Is there a state capital gains tax in Texas?
No. Texas has no personal income tax, and Article VIII, section 24-a of the Texas Constitution, approved by voters in 2019, bars the Legislature from adopting one without another constitutional amendment. A Texas resident’s gain on stock, crypto, land or a home is taxed only by the federal government.
Two things can still cost money. Businesses organized as entities owe the Texas franchise tax, which is a separate tax on entities rather than on an individual’s investment gain. And property in another state remains that state’s business: selling a rental in New Mexico or Louisiana can mean a return there. Use the federal fields here for the 0%, 15% or 20% bracket and the 3.8% NIIT.
Texas’s constitutional rule is distinct from franchise tax
Article VIII §24-a of the Texas Constitution prohibits a tax on the net income of individuals, including the specified business or professional income. For an individual selling an ordinary capital asset in a confirmed Texas resident scenario, this establishes the Texas personal-income-tax component without borrowing another state’s guide.
The individual prohibition should not be extended to all taxes on entities or all costs attached to property transactions. If an entity sold the investment or a business interest creates a separate filing question, establish the taxpayer and applicable rules first. Mortgage payoff and transaction fees also do not become income-tax deductions merely because they reduce closing cash.
The resident no-income-tax mode below sets the Texas component to zero while computing federal ordinary or long-term tax and NIIT from prepared annual inputs. A sale of real property or a business connected with another state still needs that state’s source-income review. Retain the Texas residence facts and the other jurisdiction’s worksheet when comparing a move with remaining where the asset is located.
Texas preparation checklist
- Article VIII individual-seller scope
- Entity and transaction costs treated separately
- Other-state source-income obligations