Texas has no state income tax, meaning you pay $0 in state capital gains tax. You still owe federal capital gains tax.
TX State Rate
0%
No state income tax
Federal Rate
15%
Most common long-term bracket
Combined Effective
18.8%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Texas is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Texas don't qualify for the exclusion. You'll owe 0% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Texas, homes sold in February sell for 6% more than those sold in October (-7%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Texas and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
Texas0%You | 0% | $0 | No state income tax |
| 4.25% | $6,375 | Top marginal rate (2026) | |
| 4.4% | $6,600 | Top marginal rate | |
| 4.75% | $7,125 | Top marginal rate | |
| 5.9% | $8,850 | Top marginal rate; 40% deduction available |
Texas has no state income tax, meaning zero capital gains tax on home sales. This is constitutionally protected, making it one of the most tax-stable zero-tax states.
Dallas-Fort Worth, Houston, Austin, and San Antonio are the major metros. Austin has seen the most dramatic appreciation, creating gains well above the federal exclusion.
While Texas has no income tax, it has some of the highest property taxes in the nation (1.6-2.5% of assessed value), which can affect carrying costs and total ownership expenses.
Texas is a community property state, which means both spouses can potentially claim a $250K exclusion ($500K total) if they file jointly, regardless of whose name is on the deed.
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