Retiring in Texas: taxes, property breaks and the real costs.

No state tax on retirement income

Texas has no personal income tax, and the state constitution forbids one (Art. 8, Sec. 24-a). So there is nothing for Texas to tax on your Social Security check, a public or private pension, 401(k) or IRA withdrawals, or annuity income. In November 2025, voters also added constitutional bans on a capital gains tax and on inheritance taxes (National Law Review, Nov 13, 2025), which matters if you plan to sell investments or leave a house to your kids.

Federal tax still applies. Part of your Social Security can be federally taxable once your other income plus half your benefits passes the IRS base amount for your filing status (IRS Topic 423, reviewed Oct 7, 2026). Moving to Texas changes your state bill, not your federal one.

The trade-off is sales and property tax. Most Texas cities charge the maximum combined 8.25% sales tax, though groceries and prescription drugs are exempt (Comptroller Pub. 96-280, 94-155). The full picture is on Texas taxes.

Property tax breaks at 65

Each break below applies to the home you own and live in as your main residence (your homestead). All of them run through your county appraisal district, not the state.

What the exemptions are worth

The Texas Tribune’s example: on a $200,000 home, a homeowner under 65 pays school taxes on $60,000 of value after the $140,000 exemption. Add the 65+ exemption and, by our arithmetic, the school-taxable value of that same home falls to $0. On a $300,000 home the Comptroller’s example leaves $160,000 taxable for school purposes before the senior add-on, or $100,000 after it (our math). City, county and special-district taxes are separate: they apply to the full value unless those bodies offer their own exemptions, so the senior breaks shrink the bill a lot but rarely erase it. Rates for each city are on our property tax page.

How the school tax freeze works

• The ceiling is your school tax in the year you qualify. After that the school portion can go down but cannot climb above that amount while you own and live in the home (Comptroller FAQ).
• Improvements can raise it. Adding something beyond repairs and maintenance, like a garage, can reset the ceiling higher.
• It moves with you, as a percentage. If you buy another Texas home, you carry the same share of the bill. The Comptroller’s example: a $100 ceiling on a $400 bill is 25%, so on a new home with a $1,000 bill, your ceiling would be $250. Ask your old appraisal district for a transfer certificate and take it to the new one.
• A surviving spouse can keep it if they were 55 or older when the spouse died and stay in the home (Comptroller).
• It covers school taxes only, unless your county, city or junior college district has adopted its own ceiling. It never covers water, hospital or other special districts.

How to apply

• When: in the year you turn 65. You do not have to wait until January; once approved, the exemption covers that whole year (Comptroller FAQ). If your birth date is already on file with a homestead application, the district may add it automatically.
• Where: the appraisal district in the county where the home sits. Many take online filings; others accept mail or drop-off (Texas Tribune).
• Form: Comptroller Form 50-114, the Residence Homestead Exemption Application. It is free to file.
• ID: a copy of your Texas driver’s license or state ID with the same address as the home.
• Deadline: April 30 for the general homestead exemption if you lived there on Jan 1. Missed it? Most homeowners can file late, up to two years after the taxes were due, and get a refund (Texas Tribune).
• Wait: the district has 90 days to decide, and approval generally does not need renewing.

Deferring property tax at 65

If the bill is a strain, a homeowner who is 65 or older (or disabled) can put off paying property taxes on the homestead for as long as they keep qualifying. Harris Central Appraisal District’s Jan 7, 2026 notice lays out the rules, which come from state law (Tax Code §33.06) and apply in every county:

• How: sign a tax deferral affidavit at your appraisal district (HCAD calls it Form 33.06). It covers current and past-due taxes on the home.
• Cost: the deferred taxes build up with interest at 5% a year. No new penalties accrue during the deferral, but penalties already owed are not erased.
• Protection: filing stops a pending tax foreclosure sale and keeps taxing units from suing to collect while you qualify.
• When it ends: the taxes are put off, not forgiven. Everything owed comes due once the owner (or a surviving spouse who was at least 55) no longer qualifies.
• Check your mortgage first. Most deeds of trust require you to keep property taxes current, so a deferral can put you in default with your lender.

Source: HCAD, “Deferred Property Tax Payments,” Jan 7, 2026. Other appraisal districts use their own version of the affidavit; the Comptroller’s statewide form is Form 50-126.

Medicare in Texas

Open now Medicare’s fall open enrollment runs Oct 15 to Dec 7, and changes start Jan 1, 2027. People already in a Medicare Advantage plan get a second window from Jan 1 to Mar 31 to switch plans or go back to Original Medicare.

If you are moving in, check plans for your new county. Texas offers free, unbiased help through the Health Information, Counseling and Advocacy Program, run by the Texas Health and Human Services Commission with the Area Agencies on Aging. Counselors compare Medicare Advantage plans and Medigap (Medicare Supplement) policies and help you enroll: 800-252-9240. We have not yet sourced Texas Medigap or Medicare Advantage premiums, so none are listed here.

What retirement costs, city by city

The Bureau of Economic Analysis’s regional price parity compares overall prices with the U.S. average of 100. A 90 means your money goes about 10% further than in an average U.S. metro. These are 2024 figures released Feb 2026; BEA’s 2025 update is due Dec 10, 2026.

Homeowners insurance is a big line for retirees who own. The Texas average premium was $3,489 in 2025 (TDI, preliminary), up from $1,987 in 2020. Details by policy type are on Texas insurance.

Hurricanes and heat

Hurricanes on the coast

The Atlantic hurricane season runs June 1 to November 30, with the peak around September 10 (National Hurricane Center). If you retire to the coast, budget for wind coverage on top of a regular homeowners policy. In 14 coastal counties, including Nueces (Corpus Christi), Galveston, Brazoria, Cameron and Jefferson, plus a strip of Harris County east of Highway 146, the Texas Windstorm Insurance Association sells wind and hail coverage to people private insurers have turned down (TDI). Flood is a separate policy again; see Texas insurance. In the Houston area, FEMA’s draft flood maps released in Feb 2026 could take two to three years to become final, so check both the current and draft maps before you buy.

Summer heat

Heat is the bigger everyday risk for older Texans. State death-certificate data obtained by the newsroom Deceleration counted 563 heat-related deaths in 2023, up from 419 in 2022 and an average of about 124 a year in the 2010s (as reported by the San Antonio Current, Sep 2024). Older data We found no newer statewide count. Researchers say the official numbers likely undercount, and San Antonio’s health department began a public heat-death dashboard in 2026 (Axios). Dallas County confirmed its first heat-related death of 2026 on Aug 21 and urged people to check on older neighbors and limit time outdoors between 3 and 7 p.m.

Practically, that means budgeting for air conditioning you can’t skip. Summer power bills, delivery charges and how to pick a plan are on Texas electricity; El Paso’s typical hot-month bill ran about $140 before its 2026 rate increase.

Out-of-date numbers you’ll still find online

Before you move

• Nov 3, 2026 Local elections can change your tax bill. Dallas County’s 2026 rate, for example, is on the Nov 3 ballot. Check your county before you budget.
• Texas property taxes: rates by city and county.
• How much you need to make: living wage and budgets by city.
• Moving to Texas: driver’s license, vehicle registration and the first-month checklist.

How we check

Tax rules come from the Texas Comptroller, the state constitution and appraisal districts; Medicare dates from Medicare.gov; price levels from BEA. Where we did arithmetic, we say so. This page is general information, not tax or legal advice; your appraisal district has the final word on your exemptions. Read the full methodology.