Tax Overview: Texas
Texas does not levy a state individual income tax — it is constitutionally prohibited. However, the Texas Comptroller is notably aggressive on business tax collections (sales/use, franchise tax). There is no OIC program and no settlement option. Payment plans require a 25% down payment with a 10-day substantiation deadline and zero flexibility. Texas generally prohibits wage garnishment for tax debt, but the Comptroller can levy bank accounts and seize business assets.
Key Tax Facts
- No state individual income tax — constitutionally prohibited
- NO OIC program — Texas does not offer settlements
- Installment agreements require 25% down payment first
- After DP, taxpayer may request IA — Comptroller mails a list of required documents
- 10-day deadline to provide substantiation — zero flexibility if missed
- Documents reviewed by management, approved by headquarters
- Texas generally prohibits wage garnishment for tax (exceptions: child support, student loans, IRS levies)
- Comptroller CAN levy bank accounts and seize business assets
- 4-year assessment statute, but 20 years for liens
- 2024: Franchise tax no-tax-due threshold raised to $2.47M — thousands of small businesses exempted
- Collections aggressiveness on business taxes is high despite no income tax
Common Tax Issues
The 25% down payment plus 10-day documentation deadline creates an extremely compressed timeline — missing it means losing the IA option
Zero flexibility on deadlines and documentation requirements — the Comptroller does not negotiate
While individuals don't face income tax, businesses face aggressive franchise and sales tax enforcement
Bank account levies are the primary enforcement tool since wage garnishment is generally prohibited
The 20-year lien statute means business tax liens persist for decades
Resolution Options in Texas
Payment Plans (Installment Agreements)
25% down payment required. 10-day deadline for substantiation. Documents reviewed by management, approved by headquarters. Zero flexibility.
Offer in Compromise (OIC)
Available: No
Texas does not offer OIC or settlements.
Wage Garnishment
Rate: N/A
Can lift with payment plan: No
Can reduce amount: No
Texas generally prohibits wage garnishment for tax. Comptroller can levy bank accounts and seize business assets.
Bank Levy
Can release: No
Primary enforcement tool since wage garnishment is prohibited.
Recent Tax Changes
- 2024: Franchise tax no-tax-due threshold raised to $2.47M (SB 3) — thousands of small businesses exempted
- 2025-2026: 89th Legislature made additional franchise tax changes
- No state income tax (constitutionally prohibited)
Official Resources
How Tax Advocate Group Helps Texas Taxpayers
Whether you're dealing with the IRS, the Texas Comptroller of Public Accounts, or both — we provide comprehensive tax resolution services to Texas residents and businesses.