Texas has no state income tax, but you still owe federal income tax
Texas does not charge state income tax on wages, retirement income, or most other sources. However, you still pay federal income tax to the U.S. government on the same income. The federal tax rate depends on your income level and filing status — not on where you live. Texas residents use the same federal tax brackets and rates as residents of every other state.
This means your total tax burden in Texas is lower than in states that charge both federal and state income tax. But the federal portion is not optional and does not change because you live in Texas.
Key Takeaways
- Texas residents pay federal income tax at the same rates as all other Americans, ranging from 10% to 37% depending on income and filing status.
- Federal tax brackets change each year for inflation, so the income thresholds that determine your rate are different in 2024 than they were in 2023.
- Your federal tax rate is determined by your total income and whether you file as single, married filing jointly, head of household, or another status — not by living in Texas.
- Texas has no state income tax, which is why your total tax bill is lower than in states like California or New York that charge both federal and state taxes.
How federal tax brackets work
Federal income tax uses a progressive system: you do not pay one flat rate on all your income. Instead, your income is divided into brackets, and each bracket is taxed at a different rate. The rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The bracket you fall into depends on your total income and your filing status.
For example, if you are single and earned $50,000 in 2024, you do not pay 22% on all $50,000. You pay 10% on the first portion, 12% on the next portion, and 22% only on the amount that falls into the 22% bracket. The income thresholds for each bracket change every year.
The bracket thresholds are adjusted annually for inflation. This means the income amount that triggers the 22% rate in 2024 is higher than it was in 2023. The IRS publishes new brackets each January.
Federal tax brackets for 2024
| Filing Status | 10% Bracket | 12% Bracket | 22% Bracket | 24% Bracket | 32% Bracket | 35% Bracket | 37% Bracket |
|---|---|---|---|---|---|---|---|
| Single | $0–$11,600 | $11,601–$47,150 | $47,151–$100,525 | $100,526–$191,950 | $191,951–$243,725 | $243,726–$609,350 | $609,351+ |
| Married Filing Jointly | $0–$23,200 | $23,201–$94,300 | $94,301–$201,050 | $201,051–$383,900 | $383,901–$487,450 | $487,451–$731,200 | $731,201+ |
| Head of Household | $0–$17,400 | $17,401–$66,550 | $66,551–$100,525 | $100,526–$191,950 | $191,951–$243,700 | $243,701–$609,350 | $609,351+ |
These thresholds apply to all U.S. residents, including those in Texas. The brackets for 2025 will be published by the IRS in late 2024 and will reflect inflation adjustments.
What income counts toward federal tax in Texas
Federal taxable income includes wages from employment, self-employment income, interest, dividends, capital gains, rental income, and retirement account withdrawals. It also includes income from gig work, freelancing, and side jobs. Texas does not tax any of these sources, but the federal government does.
Some income is not taxable at the federal level. This includes certain disability benefits, some Social Security benefits (depending on your total income), gifts, and life insurance proceeds. Contributions to traditional 401(k) plans and traditional IRAs reduce your taxable income, which lowers your federal tax bill.
If you work for yourself or run a business in Texas, you owe federal self-employment tax in addition to federal income tax. Self-employment tax covers Social Security and Medicare and is calculated separately from income tax.
How to calculate your approximate federal tax
To estimate your federal tax, start with your total income for the year. Subtract any deductions you claim — either the standard deduction or itemized deductions, whichever is larger. The result is your taxable income. Then apply the tax brackets for your filing status to find your tax.
The standard deduction for 2024 is $14,600 for single filers, $29,200 for married couples filing jointly, and $21,900 for head of household. These amounts also change each year. If your income is below the standard deduction, you owe no federal income tax.
Many people use tax software or work with a tax preparer to calculate their exact federal tax, because deductions, credits, and other factors can be complex. The IRS also provides a tax withholding estimator on its website.
Why your paycheck shows federal tax withheld
If you work as an employee, your employer withholds federal income tax from each paycheck based on the W-4 form you filled out. This withheld amount is sent to the IRS on your behalf throughout the year. When you file your tax return, the IRS compares what was withheld to what you actually owe.
If too much was withheld, you receive a refund. If too little was withheld, you owe the difference when you file. You can adjust your withholding at any time by submitting a new W-4 to your employer. This is useful if your income changed, you got married, or you had a major life change.
Self-employed people do not have an employer to withhold tax, so they typically make quarterly estimated tax payments to the IRS. These payments are due in April, June, September, and January.
Frequently Asked Questions
Do I pay less federal tax because I live in Texas?
No. Federal tax rates are the same for all Americans regardless of state. Texas residents pay the same federal tax as residents of New York or California. The advantage of living in Texas is that you pay no state income tax, which other states do charge. Your total tax burden is lower, but only because of the missing state tax, not because federal tax is reduced.
What is the difference between federal tax and FICA tax?
Federal income tax and FICA tax are separate. Federal income tax is based on your income and filing status. FICA tax (Social Security and Medicare) is a flat percentage of your wages: 6.2% for Social Security and 1.45% for Medicare, with your employer paying an equal amount. Both are withheld from paychecks and are not optional.
If I have no income, do I still file a federal tax return?
You must file if your income exceeds the standard deduction for your filing status. If your income is below the standard deduction, you are not required to file, though you may want to if you had federal tax withheld and are due a refund. Some people file to claim the Earned Income Tax Credit even if they owe no tax.
Can I deduct Texas property taxes on my federal return?
Yes, but only if you itemize deductions instead of taking the standard deduction. You can deduct up to $10,000 in state and local taxes combined (including property tax, sales tax, and income tax). Since Texas has no income tax, you can deduct property tax and sales tax up to that $10,000 cap. Most people take the standard deduction instead because it is larger.
When do I owe federal tax on retirement account withdrawals?
Withdrawals from traditional IRAs and 401(k) plans are taxed as ordinary income at your federal tax rate. Withdrawals from Roth IRAs are not taxed if the account has been open for at least five years and you are over 59½. You must begin taking required minimum distributions from traditional accounts at age 73, and those withdrawals are taxable.