Texas Taxes: The 4 Biggest Facts You Need to Know
Here in The Lonestar State, our taxes are as friendly as our people! That being said, there are some pretty important things you should know about Texas Taxes that can help you keep more of your hard-earned money. To help you grab the bull by the horns and start strategically saving, our tax advisors are here with some tips!
Property & Estate
1. Property Taxes in Texas
Texas has rapidly become one of the most popular places to live and to retire – and for good reason! We offer significant property tax breaks and benefits in Texas. In Texas, property taxes are imposed by local entities. As such, policies like homestead exemptions and tax freezes for homeowners 65+ can be implemented at the local county or city level. So, taking full advantage of these tax-friendly policies is often as simple as finding the right county that supports these tax breaks! However, if you plan on purchasing some land, there is one factor to keep in mind: the Tax on Land. On one hand, the tax here in Texas on land is pretty low, if you are just building your own house on it. That said, our tax rate on land is based on the value of what it produces. So, if you plan on farming your land or raising cattle, you could face higher taxes!
2. Estate Taxes in Texas
As we mentioned before, Texas has become a very popular place for people to retire. In addition to property tax breaks, the estate taxes in Texas are also quite friendly! Simply put, our estate taxes are limited and related to the collection of federal estate tax. So, if someone dies in Texas with less than the exemption amount, their estate doesn’t owe any federal estate tax, and there is no Texas estate tax. Now, if that isn’t reason enough to set down roots in Texas, our inheritance tax policies will really blow your mind! In Texas, we don’t have any inheritance taxes! Yes – you heard us correctly! Your heirs and beneficiaries will inherit your property, tax-free. Under our policies, inherited assets are not regarded as ordinary income. As such, your heirs or beneficiaries won’t pay income tax on inherited assets! That said, inherited retirement accounts are subject to income tax.
Sales & Franchise
3. Sales Taxes in Texas
While our property and estate tax policies are friendly and fairly straightforward, it can get a bit hairy when it comes to our sales taxes. Especially if you are a business owner in Texas, you’ll need to gain a thorough understanding of your tax liability. Since sales taxes are paid to state and local authorities in Texas, business owners selling taxable goods or services are acting as agents of the state of Texas. So, any sales tax collected from customers belongs to Texas, and it will be your responsibility as the business owner to manage these sales taxes and remain within compliance of the law! (This is where it can really pay off to hire a tax advisor!)
4. Franchise Taxes in Texas
For many who have chosen to live in Texas, the tax-free personal income was a deciding factor. However, some are not aware of Texas Franchise Taxes. Similar to the sales tax in Texas, our franchise taxes really impact wholesalers and retail business owners. Also known as a “privilege tax”, this is a type of income tax that is based on total business revenues that exceed $1.18 million. That said, some general partnerships and sole proprietorships can be exempt from these franchise taxes. In any case, if you or your business fall into this bracket, it is usually a good idea to invest in a tax advisor who is well-versed in Texas tax laws and policies!
Fireworks & Texas Taxes
If you are new to Texas, you’ll learn pretty quickly how much we love our fireworks! In fact, an act was passed on Sept. 1st, 2015 repealing the 2% tax on fireworks!
At Lifetime Tax Advisors, we are Texans through and through, from our warm hearts to our muddy boots! Our experience and knowledge of Texas Taxes is vast, and we are passionate about applying it to help save our clients money and headaches! If you’re ready to work with our Texas tax team, give us a call at (972) 771-6707 or visit our website today!
Do Your Texas Taxes with Texans!
Our advisors are Texans, through and through, including our knowledge and experience of Texas Tax laws! We can help you save and stay compliant.