Short answer: Texas has no state income tax, so there's no Texas capital gains tax on a home sale. You may owe federal capital gains tax, but most homeowners don't. If the home was your main residence for at least 2 of the last 5 years, you can exclude up to $250,000 of profit ($500,000 for married couples filing jointly). Gains above that are usually taxed at 0%, 15% or 20%.

Do I have to pay capital gains if I sell my house in Texas?

Only if your profit is more than the federal exclusion, or you don't qualify for it. Texas itself doesn't tax the gain. Most Houston homeowners selling their primary residence owe nothing.

How to figure your gain

Your gain is not just the sale price minus what you paid. The basic formula:

Gain = Sale price − selling costs − (purchase price + certain buying costs + capital improvements)

• Selling costs: Agent commissions, title fees and other closing costs you pay as the seller
• Capital improvements: A new roof, room addition, kitchen remodel, new HVAC or a pool. Regular repairs and maintenance don't count.

Example: You bought for $200,000, added a $30,000 kitchen remodel and sold for $450,000 with $25,000 in selling costs. Your gain is $450,000 − $25,000 − $230,000 = $195,000. If you qualify for the exclusion, you'd owe $0 in federal tax.

The home sale exclusion

• $250,000 for single filers
• $500,000 for married couples filing jointly
• You must have owned and lived in the home as your main residence for at least 2 of the 5 years before the sale.
• You generally can't use the exclusion more than once every 2 years.

Full details in our guide to the 2-out-of-5-year rule.

2026 federal capital gains rates

If you owned the home for more than a year and your gain is above the exclusion, the taxable part is a long-term capital gain:

Rate	Single (taxable income)	Married filing jointly
0%	Up to $49,450	Up to $98,900
15%	$49,451–$545,500	$98,901–$613,700
20%	Above $545,500	Above $613,700

Higher earners may also owe the 3.8% Net Investment Income Tax. If you owned the home for one year or less, the gain is taxed as ordinary income.

Example: A single seller with a $320,000 gain who qualifies for the exclusion would have $70,000 taxable. At 15%, that's about $10,500.

When you might owe tax

• The home was a rental or investment property, not your main residence
• You lived there less than 2 years (though a partial exclusion may apply)
• Your profit is more than $250,000/$500,000
• You took depreciation for a home office or rental use. That part is taxed separately, up to 25%.

Ways to lower your capital gains

1. Keep receipts for improvements. They raise your cost basis and lower your gain.
2. Meet the 2-year test before selling, if possible.
3. Count all selling costs, including commissions and closing costs.
4. For investment property, ask a tax professional about a 1031 exchange.

Thinking about selling?

Start with a free estimate of your home's value and read is now a good time to sell your Houston home?

This article is general information, not tax or legal advice. Tax rules are complex and depend on your situation. Consult a CPA or tax professional before you sell.