TTARA research release: The (Partial) Myth of Texas as a Low Tax State

For Immediate Release                                                                                     Contact: Kirsten Voinis

January 18, 2023                                                                              (512) 922-7141,

TTARA research release: The (Partial) Myth of Texas as a Low Tax State

Texas has a reputation as a low tax state, but the reality is that it depends whether the taxpayer is an individual or business. The Texas Taxpayers and Research Association (TTARA) explores the differences in taxation for each in its new research brief, The Partial Myth of Texas as a Low Tax State.

The bottom line: Texas is a low tax state for individuals and a high tax state for most businesses. The brief explores why, discusses the impact on the state, and explores how recent legislative property tax reforms are having an impact on what individuals pay.

“Our state’s tax system is friendly for the individual Texan,” said TTARA President Dale Craymer. “This past year we even saw property tax bills drop for many homeowners in spite of rising values. However, our state remains at a disadvantage when competing with others for new businesses because of a relatively high business tax rate.”

Among the findings in the research brief:


  • Because of far-reaching reforms passed by the Texas Legislature in 2019 (HB 3 and SB 2), Texas’ effective tax rate on homeowners dropped from 30% above the national average to 27%, even as property values soared.
  • Individual Texans pay 40.4% of state and local taxes, well below the national average of 56.4%.
  • Without a state income tax, state and local government taxes on average amount to 3.7% of family income, far below the average of 6%, ranking Texas lower than all but five states.


  • Relative to economic output, Texas’ effective tax rate on business is 5.4%, well above the national average of 4.9%. Business tax bills are lower in 36 states.
  • Business pays about half of all sales taxes and about three-fifths of all property taxes collected in Texas.
  • Texas’ tax structure falls more heavily on business than in 44 other states.
  • Business pays almost three-fifths (59.3%) of the taxes collected by Texas state and local governments versus 43.6% in the average state.

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The Texas Taxpayers and Research Association (TTARA) is a non-profit, non-partisan membership-supported organization of businesses and individuals interested in state and local fiscal policies in Texas and the way those policies impact our economy.

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