Texas May Change Its Constitution

Capital tends to flow where it is treated the best. Well the state of Texas is considering a change to its constitution which will have no immediate impact on taxes. Currently the state of Texas has no state income tax for individuals or businesses. It also has no capital gains tax.

Texas is currently in the process of considering a constitutional amendment that would permanently prohibit a state-level capital gains tax. This is a significant development, especially since Texas already has no state income or capital gains tax. The proposed change isn't to add a tax, but to legally block one from ever being enacted in the future.

Texas voters will decide on Proposition 2, a legislatively referred constitutional amendment, on November 4, 2025.

Of course any income earned in the state of Texas including capital gains is still subject to Federal income tax and capital gains tax.

So why is this significant? When a jurisdiction is seen as business friendly, it tends to attract investment. It attracts more than its fair share of jobs and prosperity. This is sending a message to the business community that Texas is open for business and is open for investment and residency. This might be considered a PR stunt since in the short term it really changes nothing.

But investment in a location starts with making a favourable first impression. It’s one step along the path of many steps that are ultimately required to get a company to locate there.

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