Texas has no personal income tax, which makes it one of the simplest states to freelance in. But “no state income tax” does not mean “no tax”: federal self-employment and income tax still apply in full, and Texas has a franchise tax and a sales tax that some freelancers need to know about.
What you pay on freelance profit in Texas
| Tax | Applies to Texas freelancers? |
|---|---|
| Federal self-employment tax (15.3%) | Yes |
| Federal income tax (10%–37%) | Yes |
| State personal income tax | No — Texas doesn’t have one |
| Texas franchise tax | Only if you operate through an entity such as an LLC, and only above a high revenue threshold |
| Sales tax | Only if you sell taxable goods or taxable services |
Self-employment tax ≈ $12,010 and federal income tax ≈ $5,790, for about $17,800 total — and nothing to the state. That works out to about $4,450 per quarter in federal estimated tax. Check your own numbers with the quarterly estimated tax calculator.
The Texas franchise tax
The franchise tax is a tax on businesses with liability protection, such as LLCs and corporations. A sole proprietor operating under their own name is not subject to it.
If you do form an LLC:
- For reports due in 2026, an entity whose annualized total revenue is at or below $2.65 million owes no franchise tax and no longer files a franchise tax report.
- It must still file a Public Information Report (or Ownership Information Report) each year. Skipping it can cost the LLC its right to do business in Texas.
For nearly all freelancers, that means the franchise tax is a yearly paperwork step, not a bill.
Sales tax on services
Texas charges a 6.25% state sales tax, plus local taxes of up to 2%. Most professional services — writing, design, consulting, coaching — are not taxable. But Texas taxes some services that other states don’t, including data processing and certain information services, along with any physical products you sell. If your work could fall into those categories, check with the Texas Comptroller before you assume you don’t need a sales tax permit.
Paying your taxes
With no state income tax, your only estimated payments are federal: April 15, June 15 and September 15, 2026, and January 15, 2027. See how to pay estimated taxes online.
How much to set aside
Texas freelancers only need to cover federal tax. In the tax set-aside calculator, leave the state rate at 0. For a single freelancer that is typically around 17%–24% of profit, depending on income.
The trade-off: property and sales taxes
Texas funds itself largely through property and sales taxes, which are higher than in many states. They don’t affect your business tax return, but they matter if you are comparing what it costs to live and work in Texas versus a state with an income tax.