Does Texas Tax Social Security and Retirement Income?

Texas has no income tax, so Social Security is not taxed

Texas does not tax Social Security benefits because it does not tax personal income. Article VIII, section 24-a of the Texas Constitution, added by voters in 2019, says the Legislature may not impose a tax on the net incomes of individuals. No state return is filed, and only the federal rules determine how much of a benefit is taxed. (Texas Constitution, Article VIII, sections 24-a (individual income tax prohibited) and 24-b (capital gains tax prohibited))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

No Texas tax on any pension

Private pensions, Teacher Retirement System and Employees Retirement System benefits, federal civil service annuities and military retirement pay are all untaxed by Texas. A pension earned in another state is protected as well: once the retiree lives in Texas, federal law (4 U.S.C. 114) bars the former state from taxing it. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)

IRA and 401(k) withdrawals and Roth conversions carry no state tax

Withdrawals from traditional IRAs and 401(k) plans, required minimum distributions and Roth conversions are taxed only by the federal government for a Texas resident. The size of a conversion has no state consequence, which leaves federal brackets, the taxation of Social Security and Medicare premium surcharges as the only limits to weigh. (Texas Constitution, Article VIII, sections 24-a (individual income tax prohibited) and 24-b (capital gains tax prohibited))

Timing matters only for people moving in. Retirement income is taxed by the state where the recipient lives when it is received, so a conversion completed before leaving an income-tax state is taxed there, on that state's resident or part-year return. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

No state tax on interest, dividends or capital gains

Texas does not tax interest, dividends or capital gains. In November 2025 voters added section 24-b to Article VIII of the constitution, which prohibits the Legislature from taxing the realized or unrealized capital gains of an individual, family, estate or trust. The provision leaves property taxes, sales taxes and the business franchise tax in place. (Texas Constitution, Article VIII, sections 24-a (individual income tax prohibited) and 24-b (capital gains tax prohibited))

There are no income tax rates, brackets, deductions or exemptions. Because the ban on an individual income tax is in the constitution, imposing one would take a constitutional amendment: a two-thirds vote of each chamber of the Legislature followed by approval from voters. (Texas Constitution, Article VIII, sections 24-a (individual income tax prohibited) and 24-b (capital gains tax prohibited))

Homeowners 65 or older receive an additional $60,000 school district homestead exemption on top of the $140,000 available to every homeowner. Counties, cities and other taxing units may add their own over-65 exemption, which by law cannot be less than $3,000 where one is adopted. (Texas Comptroller: Property tax exemptions (residence homestead, age 65 or older))

The school tax ceiling limits school district taxes on an over-65 homestead to the amount imposed in the year the owner first qualified. Counties, cities and junior college districts may adopt a similar ceiling on their own taxes; whether they have is a local decision. (Texas Comptroller: Appraisal and tax limitations (tax ceiling, 10% homestead cap))

A surviving spouse who is 55 or older when the over-65 owner dies can keep the over-65 exemption if they continue to live in the home as their principal residence. (Texas Comptroller: Property tax exemptions (residence homestead, age 65 or older))

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Texas's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which does not change with the state. The tax bracket calculator and the guide to taxes in retirement cover that side.

Texas has no state property tax; school districts, counties, cities and special districts levy it, and school districts take the largest share. Tax Foundation figures drawn from Census data put Texas property taxes at 1.40% of owner-occupied home value in 2024, seventh highest among the states. On a $500,000 home that average works out to about $7,000 a year before exemptions. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

Every school district must exempt $140,000 of a residence homestead's appraised value, and a further $60,000 for owners who are 65 or older or disabled. Voters approved both amounts in November 2025, raising them from $100,000 and $10,000. On a $500,000 home, a 65-year-old owner pays school tax on $300,000. Other taxing units may grant a percentage exemption of up to 20% of appraised value. (Texas Comptroller: Property tax exemptions (residence homestead, age 65 or older))

The exemptions are claimed on Form 50-114, filed with the county appraisal district, generally before May 1. The home must be the owner's principal residence. The over-65 exemption is effective January 1 of the tax year in which the owner turns 65, so it covers that whole year. (Texas Comptroller, Form 50-114: Residence Homestead Exemption Application (instructions))

Separately from the exemptions, the appraised value of a homestead cannot rise by more than 10% a year, plus the value of new improvements, once the owner has qualified it for the preceding and current year. A newly purchased home is appraised at market value in its first year. (Texas Comptroller: Appraisal and tax limitations (tax ceiling, 10% homestead cap))

Home insurance is the other large carrying cost. The Texas Department of Insurance reports an average annual homeowners premium of $3,489 for 2025 (a preliminary figure), up from $3,291 in 2024. Coastal counties, where separate windstorm coverage is often needed, run higher. (Texas Department of Insurance: Texas homeowners insurance market overview)

Texas imposes a 6.25% state sales and use tax. Cities, counties, transit authorities and special purpose districts can add up to 2% combined, for a maximum rate of 8.25%, which is the rate in most large cities. (Texas Comptroller: Sales and use tax)

The Tax Foundation puts the average combined state and local rate at 8.20% as of January 2026, 14th highest in the country. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Groceries such as bread, milk, eggs, fruit and vegetables are not taxed, and neither are prescription drugs or over-the-counter medicines labeled with a Drug Facts panel. Prepared food, restaurant meals and most household goods are taxable. (Texas Comptroller, Publication 96-280: Grocery and Convenience Stores)

Texas has no estate tax and no inheritance tax, and in November 2025 voters wrote that into the constitution: the Legislature may not impose death taxes on a decedent's property or on the transfer of an estate, inheritance, legacy, succession or gift. Estates of Texas residents face only the federal estate tax. (Texas Legislative Council, Analyses of Proposed Constitutional Amendments, November 4, 2025 election)

Texas is a community property state. Most property acquired during marriage belongs equally to both spouses, and at the first death the whole of a community asset, including the survivor's half, generally receives a new federal tax basis equal to fair market value. In most other states only the deceased spouse's half is stepped up. (IRS Publication 555, Community Property)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

On November 4, 2025, voters approved all 17 proposed constitutional amendments. For homeowners the main ones raised the school district homestead exemption from $100,000 to $140,000 and the additional exemption for owners 65 or older or disabled from $10,000 to $60,000. Both increases took effect for the tax year beginning January 1, 2025. (Texas Legislative Council, Analyses of Proposed Constitutional Amendments, November 4, 2025 election)

Two other 2025 amendments closed off future taxes: one bars a tax on realized or unrealized capital gains, and one bars estate, inheritance and gift taxes. Neither changed what Texans pay today, since the state levied none of these. (Texas Legislative Council, Analyses of Proposed Constitutional Amendments, November 4, 2025 election)

Homeowners insurance premiums have continued to climb. The Department of Insurance's preliminary 2025 average of $3,489 is about 6% above the 2024 figure of $3,291. (Texas Department of Insurance: Texas homeowners insurance market overview)

Texas has no income-tax residency test because it has no income tax. For a newcomer the question is whether the former state still treats them as a resident. States such as California and New York look at where a person's closest connections are, how many days are spent in each state and whether a home is kept there, and they audit departures by high-income taxpayers. (California FTB Publication 1031, Guidelines for Determining Resident Status (an example of a former state's residency rules))

The homestead exemption requires that the Texas home be the owner's principal residence, and the application calls for a copy of a Texas driver license or state ID whose address matches the property's. Keeping a resident-only property tax benefit on a home in the former state while claiming a Texas homestead undercuts the claim of having moved, and it is one of the things a former state's auditors check. (Texas Comptroller, Form 50-114: Residence Homestead Exemption Application (instructions))

After a completed move, the former state cannot tax pensions, IRA distributions or 401(k) income: 4 U.S.C. 114 reserves retirement income to the state of residence. It can still tax income that arises within its borders, such as rent from property there, gain on selling that property, or income from a business operating there, and a part-year return is normally due for the year of the move. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)