A Texas assignment removes state income tax from that paycheck entirely — Texas is one of nine states with no individual income tax, so there’s no Texas withholding and no Texas return to file on wages earned there. But that only lowers your total tax bill if your tax home is also in a no-tax (or low-tax) state. If your tax home is in a state that taxes income, that state still taxes all of your income, including the wages you earned physically working in Texas — because it’s taxing you as a resident, not as a nonresident earning Texas-source income.
Key takeaways
- Texas has no individual income tax, so a Texas assignment carries zero state withholding and requires no Texas income tax return.
- If your tax home is in a state with income tax, that state still taxes the wages you earned in Texas — as ordinary resident income, not through a credit, because $0 was ever paid to Texas.
- Texas franchise tax only touches business entities (LLCs, corporations) above a $2.65 million annual revenue threshold for the 2026 report year — it does not apply to W2 wages and almost never applies to a solo 1099 travel nurse’s LLC.
- Texas is one of the largest travel nursing markets in the country, so the volume of available contracts is itself a real factor alongside the tax picture.
What "no income tax" actually removes from the equation
Texas doesn’t withhold state income tax from your paycheck, doesn’t require a state return for the income you earned there, and doesn’t reduce your take-home pay the way an assignment in a state like California or New York would. Every dollar of taxable wages from a Texas assignment reaches you after only federal income tax and FICA — no state-layer deduction at all.
The catch: your home state doesn’t care where you worked
States that have an income tax generally tax their residents’ total income for the year, regardless of where it was earned. If your tax home is in, say, Illinois — a flat 4.95% on all taxable income — a 13-week Texas contract paying $65,000 in taxable wages still owes Illinois $65,000 × 4.95% ≈ $3,218 in state tax. There’s no credit to offset it, because you never paid a dollar to Texas to begin with — the credit mechanism that avoids double taxation between two income-tax states simply doesn’t come into play here. This exact mechanic, and why it surprises so many nurses, is covered in full in Working in a No-Tax State but Your Tax Home Isn’t.
If your tax home is Texas too, it’s a real double win
A nurse whose actual tax home is in Texas (or another no-tax state) pays $0 state income tax on Texas-assignment wages, full stop — no home-state return, no Texas return, no credit math. The catch is qualifying: your tax home has to pass the IRS three-factor test — regular work near your permanent home, duplicated living expenses on assignment, and a genuine intent to return — covered in Does a Travel Nurse Need a Tax Home?. Simply claiming a Texas address without meeting that test doesn’t create the tax home; it just creates audit risk.
Does Texas franchise tax affect travel nurses?
Not if you’re a W2 employee — the franchise tax is a business-entity tax and has nothing to do with personal wages. It only matters if you’re 1099 and operate through a Texas LLC or corporation. Even then, an entity with annualized total revenue at or below the $2.65 million no-tax-due threshold for the 2026 report year owes no franchise tax — a threshold no solo travel nurse LLC comes close to. You still have to file the accompanying Public/Ownership Information Report every year even when no tax is due. Whether forming an LLC is worth the paperwork at all for 1099 travel nursing income is covered in Travel Nurse LLC or S-Corp for 1099 Income.
Per diem rates in Texas’s major assignment cities
Texas hosts a huge share of the national travel nurse market. Current GSA lodging and meals & incidentals (M&IE) per-diem rates for its major assignment cities:
- Austin — $170/day lodging, $69/day M&IE
- Dallas — $159/day lodging, $69/day M&IE
- Houston — $149/day lodging, $69/day M&IE
- San Antonio — $133/day lodging, $69/day M&IE
These rates run lower than coastal metros, which tracks with Texas’s lower cost of living — check your specific agency’s offer against the current benchmark with the Per Diem Checker.
Is a Texas assignment worth it after tax?
Usually yes on the state-tax line alone if your tax home is also low-tax or no-tax — but run your actual numbers rather than assuming. If your tax home is in a high-tax state, the Texas assignment doesn’t reduce what you owe at home, so the comparison really comes down to bill rate, stipends, and cost of living, not the state tax label. Compare your specific contract’s real take-home — including your actual home-state liability — before deciding.
FAQ
Do I owe Texas state income tax on a Texas assignment?
No. Texas has no individual income tax, so there’s no Texas withholding and no Texas return required on wages earned there, regardless of where your tax home is.
If Texas has no income tax, does that mean my Texas assignment is tax-free?
No. Only the Texas layer is zero. If your tax home is in a state with an income tax, that state still taxes those wages as ordinary resident income — there’s no Texas tax paid to offset against, so no credit applies.
Does Texas franchise tax apply to my W2 paycheck?
No. Franchise tax is a business-entity tax on LLCs and corporations, not a tax on individual wages. It has no bearing on W2 travel nurse pay.
Are my housing and per diem stipends taxed in Texas?
No, and this is true in every state, not just Texas — tax-free stipends stay tax-free at the state level as long as your tax home qualifies under the IRS three-factor test, since they aren’t wages to begin with.
Is Texas a good state to make my tax home as a travel nurse?
It can be, if you can genuinely meet the tax home test there — regular work near the area, duplicated expenses on assignment, and real ties you maintain. Simply using a Texas mailing address without meeting that test doesn’t establish a tax home; see Does a Travel Nurse Need a Tax Home? for the full test.
For a quick at-a-glance reference — bracket table, reciprocity, and calculator links in one place — see the Texas state tax guide.