Taxes can vary dramatically by city as well as by state, and since taxes are complex and highly changeable with time, it is hard to determine which states treat their residents like cash machines and which just let them be. In states where taxes are generally higher, the burden can be great enough to persuade residents to consider selling their homes just so they can move elsewhere and save big. With our bookkeeping knowledge, we’ll analyze if Texas is indeed worth the hype tax-wise.
No State Income Tax
While the fed loves to go into people’s paychecks and take their share, Texas is one of the few states in the nation that does not charge an income tax, which can make bookkeepers happy. Given that other states can charge anywhere from five to ten percent extra in income tax, it can make a huge difference.
Low Property Tax
No matter where you go, property tax is unavoidable, even if you rent (you still pay but won’t exactly see it on your lease). But with a per capita property tax of only $1,555 per residence, Texas is and remains one of the best states in which to own a home or rent an apartment.
Reasonable Sales Tax
Texas makes up for its low property taxes and no income tax by charging a sales tax at currently 6.25%. Residents in my hometown of Houston may remind me that they pay 8.25% in sales tax, but the extra is on the city/county, not the state. This is actually fairly impressive when you think that other states that do charge income tax also have sales tax, some of which are even higher than 6.25%.
Homes are on the Cheap
As any Texan will tell you, a home that isn’t in River Oaks or the cul de sac of “Dallas” is incredibly cheap. And with all the land we have, the lots and size of homes are not skimped on to make up for it. USA Today ranked the average Texan home as only costing $125,800, or about double the average national salary. Only Fort Bend County near Houston topped the 15 most expensive counties in the nation to live in, with the other 14 counties residing in the state of New York.
BONUS! Texas also has a low tax rate as percentage of home value – 1.81%!
Bummer for Texas
On one downside, however, the state of Texas does levy gross receipts taxes on S corporations and limited liability corporations (LLCs). These are otherwise taxed at the individual level in other states, but the policy keeps Texas from ranking in the top half of the 50 states for its sales, corporate, or property taxes.
Texas also has a number of other state taxes that many states do, including:
• Automotive Oil Sales Fee
• Bank Franchise
• Boat & Boat Motor
• Cigar, Tobacco Products
• Coin-Operated Machines Tax
• Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG)
• Crude Oil
• Fireworks
• Franchise
• Hotel
• Inheritance
• Manufactured Housing
• Mixed Beverage Sales Tax
• Motor Vehicle – Sales and Use
• Motor Vehicle – Texas Emissions Reduction Plan (TERP) Surcharge
• Oyster Sales Fee
• Retail Charge Agreement Delinquency Fee
• School Fund Benefit
• Sexually Oriented Business Fee
• Sulphur