No state income tax
How Texas taxes retirement income
Texas has no personal income tax, so the state takes nothing from your Social Security, your pension or your withdrawals from a 401(k), 403(b), 457(b) or IRA. That holds no matter where the pension comes from: a Texas plan, another state’s teacher system, a company pension or the federal government.
Texas makes up for it with property taxes that are higher than average. Homeowners 65 and older get an extra homestead exemption on school taxes, and their school tax bill on a primary home is frozen at the level of the year they qualify, which matters a great deal for retired teachers who stay in their homes.
Federal income tax still applies everywhere. Your pension and traditional retirement account withdrawals are taxed by the IRS as ordinary income, and up to 85% of your Social Security can be taxable federally depending on your other income.
Texas public pensions
For the formula, payment dates and raises in your plan, see Texas TRS.
Questions
Does Texas tax pensions?
No. Texas has no personal income tax, so pensions of every kind are free of state tax.
Does Texas tax Social Security?
No. With no income tax, Social Security benefits are not taxed by the state.
If I move to Texas, can my old state still tax my pension?
No. Federal law (4 U.S.C. 114) bars states from taxing the pension income of people who no longer live there, including government pensions and most retirement plan payments.