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Happy 173rd birthday Texas!
And a look at our, and your, tax breaks

March 2, 2009

On March 2, 1836, Texas declared its independence from Mexico and became a republic.

Even though we're now one of 50 U.S. states, this is the date Texans still celebrate. It's a holiday for state workers.

In fact, if it weren't for the issuance of the commemorative quarter a few years ago, I suspect many of us Texans wouldn't know exactly when we became the 28th state, although I'm sure that move was part of the state history classes all Texas school children must take. FYI, it was Dec. 29, 1845.

Tweed Scott, a fellow author and Texan by choice rather than birth, notes that Texas' independent republic status is just one thing that makes us so unique. Yeah, I'm sticking with unique; you can select your own adjective!

Six flags over texas boots (3)

Six flags over Texas boots photo courtesy Bob Bullock Texas State History Museum

No income taxes, either! Another thing that's not precisely unique about my home state, but of which we are part of a select group is that we have no state income tax. Others in this category are Florida, Alaska, Nevada, New Hampshire, South Dakota, Tennessee, Washington and Wyoming.

Instead, most of Texas' state funding comes from property tax collections, with some sales taxes thrown in for good measure. These two state and/or local taxing mechanisms also offer us some potential breaks on our federal returns.

Deducting sales taxes: State sales taxes can be claimed as itemized deduction on federal returns. You don't have to live in one of the nine no income tax states to take advantage of this. If your state's income tax rate is low, you might find your sales tax write-off is more beneficial.

This technically is a temporary deduction, but since it was reinstated in 2004, it has been reauthorized, albeit retroactively in some cases, every year. It's in effect now through 2009.

Property tax write-off expanded: Real estate taxes also are a nice deduction. Usually, this also means itemizing. But for 2008 and 2009, homeowners who claim the standard deduction can add at least some of their property tax payments to that amount.

This should benefit homeowners who've paid off or nearly paid off
their mortgage loans and so don't have that interest to deduct. That
usually means their standard deduction amounts are larger.

If you're a single filer, you can count up to $500 of your property taxes. Married homeowners filing jointly can include up to $1,000. If your property tax bill is less, you can only claim the actual amount.

To add your property tax payments, you just have to check line 39c on your Form 1040 (or 23c if you file a 1040A; this option isn't available to 1040EZ filers). Then fill out the worksheet in the instruction book (or let your tax software do the work) and enter you larger standard deduction on the next line of your form.

Be sure to check the box. That will let the IRS employee looking at your return know why your standard deduction amount is larger that normal.

Cat in the hat striped hat (2)
Birthday wishes:
I can't let this day pass without noting coach Bum Phillips' great appreciation of Texas and being a Texan. His letter to a friend about what the Lone Star State means to him is several years old, but still right on the mark.

Today also is the 105th birthday of Theodore Seuss Geisel. As a child I loved Dr. Seuss books (Green Eggs and Ham was my favorite). As an adult I came to fully appreciate his messages.

I like that Texas and Dr. Seuss share the same day. And it's got me wondering what the Cat would look like in a Cowboy Hat!

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The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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