Considering retirement? Texas might just be the ideal destination, not only for its warm climate and diverse cultural offerings but also for its favorable tax environment.
From no state income tax to various property-tax relief programs, Texas can boost your retirement planning and improve your finances during your golden years.
No state income tax
Texas stands out as one of the few states with no state income tax, allowing retirees to keep more of their retirement income for themselves without worrying about deductions from their money.
This absence of state income tax can significantly enhance retirees' financial flexibility and bolster their retirement savings, enabling them to stretch their dollars further during their golden years.
Social Security income is not taxed
Retirees in Texas benefit from the exemption of Social Security income from state taxation, providing them with additional financial security and preserving their retirement funds.
This exemption allows retirees to maintain a higher standard of living and allocate more resources toward their essential needs and leisure activities, enhancing their overall quality of life during retirement.
Other forms of retirement income aren't taxed
From pension distributions to IRA withdrawals, all forms of retirement income remain untaxed at the state level in Texas. This offers retirees a significant added advantage in managing their finances during retirement.
Coupled with no tax on Social Security benefits, this favorable tax treatment of retirement income enables retirees to maintain their pre-retirement lifestyle and pursue their retirement goals without the burden of state tax liabilities.
Earn $200 cash rewards bonus with this incredible card
There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.
The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.
This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 19.74%, 24.74%, or 29.74% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.
The best part? There's no annual fee.
Texas offers a senior property-tax freeze
This program allows seniors aged 65 and over to cap their school property taxes, providing valuable tax relief and stability in their retirement years. School taxes account for a significant portion of property taxes.
This initiative ensures that seniors can better predict and manage their property tax expenses, allowing them to remain in their homes and communities without fearing escalating tax burdens as they age.
Texas offers a senior property tax deferral
Seniors aged 65 and older, as well as disabled homeowners and veterans, can defer property taxes thanks to section 33.06 of the Texas tax code. The deferment lasts until the estate is settled or the home is sold.
This option gives seniors greater flexibility in managing their finances, allowing them to delay property tax payments until a more convenient time without the risk of penalties or financial strain.
Trending Stories
Texas doesn't have an estate tax or inheritance tax
Retirees can rest assured that their heirs won't face estate or inheritance taxes in Texas, allowing them to pass on their assets seamlessly and without additional financial burdens.
This tax advantage enables retirees to preserve their wealth and legacy for future generations, ensuring a smooth transition of assets and providing their loved ones with the financial security they deserve.
Texas doesn't tax income for those who work part-time during retirement
Retirees looking to supplement their income with part-time work can do so without worrying about state income taxes. This encourages retirees to remain active in the workforce if they choose.
Retirees can pursue fulfilling opportunities and contribute to their communities while enjoying the benefits of additional income without tax implications.
Texas offers a homestead exemption for seniors
Texas allows all homeowners to apply for the homestead exemption, which takes $40,000 of taxable property value off your primary residence when your school taxes are calculated.
Fortunately, seniors and those who are disabled are eligible for an additional $10,000 exemption. This added benefit provides significant tax savings, reducing the taxable property value of a senior’s primary residence.
Texas has no corporate income tax
Entrepreneurs considering starting a business in retirement can benefit from Texas's lack of corporate income tax, creating a favorable tax environment for part-time business ventures and side hustles.
This tax advantage encourages entrepreneurial activity and investment in the state, fostering economic growth and innovation while providing retirees with opportunities to pursue their passions and generate additional income streams in retirement.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
You’ll also get insider info on social security, job listings, caregiving, and retirement planning. And you’ll get access to AARP’s Fraud Watch Network to help you protect your money, as well as tools to help you plan for retirement.
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
Groceries, prescriptions, and over-the-counter medication are not subject to sales tax
All Texans enjoy savings on everyday essentials, such as groceries, prescriptions, and over-the-counter medications. All those items are exempt from sales tax, contributing to overall cost savings in retirement.
This tax exemption helps retirees stretch their retirement dollars further, enabling them to afford essential goods and services while maintaining their standard of living and financial well-being.
Bottom line
As a retiree, it's important to avoid throwing your money away, and that includes paying too much in taxes.
With its array of tax benefits tailored for retirees, the Lone Star State could offer you a financially secure and comfortable retirement.
So, why not explore the possibilities and see if Texas could be your ideal retirement destination?
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.74%, 24.74%, or 29.74% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Subscribe Today
Want extra-cash moves to come right to you?
Stop browsing endlessly. Get proven ways to earn pocket money, help cover rent, and crush your debt — sent to your inbox daily.