No State Return, But Not Nothing to File
Texas has no personal income tax, and a constitutional amendment approved by voters in 2019 prohibits one. Wages, pensions, investment income and business profits earned by Texas residents are taxed only by the federal government. That makes the federal return the whole job for many households, but Texas law still shapes that return in ways people often miss, especially for married couples, newcomers and property owners. BOMCAS prepares federal returns for Texas residents remotely.
Community Property and Married Couples
Texas is a community property state. Income earned by either spouse during the marriage is generally owned equally by both, as is most income from community property. For a joint return this rarely matters, but it matters a great deal when spouses file separately, separate during the year, or divorce. Each spouse generally reports half of the community income and half of the withholding, using Form 8958 to show the allocation. Income from separate property, such as an inheritance, can itself be community income in Texas unless the spouses have agreed otherwise, so the details of an agreement can change the result.
Moving to Texas
People arriving from California, New York, Illinois and other income-tax states usually file a part-year return in the state they left. The old state taxes income earned while you lived there and can continue to tax income sourced there after you leave, such as rent from a property you kept, deferred compensation earned there or gain on real estate located there. Stock options and bonuses earned partly before the move are often split by workdays. We prepare the departure-year return and help you keep the evidence of the move: the date you bought or leased a home here, your Texas driver licence, vehicle registration, voter registration and where your family lives.
Property Tax and the Homestead Exemption
Property tax is the largest state-level tax most Texas households pay, and it is not deductible beyond the federal state and local tax limit. Owners who live in their home on January 1 can apply to the county appraisal district for a residence homestead exemption. School districts must exempt $140,000 of a homestead's value, with an additional $60,000 for owners 65 or older or disabled, and the taxable value of a homestead generally cannot rise more than 10 percent a year. Property tax paid appears on the federal return if you itemize, so we keep the tax statements with your file.
Storms, Floods and Disaster Losses
Hurricanes, flooding, freezes and hail affect Texas households more often than most. Uninsured losses from a federally declared disaster can be deducted on the federal return, and they can be claimed in the year of the disaster or the year before, which can produce a faster refund. The IRS also routinely extends filing and payment deadlines for residents of counties covered by a disaster declaration. We keep insurance settlements, repair invoices and photographs with the return.
Rental Property
Many Texans own a rental house or a short-term rental. Rental income and expenses go on Schedule E, depreciation is required even when it is not claimed, and property tax, insurance and repairs are deductible against the rent. Homes rented for less than 30 consecutive days owe the 6 percent state hotel occupancy tax plus any local hotel tax, unless a rental platform collects it for the owner.
Self-Employed and Gig Income
Independent contractors, rideshare drivers and online sellers report their income on Schedule C and pay self-employment tax. With no state tax to plan around, quarterly federal estimates are the main obligation. Payment platforms generally issue Form 1099-K only above $20,000 and 200 transactions a year, but all income is reportable whether or not a form arrives.
Retirees
Texas does not tax Social Security, pensions or IRA withdrawals, and it has no estate or inheritance tax. Federal planning still matters: required minimum distributions, the taxable share of Social Security, Roth conversions and qualified charitable distributions from IRAs after age 70½. Seniors should also confirm that the over-65 homestead exemption and the school tax ceiling are on file with the appraisal district.
Families
The child tax credit, the credit for other dependants, the child and dependent care credit and education credits all apply on the federal return. Parents saving through the Texas Tuition Promise Fund or another 529 plan receive no state deduction, since there is no state income tax, but growth remains tax-free for qualified education costs.
What to Bring
- W-2s, 1099s and brokerage statements.
- Your prior federal return, and the last return filed in your previous state if you moved.
- Records of the move date and your new Texas address.
- Property tax statements and mortgage interest forms.
- Any marital property or premarital agreement if you file separately.
Texas Personal Tax Preparation Questions
Do Texas residents file a state income tax return?
No. Texas has no personal income tax. Residents file a federal return, and sometimes a return in another state where they earned income or used to live.
How does community property affect my return?
If you and your spouse file separately, each of you generally reports half of the community income and withholding. Form 8958 shows the split.
I moved from California. Do I still file there?
Usually yes for the year you moved, as a part-year resident, and later if you still have California-source income such as rent from a property there.
Is the Texas homestead exemption automatic?
No. You apply to your county appraisal district. Once granted, it generally stays in place while you own and live in the home.
Talk to BOMCAS About Personal Tax Preparation in Texas
Owners of a pass-through business need the business return and current bookkeeping before their own return can be finished. Households that employ a nanny or caregiver can hand the household payroll to us, side businesses may need a sales tax permit, and a move, a sale or retirement is worth planning ahead. Years that were never filed are handled through late filing, and Canadians living or working here will find the treaty rules under cross-border tax. For a summary of how Texas taxes businesses and residents, see the Texas accounting and tax overview or our United States services.
Tell us what you need help with and we will reply with next steps. Contact BOMCAS, use the contact form below, call 780-667-5250 or email info@bomcas.ca. You can also go back to the Texas overview. This page is general information, not advice for a particular situation.