How do Texas taxes compare to other states? Here’s what one study says

Dalia Faheid
Updated ·1 min read

As you’re filing your taxes this year, you may be wondering how tax rates in Texas compare to other states.

In a March study from WalletHub, Texas had the 41st-lowest tax rates compared to other states. The effective state and local tax rate in Texas is 12.73%, according to WalletHub.

By comparison, Alaska had the lowest effective tax rate in the country at 6.05% and Illinois had the highest at 15.05%. The financial services firm compared state and local tax rates in all 50 states and D.C.

The effective state and local tax rate was calculated using three types of taxes: property taxes, individual income taxes, and sales and excise taxes. Researchers then calculated the three types of taxes using median U.S. household income, home and car values, and household spending data.

States that border Texas were found to have lower tax rates. Lousiana had the 25th lowest tax rates in the country at 10.75%. Arkansas had the 29th lowest at 11.30%. Oklahoma ranked 32nd for lowest tax rates at 11.51%. And New Mexico ranked 22nd at 10.59%. Also, the study found that red states ranked at 24.04 on average, and blue states at 27.88.

Here’s what tax rates look like in the Lone Star State, per the WalletHub study.

  • Real estate tax rate: 6.12% (46th lowest in U.S.)

  • Sales and excise tax rate: 6.60% (48th lowest in U.S.)

In another study from WalletHub measuring tax burden nationally, Texas ranked 29th in “the proportion of total personal income that residents pay toward state and local taxes.”