Retire in Texas: 2026 Tax & Cost of Living Guide
One of the most tax-friendly states for retirees: no income tax, no Social Security tax, no retirement-income tax. Property tax is the real cost (1.68% effective, 6th-highest) but the senior homestead exemption and school-tax freeze significantly limit it.
State income tax
None
Social Security
Not taxed
Estate tax
None
Property tax
1.68%
How Texas Taxes Retirement Income
- Social Security
- Not taxed
- Public pensions (state/federal)
- Not taxed
- Private pensions
- Not taxed
- 401(k) / IRA withdrawals
- Not taxed
Exemption / exclusion
Not applicable — Texas has no state income tax
Capital Gains in Texas
Texas does not tax capital gains, dividends, or interest at the state level. Federal capital gains tax still applies.
Top Cities for Retirees in Texas
Property Tax Details
Sixth-highest effective property tax in the nation. The 2023 constitutional amendment (Prop 4) raised the school-district homestead exemption to $100,000 and capped appraisal growth at 20%/year for non-homestead property. Seniors 65+ get an additional $10,000 school-district exemption and a school-tax freeze (tax amount cannot rise after the year you turn 65, assuming you don't substantially improve the property).
What Texas Retirees Need to Know
School-district tax freeze at 65
Texans 65+ who apply for the Over-65 Homestead Exemption have their school-district property-tax amount frozen at the amount owed in the year they turn 65 (subject to reset if they make major home improvements). Significant for retirees planning to age in place.
No inheritance or estate tax
Texas has neither a state estate tax nor an inheritance tax. Only the federal estate tax applies (exemption $13.61M in 2024, set to sunset to ~$7M in 2026 under current law).
Franchise tax is business-only
Texas levies a franchise tax on businesses with revenue over $1.23M (2024 threshold) but does not apply to individuals' retirement income or personal investment returns.
Compare Against Other States
All 50 US States + DC
Ranked by tax-friendliness for retirees. Grouped by income-tax type.
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Sources — Texas tax data
Last verified 2026-04-16
- Texas Comptroller — Property Tax Exemptionsaccessed 2026-04-16
- Tax Foundation — State Individual Income Tax Rates 2024accessed 2026-04-16
- WalletHub — Property Taxes by State 2024accessed 2026-04-16
- Kiplinger — Taxes in Retirement: Texasaccessed 2026-04-16
Tax rates and programs are subject to change. Data is current for 2024–2025. Always consult a qualified tax professional before making relocation decisions.