Texas

The principal source of state tax revenue is the 6.25% sales and use tax. Both basic foodstuffs and drugs are exempted. Local sale taxes range from none to 2.5% add-ons. The state also imposes a full array of selective sales (excise) taxes, including ones on motor fuels, tobacco products, insurance premiums, public utilities, alcoholic beverages, amusements, pari-mutuels, and other selected items. There is no state inheritance tax, and the state estate tax is tied to the federal exemption for state death taxes, and is therefore scheduled to expire in tandem with the exemption in 2007, unless the state takes positive action to preserve the tax. Texas' revenue losses from the phasing out of its estate tax are estimated at -$81 million for 2002/03, -$159 million for 2003/04 and -$253 million for 2006/07. Death and gift taxes accounted for 1.1% of state collections in 2002. Other state levies include oil and gas severance taxes and various license fees. Property taxes are collected at the local level. Local property tax rates per $100 of assessed valuation vary widely throughout the state. The city sales tax is a major source of revenue for the municipalities. Almost half of total state and local revenues (47% in 2000) are collected at the local level.

The state collected $28.662 billion in taxes in 2002, of which 50.8% came from the general sales tax, 31.4% from selective sales taxes, 13.2% from license fees, and 3.4% from severance taxes. In 2003, Texas ranked 46th among the states in terms of combined state and local tax burden, which amounted to about 8.3% of income.

The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.