salaries – No tax on earned income from employment or self-employment.
• Retirement Income – Social Security benefits, pensions, 401(k) withdrawals, and IRA distributions are not taxed.
• Investment Income – Capital gains, dividends, and interest earnings are free from state taxation.
• Business Income – Sole proprietors and partnerships do not pay state income tax, though some businesses may owe franchise tax based on revenue.

While Texas exempts these incomes, federal taxes still apply.

Texas offers several tax exemptions at the state level:

• Property Tax Exemptions: Homestead exemptions reduce taxable home values, with additional exemptions for seniors, disabled individuals, and veterans.
• Sales Tax Exemptions: Groceries, prescription medications, and certain medical supplies are exempt.
• Tax Exemptions for Qualified Organizations. Certain organizations in Texas may qualify for exemptions from franchise, sales, hotel, and property taxes. Eligibility varies by category, and nonprofit groups must apply. Farmers receive exemptions on specific purchases.
• Business Tax Exemptions: Small businesses with revenue below $2,470,000 (as of 2024) are exempt from franchise tax.
• Agricultural & Manufacturing Exemptions: Equipment and supplies used for farming and manufacturing are not taxed.

These exemptions help reduce overall tax burdens for residents and businesses.

1. No State Income Tax: Texas does not impose a personal state income tax, so residents are not required to file a state income tax return.
2. Federal Income Tax Filing: You can file federal income tax in Texas using –
   • IRS Direct File: As of the 2025 tax season, eligible Texas residents can use the IRS Direct File service to prepare and file their federal tax returns online directly with the IRS for free
   • Use IRS Form 1040 for personal federal taxes.
   • File online through the IRS Free File, tax software, or with a tax professional.
3. Property Tax: Administered at the county level.
4. Franchise Tax: File and pay Franchise Tax online using the web file esystems provided by Texas Comptroller of Public Accounts

Texas tax lawyer costs depend on case complexity, whether it’s an IRS audit, business tax planning, or state tax issues. Rates may vary between flat fees and hourly billing.

At Taxlawyer.com, we connect Texans with skilled Texas tax attorneys who offer expert legal services at competitive rates.

Navigating Texas tax laws can be complex, from IRS audits to multi-state business taxation. Follow these steps to hire a qualified tax attorney:

• Assess your legal needs: IRS litigation, offshore disclosures, estate tax planning, or corporate taxation.
• Research lawyer qualifications: Verify specialization in federal and Texas state tax law.
• Schedule a case review: Discuss potential legal strategies and compliance requirements.
• Understand the pricing model: Flat fees, hourly rates, or contingency-based billing.

At TaxLawyer.com, we connect Texans with leading Texas tax attorneys for personalized legal solutions.

Find a Tax Lawyer in Your Area

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• Austin
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• Dallas

Texas has no state income tax, relying instead on sales taxes, property taxes, and the franchise tax to generate revenue.

• No State Income Tax – Texas does not tax personal income, benefiting residents and retirees.
• Sales Tax – The state sales tax is 6.25%, with local governments adding up to 2% more.
• Property Taxes – Texas has no state property tax. Local governments set tax rates and collect property taxes to fund local services and programs. Thus, Texas has a 1.47% effective property tax rate on owner-occupied housing value. However, there are exemptions for homeowners, seniors, veterans, and disabled individuals.
• Franchise Tax – Businesses with revenue over $2.47 million pay a 0.75% tax on gross receipts.
• No Estate or Inheritance Tax: Texas does not have an estate tax or inheritance tax.
• Tobacco & Gas Tax: Texas has a 20 cents per gallon gas tax rate and a $1.41 cigarette excise tax rate.
• Alcohol Tax: Consumers purchasing alcohol from a retailer are required to pay both state sales and local sales taxes. The state also levies excise taxes on alcohol.
• Hotel Occupancy Tax: Guests are taxed a 6% hotel occupancy tax for a room or space in a hotel costing $15 or more each day. This tax also applies to bed and breakfasts, condominiums, apartments and houses. Municipalities are authorized to levy additional local hotel taxes.
• Tax Exemptions – Groceries, prescription medications, and farming equipment are exempt from sales tax.

These tax policies help Texas remain attractive for businesses and individuals.