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Celebrating Texas Independence with a look at Lone Star, and other, state taxes

March 2, 2012

Why do we Texans remember the Alamo? Because that momentous defeat came just four days after the new Republic declared its Independence on March 2, 1836.

My Texas ancestors knew when they decided to break away from Mexico 176 years ago today that they were in for a fight. If the siege of the Alamo didn't adequately demonstrate that, the Goliad massacre underscored the difficulty of forming a new nation.

But the Texians of yore tightened their belts, pulled up their boots and on April 21, 1836, yelling "Remember the Alamo!" at the top of their lungs, vanquished Santa Anna's army at San Jacinto.

That short span between officially declaring independence to winning it on the battlefield might explain modern day Texans' impatience, not to mention our general combative attitude.

In the 176 years since the Republic of Texas was formed, the Lone Star State has gone through a lot of changes. Some good. Some not so good.

And we need to keep changing to keep up with the rest of the world.

Texas property, sales and excise taxes: One area, though, that Texans have been adamant about keeping the same is no state income tax.

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Most folks here think that's a good thing. I'm presuming that they aren't real property owners.

Since Texas doesn't have an income tax, that means none of its lower-level governments can enact one either. So those jurisdictions make up what isn't collected via local income taxes by getting money from homeowners and other property owners to pay for local services, primarily schools.

This reliance on one major source of funding means that Texas property taxes are relatively high.

The Tax Foundation reports that in fiscal year 2006, the latest year the Census Bureau published state-by-state property tax collection data, Texas' local governments brought in $1,404.76 per capita in property taxes. That ranks Texas 13th highest nationally in property taxes.

As for the state itself, without an income tax Texas relies heavily on sales taxes.

The Lone Star State's general consumer sales and use tax was adopted in 1961. The current 6.25 percent rate is slightly above the national sales tax median of 5.85 percent, according to the Tax Foundation.

Then there are the local sales tax add-ons. Here in Austin, we pay another 2 percent on top of the state sales tax.

In 2007, combined state and local general and selective sales tax collections were $1,624 per person, which put Texas at 14th highest nationally in this category.

Befitting Texas' oil heritage, the state's gasoline tax is an old one. It was adopted in 1923.

Currently, Texas' gas tax is 20 cents per gallon, ranking it 36th highest nationally.

The state cigarette excise tax, enacted in 1931, stands at $1.41 per pack, placing it 21st highest nationally. 

Overall, though, we Texans shouldn't complain about taxes (but we still do!).

Texas taxpayers pay $3,197 per capita in state and local taxes, according to the Tax Foundation. Overall, that combined tax burden is 7.9 percent of Texans' income or 45th nationally.

And that's well below the national average of 9.8 percent..

Other states and their taxes: Want to see how your state compares tax-wise to Texas? The Tax Foundation has myriad tables, charts and maps, including:

If reviewing your locale's tax data has you thinking about becoming a Texan, to paraphrase one of our favorite son singers Lyle Lovett, "Texas wants you."

But as an Austin resident, may I suggest you check out some of the Lone Star State's other fine cities. Traffic here in the state capital is already a bear!

You also might find these items of interest:

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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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