Texas has no state income tax, so the only money leaving your paycheck for taxes is federal income tax and FICA. There is no Texas withholding line at all.
That makes Texas one of the best states in the country for take-home pay, and a big reason people and companies keep moving there. Here is exactly what still comes out of a Texas paycheck, what the missing state tax is worth in dollars, and how Texas funds itself instead. See your exact take-home with the free Texas paycheck calculator.
How Texas's income tax works
Texas is one of nine states with no tax on wage income, and its constitution makes a personal income tax very hard to ever enact. Your employer withholds only federal income tax (a progressive rate based on income and filing status) and FICA at 7.65% (6.2% Social Security up to the wage base, plus 1.45% Medicare). There is no state or local income tax anywhere in Texas, including Houston, Dallas, Austin, and San Antonio.
Because there is no state layer, two people on the same salary keep noticeably more in Texas than in California, New York, or Illinois. The gap is simply the state income tax Texans never pay.
Your take-home on a $65,000 salary in Texas
Here is how a $65,000 salary breaks down for a single filer, using 2025 federal and FICA figures alongside Texas's no state income tax.
| Item | Annual |
|---|---|
| Federal income tax | $5,246 |
| FICA (Social Security + Medicare) | $4,973 |
| Texas income tax | $0 |
| Take-home pay | $54,782 |
| Percent of gross kept | 84.3% |
On a $65,000 salary a single filer keeps about $54,782, or 84.3% of gross. That is roughly $3,000 more per year than the same earner nets in Illinois or California. In a lower-cost metro like San Antonio or Houston, that extra take-home stretches further still than it would on the coasts. Compare with California.
How Texas pays for itself without an income tax
No income tax does not mean no taxes. Texas leans on sales tax (6.25% state plus local add-ons, up to 8.25%) and some of the highest property taxes in the country, with effective rates often around 1.6% to 1.9% of home value. If you own a home, that property-tax bill claws back part of the income-tax savings, so the win is biggest for renters and high earners.
For retirees the math is excellent: Texas taxes neither wages nor retirement income such as 401(k), IRA, and pension withdrawals or Social Security, and there is no estate or inheritance tax.
How to keep more of your Texas paycheck
Even without a state tax to shelter, a traditional 401(k) or HSA still lowers your federal tax, and an HSA also avoids FICA. In a no-income-tax state those accounts are the main remaining lever to push your take-home rate even higher.