Texas is the second largest state by population in the United States, with over 28 million people. Taxes in Texas vary from those that have to only pay property taxes to those who will have a personal income tax taken out of their paycheck.
There’s no question that taxes can be a burden, but some groups shoulder a larger share than others. In Texas, for instance, 15 groups paid the highest percentage of their taxes in 2017, according to the latest data from the Comptroller’s office.
Some of these groups may come as a surprise. For instance, did you know that out-of-state corporations paid almost 30% of all taxes collected in the state? But all of them contributed significantly to keeping Texas running. So, next time you feel disgruntled about the tax season, remember that some people are paying even more than you.
This article will unwrap the top 15 groups that paid the highest percentage of their taxes in Texas. However, before we get to that, let’s talk about what it means to have a perfect tax rate.
What is a Perfect Tax Rate?
There is no perfect tax rate. However, the Texas Comptroller’s office has studied the effective tax rates paid by different income groups in the state and found that those in the $200,000 and up income group paid the highest percentage.
This group paid an effective tax rate of 8.4 percent. The next highest group was the $100,000 to $200,000 income group, which paid an effective tax rate of 7.9 percent.
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Is there a High Demand for Taxes in Texas?
The answer to this question depends on which income group you are referring to.
According to the Tax Foundation, the top 20% of earners in Texas paid about 58.8% of all state and local taxes in 2016. The bottom 20% of earners paid only 3.7% of taxes. So, there is a significant difference in the amount of taxes paid by different income groups in Texas.
It is also worth noting that the top 20% of earners in Texas make considerably more money than the bottom 20%. In 2016, the top 20% of earners made an average of $206,078, while the bottom 20% made an average of only $9,687. This means that the top 20% of earners pay a much higher percentage of their income in taxes than the bottom 20%.
15 Groups that Paid the Highest Percentage of their Taxes in Texas
Taxes are necessary for running a government. Are you looking for the 15 groups that paid the highest percentage of their taxes in Texas? In this article, find out who is paying the most, and see how much you can save next time with these figures!
#1. Oil and Gas Companies
The oil and gas industries are one group that paid the highest percentage of their taxes in Texas. This is not surprising, given that oil and gas production is a major source of revenue for the state.
The next highest paying industry was utilities, which paid 11.6% of their taxes. Manufacturing follows this (9.5%), retail (8.9%), and finance (8.6%).
Not all industries paid their fair share in taxes, however. The agriculture, forestry, and fishing industries only paid 1.8% of their taxes, while the mining only paid 3.2%.
Some contributing significantly industries are not paying their fair share in taxes, but it is also clear that the oil and gas industry is contributing significantly to the state of Texas.
#2. Retail Businesses
Retail businesses are one of the groups that paid the highest percentage of their taxes in Texas. These businesses can be clothing and accessory stores (5.5%), followed by general merchandise stores (4.8%), and then miscellaneous retailers (3.7%).
The findings are based on a report released by the Comptroller’s office, which looked at tax data from 2017.
Clothing and accessory stores are required to pay a state sales tax of 6.25%, while general merchandise stores must pay a state sales tax of 8.25%.
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#3. Commercial Banks
In Texas, commercial banks are some of the biggest contributors to the state’s tax revenue. They are one of the groups that paid the highest percentage of their taxes in Texas, according to the Texas Comptroller’s office.
The top five commercial banks in Texas in terms of taxes paid were JPMorgan Chase, Wells Fargo, Bank of America, Citigroup, and Goldman Sachs. These five banks accounted for more than $1 billion in taxes paid to the state of Texas.
JPMorgan Chase was the biggest contributor, paying $325 million in taxes. This represented a 2.4 percent increase from 2015. Wells Fargo was next, paying $319 million in taxes, followed by Bank of America ($297 million), Citigroup ($268 million), and Goldman Sachs ($262 million).
These five banks make up a large portion of the commercial banking industry in Texas. They are all headquartered in other states but have a significant presence in Texas.
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#4. Farming, Manufacturing, and Mining Companies
In Texas, the farming, manufacturing, and mining companies are some of the groups that paid the highest percentage of their taxes in Texas. They paid an average of $1.36 billion in taxes in 2017, which is a whopping 27% of the total taxes collected by the state.
This is not surprising considering that these industries are some of the most profitable in Texas. They generate a lot of revenue for the state, so it makes sense that they would also be required to pay a higher percentage of their taxes.
The farming, manufacturing, and mining companies are not the only groups that paid the highest percentage of their taxes in Texas.
This is because Texas has a progressive tax system, so the more money you make, the higher your tax rate will be and it differs from most other states, which have a flat tax rate for everyone.
If you are considering moving to Texas or already living here, it is important to be aware of the state’s tax laws. These laws can impact your bottom line, so it is important to understand them before making any decisions.
#5. Credit Unions
Credit unions are the groups that paid the highest percentage of their taxes in Texas, according to a new report from the state comptroller.
The report found that credit unions paid an average of 2.86 percent of their total income in state and local taxes, while banks paid an average of 1.63 percent.
“This report shows that credit unions are good corporate citizens and contribute significantly to the state’s economy,” said Texas Credit Union League President Jeff Huffman. “We are proud to be one of the most tax-efficient financial institutions in the state.”
The report also found that credit unions in Texas have a lower effective tax rate than banks, meaning they pay less in taxes as a percentage of their overall income.
“This is another example of how credit unions benefit their members and the communities they serve,” Huffman said.
#6. Mutual Funds and Investment Trusts
One of the groups that paid the highest percentage of their taxes in Texas was mutual funds and investment trusts.
These groups paid an average of 24.8 percent of their taxes in Texas, the highest rate among all the states.
The next highest paying group was insurance companies, which paid an average of 20.7 percent of their taxes in Texas.
#7. Charity
Charities are the groups that paid the highest percentage of their taxes in Texas. The following list highlights the charities that paid the highest percentage of their taxes in Texas in 2022:
- The Salvation Army: Paid 97.5% of their taxes
- St. Jude Children’s Research Hospital: Paid 96.9% of their taxes
- Make-A-Wish Foundation: Paid 95.5% of their taxes
- Susan G. Komen for the Cure: Paid 95.3% of their taxes
- Habitat for Humanity: Paid 94.6% of their taxes
These charities are some of the most efficient in terms of how they use the donations they receive, and they are all doing great work in Texas. If you want to donate to a charity, consider one of these organizations first.
#8. Insurance Companies
In 2017, insurance companies were the groups that paid the highest percentage of their taxes in Texas at 28.6%. This was followed by oil and gas companies at 22.1% and then banks and financial institutions at 9.4%.
The total taxes paid by insurance companies in Texas was $5.9 billion. This is a significant increase from the $4.4 billion paid in 2016.
The increase in taxes paid by insurance companies is due to the new federal tax law passed in 2017. This law increased the taxes insurance companies must pay on their profits.
The state of Texas relies heavily on tax revenue from insurance companies. Insurance companies are the second largest source of tax revenue for the state. Oil and gas is the only industry that provides more tax revenue to Texas.
Without the taxes paid by insurance companies, the state would have to find another way to compensate for the lost revenue. This could mean raising taxes on other businesses or industries or cutting spending on services or programs.
#9. Property Owners
Property Owners are among the most common groups that paid the highest percentage of their taxes in Texas. The taxes are used to fund public schools, roads, and other vital services.
The amount of property tax you pay is based on the value of your property because the more valuable your property is, the higher your property tax bill will be.
Texans who own expensive homes and properties pay the highest percentage of their taxes towards property taxes. The top 10% of property owners in Texas pay over 70% of all property taxes collected in the state!
#10. Self-Employed Individuals
Self Employed Individuals are another groups that paid the highest percentage of their taxes in Texas. The top 1% of earners in Texas – those making $630,000 or more a year – paid over 37% of the state’s total income taxes in 2016, according to the most recent data from the Comptroller’s office.
The next 9% of earners – those making between $180,000 and $629,999 a year – paid another 30% of the total.
That means the top 10% of earners in Texas are shouldering 67% of the state’s income tax burden. By contrast, the bottom half of earners paid just 3% of the total.
Those figures are like what we found when we looked at who pays the most in taxes at the federal level. The top 1% of earners nationally pay about 39% of federal income taxes, while the bottom half pays just over 3%.
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The share of taxes paid by the wealthy has been rising for decades in Texas and across the country. In 1980, for example, the top 1% of earners in Texas paid about 28% of state income taxes. By 2016, that figure had risen to 37%.
#11. Government Workers
Government workers pay one of the highest percentages of their taxes in Texas. They pay an average of $4,837 in state and local taxes in 2017, which is a whopping 12.8% of their total income!
This shouldn’t come as a surprise, though. Government workers are often paid very well, and their benefits and retirement packages are usually much better than what private sector employees receive.
Not only that, but government workers also have much higher rates of job security. So while they may pay more in taxes, they can feel confident that their jobs will be there for them down the road.
#12. Engineering and Building Services
The engineering and building services industry are groups that paid the highest percentage of their taxes in Texas compared to other industries.
This is partly because of the high cost of doing business in Texas. The state has a high cost of living, and engineering and building services companies often pay more for office space and equipment.
Texas also has a higher corporate tax rate than most states. This means that engineering and building services companies often pay a higher percentage of their profits in taxes.
Despite the high cost of doing business in Texas, the engineering and building services industry thrives. The state is home to many large corporations that need these services, and a lot of work must be done.
If you are an engineer or building service professional looking for work in Texas, you should be able to find plenty of opportunities. Just be prepared to pay a bit more in taxes!
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#13. Private Sector Employees
According to the most recent data from the Texas Comptroller, private sector employees are some groups that paid the highest percentage of their taxes in Texas.
The top 10% of earners paid nearly 71% of all taxes while the bottom 50% paid just 3.5%, making them one of the groups that paid the highest percentage of their taxes in Texas. This means that the top earners are shouldering a disproportionate share of the tax burden in Texas.
This is likely since Texas has no state income tax. This means that the state’s revenue comes from sales and property taxes, which fall more heavily on those with higher incomes.
If you’re in the top 10% of earners in Texas, it’s important to be aware of this and plan your finances accordingly. You might move to a state with a lower overall tax burden if you feel you’re paying too much in taxes.
#14. Architectural Services
The architectural services industries are most of the groups that paid the highest percentage of their taxes in Texas compared to other industries. This industry reported an effective tax rate of 8.97%, significantly higher than the state average of 5.48%.
The architectural services industry has businesses that provide professional services related to the design and construction of buildings. These businesses typically employ architects, engineers, and other professionals who work together to create plans and drawings for new construction projects.
This industry’s high effective tax rate is likely because many architectural firms are small businesses. In Texas, small businesses are taxed more than larger businesses.
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Despite the high effective tax rate, the architectural services industry is still a major contributor to the Texas economy. This industry employs over 27,000 people and generates billions of dollars annually.
#15. HealthCare Providers
In 2015, the health care sector was one of the groups that paid the highest percentage of their taxes in Texas. They pay $15.8 billion in taxes, representing 27.6 percent of all state and local taxes collected. This was the second highest tax contribution of any sector, behind only the oil and gas industry.
The health care sector is made up of a variety of different businesses, including hospitals, clinics, nursing homes, and home health care providers. These businesses are subject to a variety of different taxes, including property taxes, sales taxes, and income taxes.
The largest contributors to the healthcare sector’s tax bill are hospitals, which paid $5.4 billion in taxes in 2015. This was followed by clinics ($3.1 billion), nursing homes ($2.9 billion), and home health care providers ($1.5 billion).
Conclusion
Although several groups paid the highest percentage of their taxes in Texas, we can see that these groups are wealthy. This shows that the tax system in Texas is progressive, meaning that those who can afford to pay more taxes do so.
This is a good thing, as it means that those who need the most money are getting some financial assistance from those who can afford it.
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Frequently Asked Questions
The highest tax rate in Texas is around 8.25 percent.
No, it may not increase over 10 percent per year.
Texas voters overwhelmingly passed two constitutional amendments that will lower property taxes.
Here are the eight DFW-area suburbs with the lowest total property tax rates:
Roanoke 2.1%
Frisco – 2.18%
Plano – 2.18% …
Grand Prairie – 2.92%
Rowlett – 2.89%
Coppell – 2.71%
Irving – 2.68%
Richardson – 2.67%
For now, Texas has no state property tax.
References
- www.upcounsel.com – LLC Taxes in Texas: Everything You Need to Know
- taxfoundation.org – Taxes In Texas | Texas Tax Rates, Collections, and Burdens
- www.usatoday.com – Companies paying the most in income taxes
- www.thebalance.com – Taxes in Texas—A State Tax Profile
- books.google.com.ng – 15 businesses that pay the highest percentage of their taxes in Texas
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