Texas Paycheck Calculator

How to Use the Texas Paycheck Calculator

Our Texas paycheck calculator helps you understand exactly how much money you'll take home after federal taxes and deductions. Whether you're considering a move to Texas, starting a new job, negotiating a salary, or planning your budget, this tool gives you accurate calculations based on 2024 federal tax rates.

Step-by-Step Instructions

1. Enter Your Salary or Hourly Rate: Input your annual salary or hourly wage. If you're paid hourly, select "Hourly Rate" from the dropdown and enter your hours per week (typically 40 hours). Texas workers across all industries can use this calculator, from oil and gas to tech to healthcare.

2. Select Your Pay Frequency: Choose how often you get paid. Common options include bi-weekly (every two weeks, 26 paychecks per year), semi-monthly (twice per month, 24 paychecks per year), weekly, or monthly.

3. Choose Your Filing Status: Select whether you file taxes as single, married filing jointly, or head of household. This affects your federal tax brackets and standard deduction. Since Texas has no state income tax, your filing status only impacts federal taxes.

4. Enter Federal Allowances: This number comes from your W-4 form and affects how much federal tax is withheld. More allowances mean less tax withheld per paycheck (but potentially owing more at tax time).

5. Add Pre-Tax Deductions: Include any 401(k) contributions (as a percentage) or other pre-tax deductions like health insurance premiums. These reduce your taxable income and are especially valuable since you're already saving on state taxes.

6. Click Calculate: See your exact take-home pay and a complete breakdown of all federal taxes and deductions. Notice the $0.00 for state income tax - that's money in your pocket!

Understanding Your Results

Gross Pay: This is your total earnings before any deductions. For salaried employees, it's your annual salary divided by the number of pay periods. For hourly workers, it's your hourly rate multiplied by hours worked.

Federal Income Tax: The amount withheld for federal income tax based on IRS tax brackets for 2024. Texas workers pay the same federal rates as everyone else, but save thousands annually by avoiding state income tax.

Texas State Tax: Always $0.00! Texas has no state income tax on wages, salaries, or other compensation. This is one of the biggest financial advantages of working in Texas.

Social Security Tax: A flat 6.2% tax on wages up to the Social Security wage base ($168,600 for 2024). This funds Social Security benefits and applies to all workers nationwide.

Medicare Tax: A flat 1.45% tax on all wages with no income limit. High earners ($200,000+ for single filers) pay an additional 0.9% Medicare surtax.

Take-Home Pay: Your net pay after all federal taxes and deductions. In Texas, this is typically 5-10% higher than the same salary in states with income tax!

Texas Tax Advantages Explained

How Much Do You Save Without State Income Tax?

The lack of state income tax in Texas provides significant savings compared to other states. Here's what you would pay annually in state income tax if you lived elsewhere:

• $50,000 salary: Save ~$2,500/year vs California, ~$2,000/year vs New York
• $75,000 salary: Save ~$4,500/year vs California, ~$3,500/year vs New York
• $100,000 salary: Save ~$7,000/year vs California, ~$5,000/year vs New York
• $150,000 salary: Save ~$12,000/year vs California, ~$8,500/year vs New York

What About Sales Tax and Property Tax?

While Texas has no income tax, it does collect revenue through other means:

Sales Tax: Texas has a state sales tax of 6.25%, with local jurisdictions adding up to 2%, for a maximum combined rate of 8.25%. This is moderate compared to other states.

Property Tax: Texas has relatively high property taxes, with an average effective rate of about 1.6% of home value. However, homeowners can claim a homestead exemption that reduces the taxable value of their primary residence.

The Bottom Line: Even accounting for higher property and sales taxes, most Texas workers come out ahead financially, especially those with higher incomes.

Which States Have No Income Tax?

Texas is one of nine states with no state income tax:

• Alaska
• Florida
• Nevada
• New Hampshire (only taxes dividends and interest)
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

Common Paycheck Scenarios in Texas

Example 1: Entry-Level Position ($40,000/year)

A single filer making $40,000 annually in Texas, paid bi-weekly, with no 401(k) contributions would take home approximately $31,500 per year or about $1,212 per paycheck. The same salary in California would net only about $29,000/year - a $2,500 annual difference!

Example 2: Tech Professional ($85,000/year)

A single filer making $85,000 annually in Texas, paid bi-weekly, contributing 5% to 401(k) would take home approximately $60,000 per year or about $2,308 per paycheck. In California, the same person would take home about $55,000/year - saving $5,000 annually in Texas.

Example 3: Senior Professional ($120,000/year)

A married filer making $120,000 annually in Texas, paid bi-weekly, contributing 10% to 401(k) would take home approximately $82,000 per year or about $3,154 per paycheck. The same scenario in New York would net about $75,000/year - a $7,000 annual savings.

Hourly Worker Example ($25/hour)

A single filer working 40 hours per week at $25/hour ($52,000 annually) in Texas would take home approximately $40,000 per year or about $1,538 per bi-weekly paycheck. No state income tax makes hourly wages go further.

Oil & Gas Worker Example ($75,000/year + Overtime)

Texas is home to a thriving oil and gas industry. Workers in this sector often earn overtime. A worker with a $75,000 base salary plus 10 hours of overtime weekly at time-and-a-half would earn approximately $90,000 annually and take home about $65,000/year.

Maximizing Your Take-Home Pay in Texas

1. Take Full Advantage of No State Income Tax

Since you're not paying state income tax, you can afford to maximize your federal tax-advantaged accounts. Contributing the maximum to your 401(k) ($23,000 for 2024, or $30,500 if 50+) provides even greater savings.

2. Optimize Your W-4 Withholding

Review your W-4 form annually. If you're getting large federal tax refunds, you're having too much withheld. Adjust your allowances to keep more money in each paycheck. This is especially important in Texas where you don't need to worry about state tax underwithholding.

3. Maximize Pre-Tax Benefits

Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) reduce your taxable income. The 2024 HSA limit is $4,150 for individuals and $8,300 for families. Every dollar contributed saves you on federal taxes.

4. Consider the Total Compensation Package

When comparing job offers, factor in that Texas salaries go further. A $90,000 job in Texas provides similar take-home pay to a $100,000 job in California.

5. Claim the Texas Homestead Exemption

If you own a home in Texas, file for the homestead exemption to reduce your property tax burden. This can save you hundreds or thousands annually depending on your home's value and local tax rates.

Frequently Asked Questions

Will Texas ever implement state income tax?

It's highly unlikely. Texas voters approved a constitutional amendment in 2019 that prohibits the state from implementing an income tax without voter approval. The political culture in Texas strongly favors keeping income tax-free status.

How does Texas fund government services without income tax?

Texas relies on sales tax, property tax, and business franchise taxes. The state also benefits from oil and gas production taxes. This diversified revenue approach has worked for decades.

Should I move to Texas to save on taxes?

Moving solely for tax reasons requires careful consideration. Factor in cost of living, property taxes, job opportunities, and quality of life. However, for high earners, the tax savings can be substantial. Someone making $150,000 in California saves about $12,000/year by moving to Texas.

Do I still need to file federal taxes if I live in Texas?

Yes! While Texas has no state income tax return, you must still file federal income taxes with the IRS. You'll file IRS Form 1040 and pay federal taxes as usual.

What if I work remotely for a company in another state?

If you physically work from Texas, you generally don't owe income tax to your employer's state. However, some states try to tax remote workers. Consult a tax professional if you work for an out-of-state employer.

Are there any drawbacks to no state income tax?

The main tradeoff is higher property taxes and the lack of state income tax deductions on your federal return (though the SALT deduction cap of $10,000 makes this less relevant for most people). Overall, most workers benefit significantly from no income tax.

How does this affect self-employed people?

Self-employed individuals in Texas save even more! They avoid both employee and employer portions of state income tax (if it existed), though they still pay federal self-employment tax (Social Security and Medicare). A self-employed person earning $100,000 in Texas saves about $7,000-10,000 annually compared to California.

What about Social Security and retirement income?

Texas doesn't tax Social Security benefits, pensions, 401(k) distributions, or IRA withdrawals. This makes Texas extremely attractive for retirees. A retiree with $50,000 in annual retirement income pays zero state tax in Texas.