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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

Austin

$2,917/month estimated cost of living

San Antonio

$2,145/month estimated cost of living

Property Tax Details

Effective rate (WalletHub 2024)1.68%
Avg combined sales tax (state + local)8.20%

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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Retirement Methodology Calculators

How much do the big names actually say you need? See each guru's assumed return and withdrawal rate, side by side with academic defaults.

Dave Ramsey

12% / 8%

Bill Bengen

4% rule

Bogleheads

7% / 4%

FIRE Calculator

See how much you need to retire — in Texas or anywhere else.

Safe Withdrawal Rate

Model your retirement paycheck with real historical data.

Sources — Texas tax data

Last verified 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.