Texas Income Tax
None on business or persons.
Personal - Texas has no state personal income tax
Partnerships - Texas has no state partnership income tax
- Franchise Tax
Franchise tax in Texas is a business privilege tax assessed by the State of Texas and is applicable to all corporations operating in the state. The tax is effectively the greater of 0.25 percent of taxable capital or 4.50 percent of earned surplus apportioned to the state under a singe-factor gross receipts test. Taxable capital is a corporation's stated capital (capital stock) plus surplus. Surplus means the net assets of a corporation minus its stated capital. For a limited liability company, surplus means the net assets of the company minus its members'contributions. Taxable capital is apporotioned using a single gross receipts factor.
Earned surplus basically includes the corporation's federal net taxable income, plus compensation paid to officers and directors of the corporation. S corporations and corporations with fewer than 36 shareholders are generally exempt from the compensation add-back. For the earned surplus calculation, unitary income is apportioned using a single gross receipts factor. In addition, non-unitary income is allocated to Texas if Texas is the corporation's commercial domincile. There is no minimum tax, and no taxes are due on liabilities of less than $100.
In 2008, Texas will replace its francise tax with a "Margins Tax", a tax of 1% (retailers' and wholesalers" rate will be 0.5%) on gross receipts less (taxpayer;s choice of ) compensation or the cost of goods sold. Sole proprietorships and general partnerships are exempt. Businesses are also exempt if revenues are under $300.000.
- Maximum: 6.26%.
- Minimum: .28% on first $9,000 taxable wages.
- Statutory amount for each new employee: 2.7%
- New employers pay maximum for first six quarters after which an "experience rate" is assigned by TEC.
- Charged on first $9,000 in earnings, reassesed after 6 quarters charged at owned experienced rate
- State of Texas: 6.25%
- Katy: Add 1%
- Houston: Add 1%
- Metro: Add 1%
- Residents of Harris County will pay a minimum of 6.25% in sales tax.
- If the resident lives in either the City of Katy or the City of Houston, the resident will pay an additional 1% in sales tax.
- METRO is a government agency which has a responsibility for transportation and road construction and maintenance in the Houston and Katy area.
- All of Katy and most of Harris County lies within the Metro area.
- Residents who live in the Metro area will pay an additional 1% in sales tax.
- The Maximum sales tax is 8.25%.
- The County Appraisal Districts make an assessment of Ad Valorem Property market value in each county for all taxing districts
Special Taxing Districts
- Texas citizens may vote to establish special taxing districts to accomplish desired results.
- A number of taxing jurisdictions in the area have adopted guidelines and criteria for tax abatement.
Property Tax, School Tax, MUDs
- Harris County: .39986 cents per $100 valuation
- Waller County: .59775 cents per $100 valuation
- Fort Bend County .49334 cents per $100 valuation
- Katy Independent School District 1.5266 per $100 of valuation
- City of Houston 66.5 cents per $100 valuation
- City of Katy . 6054 cents per $100 valuation
- Municipal Utility District (MUD): Call your local Municipal Utility District for tax rate
- Property rates are applicable to both real property and business personal property. Call your local appraisal district for tax and exemption forms.
- Harris County tax rate also includes the applicable rates for the Harris County Hospital, Education, and Flood Control districts, as well as the Port of Houston and, where applicable, the Houston Community College System.