Texas Tax Benefits
Texas is the second-largest, most populated state in the country and growing by approximately 1,000 people per day. And it is easy to see why. There are plenty of benefits to living in the Lone Star State – affordable housing costs, a booming economy, top-notch educational opportunities, and not to mention killer Texmex & barbeque options. But, one of the greatest benefits to living in the Lone Star State is their resident-friendly approach to taxes. Let’s drill down and take a look at some Texas tax benefits.
No State Income Tax
In addition to the state’s low cost of living and affordable housing costs, there is no state income tax. This means Texas doesn’t require residents to pay taxes on their personal income. Texas is one of nine states in the country which forgoes individual income tax. Other states include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Washington, and Wyoming.
Historically, states that don’t withhold taxes from residents’ personal income promote residential and economic growth. These states are better at creating jobs and keeping educated workers from fleeing to other states. They are also better at keeping residents and attracting folks looking to retire. The Texas American Exchange Council reported over the past decade the nine states with no personal income tax consistently outperformed those with state income tax. They saw their population and job growth rise at a significantly higher rate.
No Property Tax on Vehicles
While your vehicle might be considered personal property, it is not subject to property tax as long as you don’t use it to earn a living, and driving it to and from work does not count as using it to earn a living. Texas also offers general sales and use tax exemptions for any vehicle leases lasting for greater than 180 days.
Limited Sales Tax
While Texas does charge an 8.25% sales tax on most purchases, there are a few exemptions. These exemptions include prescription drugs, over-the-counter medicine, and most groceries. Groceries that would not be exempt are sodas, candy, alcohol, and cigarettes (what Texas dubs as “sin tax”.)
Tax Benefits of Retiring in Texas
Texas is a great place to retire – not only for the aforementioned low housing costs, delicious Texmex, and ample golf courses but also because of their tax-free environment. Because there is no personal state income tax, all forms of retirement income like Social Security retirement benefits and pension income are not taxed at the state level in Texas. That means thousands of dollars back in your pocket each year. In addition, if you plan on a “worktirement” and want to work part-time after you retire, Texas doesn’t tax you on this income, either.
Homestead Exemption Tax for Retirees
While Texas does have higher property taxes than other states, housing costs in Texas are below the national average and often offset your higher property taxes. Property tax collected in Texas is not collected at the state level, but instead by cities, counties, and school districts and only used locally. This allows locals to benefit from the property taxes they are paying each year.
Those looking to retire who are considered a senior will benefit from the Homestead Exemption Tax. It is not uncommon for a retiree to find themselves in a home that has significantly increased in value, thus driving up the taxes they are paying on their house. This can be particularly impairing for those who have a fixed income. Homestead Exemptions lower your home’s value from taxation resulting in lower taxes. For example, if your home is worth $100,000 a homestead exemption could lower the value to $75,000, allowing you to qualify for a homestead exemption of $25,000. Seniors age 65+ can claim an additional exemption of $10,000.
Retiring at Lakeside at Tessera
When looking to retire in Texas, consider retiring at Lakeside at Tessera. Surrounded by the stunning natural beauty of the Texas Hill Country and just a short drive from the hustle and bustle of Austin, you are sure to find rest and relaxation in your dream home on the lakeside. Contact us today for more info.