What taxes do Texas self-employed workers actually owe?
| Tax type | Rate | Notes |
|---|---|---|
| Federal SE tax | 15.3% of net profit × 0.9235 | Social Security + Medicare — federal only |
| Federal income tax | 10–37% depending on income | Standard deductions and brackets apply |
| Texas state income tax | 0% | Texas has no personal income tax |
| Texas franchise tax | 0% for most small businesses | Only if annual revenue exceeds $2.47M |
That's the whole picture. Texas self-employed workers file a federal Form 1040 with Schedule C and Schedule SE — and that's it. No state return, no state estimated payments, no state revenue agency to deal with.
The Texas advantage: A Texas freelancer earning $60,000 in net profit pays roughly $12,500–13,500 in total taxes (federal SE + income). The same freelancer in California might pay $15,500–17,000. That's $2,000–4,000+ per year staying in your pocket simply because of state of residence.
- →What taxes do Texas self-employed workers actually owe?
- →Federal SE tax — same everywhere, including Texas
- →Federal income tax for Texas self-employed workers
- →Real example: Texas freelancer, $60,000 net profit
- →Texas quarterly tax payments — federal only
- →Texas LLC and franchise tax
- →Frequently asked questions
- →The bottom line
Federal SE tax — same everywhere, including Texas
Self-employment tax is a federal tax that applies identically regardless of your state. As a self-employed Texan:
- You owe 15.3% of your net profit × 0.9235 in SE tax
- This covers Social Security (12.4%) and Medicare (2.9%) — both the employer and employee halves
- Social Security applies to the first $176,100 of net SE income (2024 wage base)
- Medicare 2.9% applies to all net SE income; an additional 0.9% applies above $200,000 (single)
- You can deduct half of SE tax from your adjusted gross income on your federal return
Federal income tax for Texas self-employed workers
After calculating SE tax, your federal income tax is based on your adjusted gross income (net profit minus the SE deduction, minus the standard deduction):
| 2025 federal bracket (single) | Tax rate |
|---|---|
| $0 – $11,600 | 10% |
| $11,601 – $47,150 | 12% |
| $47,151 – $100,525 | 22% |
| $100,526 – $191,950 | 24% |
| $191,951 – $243,725 | 32% |
| $243,726 – $609,350 | 35% |
| Over $609,350 | 37% |
Most Texas freelancers earning $30,000–80,000 in net profit end up in the 12–22% federal brackets for income tax, plus 15.3% SE tax — for an effective combined rate of roughly 22–30%.
Real example: Texas freelancer, $60,000 net profit
| Tax | Calculation | Amount |
|---|---|---|
| Federal SE tax | $60,000 × 0.9235 × 15.3% | $8,478 |
| SE deduction (saves you) | $8,478 × 50% | −$4,239 |
| Federal standard deduction (single) | 2024 amount | −$15,000 |
| Federal taxable income | $60,000 − $4,239 − $14,600 | $41,161 |
| Federal income tax | 10%/12% brackets | ~$4,786 |
| Texas state income tax | No state income tax | $0 |
| Total tax | ~$13,264 |
Effective rate: 22.1% of net profit. With $8,000–12,000 in business deductions (home office, equipment, software), effective rate drops to 17–20%.
Texas quarterly tax payments — federal only
Texas self-employed workers still owe federal quarterly estimated payments if expected federal tax exceeds $1,000 for the year. Pay at IRS.gov/payments by:
- April 15 — Q1 (January–March)
- June 15 — Q2 (April–May)
- September 15 — Q3 (June–August)
- January 15 — Q4 (September–December)
No Texas state quarterly payments are required because there's no state income tax. The federal IRS payments are the only quarterly obligation.
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Check my TX hustle — free →Texas LLC and franchise tax
Texas has a franchise tax (also called the "margin tax"), but most small businesses owe nothing:
- No-tax-due threshold: $2,470,000 in total annual revenue (2024). Businesses under this threshold file a No Tax Due report but owe $0.
- Above the threshold: Texas franchise tax rate is 0.375% (retail/wholesale) or 0.75% (other businesses) on taxable margin — not on gross revenue.
- Public Information Report (PIR): Required annually for all Texas LLCs, but there's no filing fee. Due by May 15 each year.
For the vast majority of Texas side hustlers and freelancers, the franchise tax is a non-issue — file the No Tax Due report, pay nothing, move on.
Texas LLC formation cost
Texas charges a $300 state filing fee to form an LLC (Certificate of Formation). This is higher than many states (Wyoming charges $100), but once formed, ongoing costs are minimal: just a registered agent fee and the free annual PIR filing.
Frequently asked questions
Does Texas have a self-employment tax?
No state SE tax or state income tax. Texas self-employed workers only owe federal SE tax (15.3%) and federal income tax.
What taxes do Texas freelancers owe?
Federal SE tax + federal income tax only. No Texas state income tax, no Texas quarterly payments, no state revenue agency to file with.
Does a Texas LLC pay franchise tax?
Only if annual revenue exceeds $2.47 million (2024 threshold). Most small side hustles file a free No Tax Due report and owe $0.
Do Texas self-employed workers pay quarterly taxes?
Yes — federal quarterly payments only. Pay at IRS.gov/payments by April 15, June 15, September 15, and January 15. No state quarterly payments required.
How much does it cost to form a Texas LLC?
$300 state filing fee. Annual PIR filing is free. Most small Texas LLCs owe no franchise tax. Registered agent costs $100–300/year.
The bottom line
Texas is genuinely one of the most favorable states in the country for self-employed workers and side hustlers. No state income tax means your effective tax rate is 5–10 percentage points lower than comparable earners in California or New York — a real, dollar-for-dollar difference every year.
You still owe federal SE tax and income tax, still need to pay quarterly, and still need to track deductions. But the Texas state tax picture is simple: file your federal return, pay the IRS, and ignore the state income tax line entirely.
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