Texas Contractor Tax Guide
Texas does not tax wage or business income.
Combined Social Security and Medicare tax (Self-Employment).
Progressive marginal rates, applied separately to taxable income.
How 1099 Taxes Work in Texas
As a freelancer, consultant, or gig worker in Texas, you are technically your own employer. This means you aren't subject to standard W-2 withholding from a "boss." Instead, you must manually track your earnings and determine federal and any applicable state obligations. Check the Texas Comptroller of Public Accounts for state-specific rules.
Texas-Specific Considerations
Business Entity Tax
A sole proprietorship has no Texas franchise tax exposure at all. If you form an LLC, you only owe franchise ("margin") tax once annualized revenue exceeds $2,650,000 — below that you owe $0, but you must still file a Public Information Report every year by May 15 to stay in good standing. Entities above the threshold pay 0.75% of taxable margin (0.375% for retail/wholesale).
Local Income Tax
None. Texas cities and counties cannot levy an income tax.
Filing & Estimated Payments
Individual returns use None — Texas has no individual income tax return. There are no state estimated income tax payments, since Texas has no individual income tax. If you formed an LLC, its only recurring state deadline is the annual franchise tax report, due May 15.
Worth Knowing
Forming an LLC opts you into Texas's franchise tax filing obligations that a bare sole proprietorship doesn't have — even though most solo contractors owe $0 tax under the ~$2.65M threshold, the annual report filing itself is still required and carries penalties if missed.
Worked Example: $75,000 Texas Contractor
On $75k of net 1099 profit (single filer, no deductions), the calculator estimates $6,504 in federal income tax, $10,597 in self-employment tax, and $0 in state tax — leaving about $57,899 take-home.
Sources: Texas Comptroller — Franchise Tax, Texas Comptroller — Taxable Entities FAQ
Quarterly Estimated Payments
Federal estimated payments generally apply when you expect to owe at least $1,000, subject to withholding and safe-harbor rules. Typical federal due dates are below; weekends and holidays can shift them. January is in the following year. State requirements vary:
Deductions and Expenses in Texas
The single best way to lower your tax bill in Texas is to optimize your business deductions. Common expenses you can subtract from your gross income include:
Home Office
A proportional amount of rent or mortgage for your dedicated workspace.
Software & Tools
Subscriptions, laptops, and professional design or dev tools.
Travel & Auto
Mileage driven for client meetings or local hardware purchases.
Internet & Phone
The percentage of your utility bills used primarily for business.
Official Texas Tax Resources
Texas Comptroller of Public Accounts
Visit the official state portal to download forms, pay online, or contact support.
Calculate Your Net Pay
Ready to see an estimate of how much you'll keep after Texas taxes? Try our free take-home estimator.
Open CalculatorDoes Texas tax income?
Great news! Texas does not tax wage or business income. This makes it a popular destination for high-earning contractors.