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Study: Despite Having No Income Tax, Texas Has 11th Highest Tax Rate in the Country 

  • Pexels / Acharaporn Kamornboonyarush
Texas has long prided itself in being one of the seven U.S. states with no income tax. And, last November, residents voted to add a ban on enacting an income tax to the state’s constitution.

But that doesn't mean our residents are immune from taxation. What the Lone Star State and its municipalities don't collect through an income tax, they raise elsewhere — namely through sales and property taxes.

Indeed, Texas has the 11th-highest tax rate in the country, according to a new study by financial site WalletHub. That largely comes down to residents here paying the 6th-highest in real estate taxes in the U.S. and 3rd-highest sales and excise taxes.

According to WalletHub's analysis, a Texas household earning the median U.S. income pays an effective 12.71% tax rate. That compares to just 5.73%, 6.19% and 7.08% in the three states with the lowest taxes — Alaska, Delaware and Montana, respectively.

Even California, which Texas politicos love to rail against as the epitome of tax-and-spend liberalism, has a lower effective tax rate — just 8.94%.

Making matters worse for average Texans, real estate and sales taxes are regressive taxes, meaning they tend to hit low- and middle-income residents the hardest. In that regard, the new findings seem to piggyback onto a 2019 WalletHub study that ranked Texas the 8th-worst state for tax burdens on low-income households.

"More specifically, low income earners in Texas are among the most burdened by taxes, as more than 11% of their income goes towards paying them," WalletHub analyst Jill Gonzalez told the Current in an emailed statement. "The situation is similar for middle income earners, who spend 9.8% of their income on real estate and sales taxes. By comparison, taxes make up only about 7% of the revenue of high-income earners."

Gosh, maybe that constitutional amendment wasn't such a great ideal after all. Cue the sad trombone.

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