Texas’s current budget

Governor Greg Abbott released its FY 2026-2027 budget proposal in February 2025 and gave his state of the state address in February 2025. The FY 2026-2027 budget was enacted in June 2025.

Texas enacted its FY 2024-2025 biennial budget in June 2023. The budget reported $144.0 billion in general fund spending and $321.3 billion in total spending over the two-year period, an increase of 11 and 6 percent over the previously enacted biennial budget, respectively. Texas also passed a package of property tax cuts in calendar year 2023.

Under the American Rescue Plan, Texas received $15.8 billion in direct state fiscal aid and $9.1 billion in local government aid from the federal government. As of January 2025, Texas had allocated over 75 percent of its state ARP. States must spend the funds by Dec. 31, 2026.

According to the National Association of State Budget Officers (NASBO), Texas’s total expenditures in fiscal year FY 2025 were $137.1 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2025 were $2.9 trillion, ranging from $5.4 billion in Wyoming to $413.8 billion in California.

According to NASBO, Texas’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2025: $46.8 billion/$146.6 billion
• FY 2024: $50.5 billion/$144.6 billion
• FY 2023: $45.4 billion/$134.2 billion
• FY 2022: $44.8 billion/$136.9 billion
• FY 2021: $42.5 billion/$139.9 billion
• FY 2020: $44.9 billion/$113.1 billion
• FY 2019: $55.6 billion/$121.9 billion

For more on Texas’s budget, see

• the Texas Budget and Policy Division (Office of the Governor),
  
• the Texas Legislative Budget Board,
  
• the Texas House Research Organization,
  
• Texas Sunset Advisory Commission.

Texas’s budget institutions, rules, and constraints

Texas uses a biennial budget. The legislature must pass a balanced budget, and is prohibited from carrying a deficit over into the following year. The Texas Constitution further limits spending growth with a budget rule based on personal income growth. However, the limit may be overridden with a simple legislative majority. Texas also limits total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Overview of Texas’s state and local expenditure and revenue sources

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Texas’s combined state and local direct general expenditures were $305.9 billion in FY 2022 (the most recent year census data were available), or $10,186 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $12,083.

Texas’s largest spending areas per capita were elementary and secondary education ($2,325) and public welfare ($2,037). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Texas’s combined state and local general revenues were $328.9 billion in FY 2022, or $10,954 per capita. National per capita general revenues were $13,619. Texas does not levy an individual income tax or corporate income tax but does have a gross receipts tax. (Census counts this revenue as either general sales tax revenue or selective sales tax revenue.) After federal transfers, Texas’s largest sources of per capita revenue were property taxes ($2,234) and general sales taxes ($1,972).

Texas’s economic trends

Texas’s per capita income (per the Bureau of Economic Analysis) was $67,942 in 2024, ranking 28th among the states. It was below the national average of $72,425, but above the Southwest regional average of $63,623. The state’s median household income (five-year estimate) was $78,476 in 2024, ranking 21st among the states and below the national average of $80,734. Texas’s poverty rate was 13.8 percent in 2024 (five-year estimate), above the national rate of 12.5 percent.

Although Texas’s averages tell a story about the entire state, Texas is composed of diverse localities. For example, the city of Nacogdoches’s median household income was $39,281, and its poverty rate was 31.5 percent; the city of University Park’s median household income was $250,001, and its poverty rate was 4.7 percent.

Texas’s unemployment rate historically follows the trend of the national average. The state’s rate was slightly below the national average following the Great Recession, but it has again paralleled the US rate for the past few years.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Texas, the average unemployment rate in 2024 was 3.6 percent for white residents, 6.2 percent for Black residents, and 4.5 percent for Hispanic or Latino residents.

The major industries that contributed the most to Texas’s gross domestic product (GDP) in 2024 were finance, professional services, manufacturing, government, and wholesale trade. Manufacturing and wholesale trade contributed more to Texas’s GDP than they did to the nation’s and region’s GDP, while finance and government were less important to Texas than they were to the nation and region in 2024.

Looking at more specific industries, among those that accounted for at least 1 percent of Texas’s GDP in 2023, oil and gas extraction produced far more for the state than for the nation, contributing 6.2 percent to Texas’s GDP and 0.9 percent to the nation’s. Other industries that overperformed in Texas relative to national averages in 2023 were wholesale trade, petroleum and coal manufacturing, mining support, and chemical manufacturing.

Texas’s politics

Governor Greg Abbott, a Republican, was elected in 2022 with 56 percent of the vote. The next gubernatorial election is in 2026.

Republicans control both the House of Representatives (88 Republicans to 62 Democrats) and Senate (20 Republicans to 11 Democrats). Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in Texas. All Texas House seats are on the ballot in 2026 because representatives serve two-year terms. Senators serve a combination of two- and four-year terms during each decade’s legislative district apportionment cycle. This 2-4-4 term system ensures all Senate seats are up for election after new legislative district boundaries are drawn. All senators are therefore up for election in 2026.

Texas’s demographics

As of July 2024, Texas’s population was 31,290,831. That was up 23.9 percent from 2010. The state’s population growth rate was faster than than the nation’s 9.9 percent growth over the same period. The Urban Institute estimates the state’s population will increase 29.9 percent between 2010 and 2030, more than the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
  
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
  
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
  
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
  
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.