Texas Paycheck Calculator 2025

Calculate your exact take-home pay in Texas with our free paycheck calculator. Texas is one of nine states with no state income tax, allowing you to keep significantly more of your earnings compared to high-tax states. With only federal income tax and FICA deductions, Texas workers enjoy higher net pay at all income levels, making it an attractive destination for those seeking to maximize take-home pay.

Why Texas Has No Income Tax

Texas generates state revenue through alternative sources including sales taxes, property taxes, and taxes on businesses. The state constitution prohibits implementing an income tax without voter approval through a constitutional amendment, making it highly unlikely Texas will ever adopt income tax. This no-tax policy has made Texas a magnet for businesses and individuals relocating from high-tax states, contributing to decades of population and economic growth.

The Texas sales tax rate is 6.25% statewide, with local jurisdictions adding up to 2% for a maximum combined rate of 8.25%. Property taxes in Texas are relatively high, with an average effective rate of 1.60%, among the highest in the nation. For homeowners, property taxes can partially offset the income tax savings, but for renters and those with modest homes, the no-income-tax advantage is substantial.

Take-Home Pay Examples for Texas

Without state income tax, Texas residents keep significantly more of their earnings. Here are examples for single filers with standard deductions:

$60,000 Annual Salary: After federal income tax (~$5,700) and FICA taxes ($4,590), your annual take-home pay is approximately $49,710, or $4,143 per month. This represents about 83% of gross pay. Compared to California, you're taking home approximately $3,060 more annually—enough to max out a Roth IRA contribution.

$100,000 Annual Salary: With federal tax (~$13,200) and FICA ($7,650), annual take-home pay is approximately $79,150, or $6,596 per month. This is about 79% of gross pay. Compared to California, you're taking home approximately $8,000 more annually. Over ten years, that's $80,000 in additional take-home pay—enough for a down payment on a house in many Texas markets.

$150,000 Annual Salary: After federal tax (~$25,300) and FICA ($11,475), take-home pay is approximately $113,225, or $9,435 monthly. This represents 75% of gross pay. Compared to California, you're taking home approximately $15,225 more annually. Over a 30-year career, this difference accumulates to over $456,000 in additional take-home pay, not including investment returns on the saved money.

The True Value of No State Income Tax

The benefit of zero state income tax increases with your income level. Someone earning $50,000 might save $2,000-3,000 annually compared to a typical state with income tax. At $100,000, the savings jump to $5,000-8,000 annually. At $200,000, the savings can exceed $15,000 annually compared to high-tax states like California or New York. These differences compound dramatically over time, especially when you consider the opportunity cost of investing the saved money.

Consider a professional earning $120,000 annually who moves from California to Texas. They save approximately $9,600 annually in state income tax. If they invest this savings at a 7% average annual return, after 25 years they'll have accumulated approximately $593,000—enough to retire years earlier or maintain a significantly higher standard of living in retirement. This demonstrates how state tax differences create substantial long-term wealth disparities even for middle-to-upper-middle-income earners.

Cost of Living Considerations in Texas

While Texas has no income tax, you must consider other cost factors. Property taxes in Texas are high, with many homeowners paying $4,000-8,000 annually on median-priced homes. Sales taxes add 6.25-8.25% to most purchases. However, housing costs in most Texas cities remain substantially lower than California, New York, and other high-tax states. The median home price in Houston or Dallas is 50-70% less than San Francisco or San Diego, more than offsetting the higher property tax rate.

Overall cost of living in Texas cities ranges from 4% below the national average in Houston to 6% above in Austin. Compared to high-tax state cities, Texas offers dramatically lower total costs. A $100,000 salary in Houston provides purchasing power equivalent to approximately $180,000-200,000 in San Francisco or New York City, when accounting for both tax differences and cost of living.

Texas vs. Other No-Tax States

Texas is one of nine states with no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Among these, Texas offers unique advantages including a diverse economy with major industries in energy, technology, healthcare, and aerospace; multiple major metropolitan areas providing job opportunities; relatively affordable housing in most markets; no income tax on Social Security or retirement income; and favorable business climate attracting corporate relocations.

Florida offers similar benefits with better weather in most residents' opinions, while Washington State has a major tech hub in Seattle. Tennessee and Nevada offer even lower overall costs than Texas in many areas. Each no-tax state has trade-offs, but Texas's combination of no income tax, economic opportunity, and relative affordability makes it particularly attractive to working professionals and families.

Remote Work and Texas Residency

The rise of remote work has enabled thousands of workers to relocate to Texas while maintaining employment with companies based in other states. Establishing Texas residency is straightforward: spend more than 6 months in Texas annually, get a Texas driver's license, register to vote in Texas, register your vehicles in Texas, and file Texas as your home address on tax returns. Once you're a Texas resident, you pay no state income tax regardless of where your employer is located, as long as you're physically working from Texas.

However, verify that your employer's state doesn't have special rules. A few states like New York have "convenience of the employer" rules that attempt to tax non-residents working remotely for employers based there. These rules are controversial and subject to legal challenges. Consult a tax professional if you're working remotely for an employer in a high-tax state to ensure you understand your obligations.

Maximizing Your Texas Tax Advantage

Without state income tax to worry about, Texas residents can focus their tax optimization efforts on federal taxes. Maximizing traditional 401(k) contributions provides federal tax savings but doesn't provide additional state tax savings since there's no state tax to save. For this reason, some financial advisors suggest Texas residents consider Roth 401(k) contributions more seriously than residents of high-tax states. With no state tax benefits from traditional contributions, the case for Roth contributions strengthens.

However, federal tax savings from traditional 401(k) contributions are still substantial. Someone in the 24% federal bracket saving $10,000 in a traditional 401(k) saves $2,400 in federal taxes plus $765 in FICA taxes, making the true cost of the contribution only $6,835. This 32% discount on retirement savings remains valuable even without additional state tax savings.

Conclusion

Texas's no-income-tax policy provides substantial financial advantages, especially for middle and high earners. With only federal income tax and FICA deductions, Texas workers keep significantly more of their earnings compared to high-tax states. Over a career, this difference can accumulate to hundreds of thousands or even millions of dollars in additional wealth. Combined with Texas's diverse economy, major job markets, and relatively affordable cost of living, it's no surprise the state continues attracting relocators from across the nation. Use our calculator to see exactly how much you'd take home in Texas and compare it to your current or potential future location.