Texas
Taxation

Texas has a reputation for a low tax. According to the Tax Foundation, Texans' state and local tax burdens are seventh-lowest nationally; state and local taxes cost $3,580 per capita, or 8.4 percent of resident incomes. Texas is one of seven states that lack a state income tax.

Instead, the state collects revenue from property taxes (though these are collected at the county, city, and school district level; Texas has a state constitutional prohibition against a state property tax) and sales taxes. The state sales tax rate is 6.25 percent, but local taxing jurisdictions (cities, counties, special purpose districts, and transit authorities) may also impose sales and use tax up to 2 percent for a total maximum combined rate of 8.25 percent.

Texas is a "tax donor state"; in 2005, for every dollar Texans paid to the federal government in federal income taxes, the state got back about $0.94 in benefits. To attract business, Texas has incentive programs worth $19 billion per year (2012); more than any other U.S. state.
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