The 2023 picture for Texas residents
Texas has no state income tax, so the 2023 tax picture for its residents was entirely federal: ordinary rates up to 37%, capital gains up to 23.8%, and federal Medicare taxes. That was the structural advantage that drove tech-employee relocations into Texas throughout the decade.
2023 AMT exemption
The 2023 federal AMT exemption was $85,700 for single filers. The exemption phased out at 25 cents per dollar of AMTI above $609,350, fully eliminating the exemption for higher earners. That is why ISO exercises in Texas during 2023 produced AMT bills that surprised people running first-order mental math.
Texas layer in 2023
Texas did not impose a separate state AMT in 2023, so federal AMT was the only layer. State ordinary tax still applied to any disqualifying disposition income recognized in the same year.
Frequently asked
- What supplemental-wage withholding rate applied to RSU income in Texas in 2023?
- The federal supplemental-wage withholding rate was 22% on the first $1,000,000 of supplemental wages per calendar year, rising to 37% above that. Texas does not impose a state income tax on wages, so no state withholding applied.
- Did Texas recognize federal QSBS exclusion in 2023?
- Texas has no state income tax, so QSBS eligibility affects only federal tax. Federal Section 1202 treatment applied in 2023 identically for Texas residents.
- What was the top federal ordinary bracket in 2023, and how did it apply to Texas residents?
- The 37% federal ordinary bracket started around $609,350 of taxable income for single filers in 2023. Texas added nothing at the state level, producing a combined top marginal rate of approximately 37%.