STATE RANKING #7

Quick facts: 

-If you homestead your primary residence, you can pay less in property taxes.

-One of the most business friendly states in the union

NONE

State Income Tax

State
Income
Tax

NONE*

Cost of Setting Up A Business

state
business
tax

HIGH

Property
Taxes

8.19%

Sales
Tax (average)

State Income Taxes in Texas

The state of Texas does not have individual income tax, Yay! One of only 8 states in the union with no income tax!

State Business Taxes in Texas

The state of Texas does not have business income tax; however, it does have a Gross Margins* Tax called a Franchise Tax. The Franchise Tax is assessed on businesses that have over $1,180,000 Million in Revenue in Texas. The tax is based on calendar year and is usually due by May 15th. The franchise tax rate on Gross Receipts is currently between 0.331% – 0.75%

Sales Taxes in Texas

Like many states, Texas has multiple tax rates. One at the state level and another at the local level. The state rate is 6.25% the average local rate is 1.94% (total average rate for Texas Sales Tax is 8.19%)

Property Taxes in Texas

The average property tax rate for residential property in the state of Texas is 1.69%, making it one of the more expensive places in the country to pay property tax. This is because the funding for Texas’ Independent School Districts all come from property taxes. If you homestead in Texas, your property tax appraisal may be lowered by $25,000 (which is similar to Idaho with a homestead adjustment of $100,000).

Unemployment taxes in Texas

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – Texas has a wage base of $9,000 for 2020
  • UI Rates – range from 0.15% to 6.36%
  • Schedules – Texas has one rate schedule regarding UI

Texas Business Entities - LLCs

As you’ve heard, Texas is a business-friendly state. It is one of only a few states that do not have an annual LLC fee. Here are some important facts:

  • No annual LLC fee – Yay!
  • When you register with the state, you pay a one time fee of $300
  • Secretary of State of Texas website – click here
  • If you would like help setting up your LLC, we recommend using IncFile.com. They are simple and easy to use.

State #6

State #8