What is Texas’ primary source of tax revenue?

Texas’ primary source of tax revenue is the sales tax. This form of taxation is particularly significant in Texas because the state does not impose a personal income tax, which allows it to rely more heavily on consumption-based taxes. The sales tax is levied on most goods and services sold within the state, making it a substantial and steady stream of revenue for funding essential services such as education, healthcare, and infrastructure.

The absence of a personal income tax incentivizes consumer spending, contributing to the robustness of sales tax revenue. As a result, this tax is a critical component of Texas’ overall tax structure and significantly influences the state’s fiscal policy.