Tax Lawyers in Houston

Like its sister city Austin, Houston, Texas imposes no state or local income tax, making it especially appealing to those seeking lower personal tax burdens. Still, property and sales taxes remain major revenue streams.

The city’s minimum combined sales tax rate is 8.25% (6.25% from the state, 1% from the City of Houston, and 1% from the Metropolitan Transit Authority). In some districts, extra local taxes may push the total rate up.

As of early 2025, Houston’s base property tax rate per $100 of assessed value is $1.77278, comprising:

• City of Houston: $0.51919
• Harris County: $0.38529
• Houston ISD: $0.86830

Additional charges from colleges, flood control, and special districts may apply. The homestead exemption and other reliefs help ease the burden for qualifying homeowners. Harris County also implemented a 10% rate hike for FY 2025, raising overall bills.

In Houston, businesses earning over $2.47 million annually face the Texas franchise tax, based on gross receipts after deductions- not net income. Other taxes cover gasoline, alcohol, tobacco, and hotel occupancy. Texas does not levy estate or inheritance taxes.

Additionally, the Texas Comptroller of Public Accounts oversees state-wide tax compliance, and collection, with local property tax handled by the Harris County Tax Assessor-Collector’s Office.

Houston has no state income tax, making it appealing for individuals aiming to reduce personal tax burdens. However, residents are still subject to federal income tax, with rates determined by the IRS based on income brackets.

The combined sales tax rate in Houston stands at a minimum of 8.25% (6.25% from the state, 1% from the city, and 1% from the Metropolitan Transit Authority), with certain districts adding special local levies. Property taxes also play a major role, with a combined base rate of approximately $1.77278 per $100 of assessed value, excluding additional levies from colleges or utility districts. For businesses, the Texas franchise tax applies if gross receipts exceed $2.47 million annually.

Also, Houston imposes a 17% hotel occupancy tax (6% state, 7% city, 2% county, and 2% for the Harris County-Houston Sports Authority), applied to hotels, motels, and short-term rentals. However, anyone renting a room for 30 or more consecutive days is considered a permanent resident and exempt from the hotel tax.

Houston 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.
• Rental Income: Generally, exempt from state taxation, unless subject to federal rules.
• Alimony and Child Support: These are not taxed by the state.
• Gifts and Inheritances: Texas does not impose a gift or inheritance tax.
• Military Retirement Pay: Fully exempt from state taxation.

While the city of Houston and the state of Texas exempts these incomes, federal taxes still apply.

The city of Houston offers several tax exemptions. They include:

• 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 and the city of Houston 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.

Houston 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 Houston residents with skilled Houston 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 Houston tax lawyer:

• Assess your legal needs: IRS litigation, offshore disclosures, estate tax planning, or corporate taxation.
• Research lawyer qualifications: Verify specialization in federal, state and local 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 Houston taxpayers with leading tax lawyers Houston TX for personalized legal solutions.