Why Texas Residents Need to Think Twice About This Federal Tax Bill?

At first glance, it may seem like the “One Big Beautiful Bill Act” (OBBBA) doesn’t impact Texans much. After all, Texas doesn’t have a state income tax—and that’s often the headline benefit. But don’t be fooled: if you file taxes (and you do), this legislation still directly affects your federal return. And indirectly, it can affect your net income, deductions, and how your business is taxed.

Here’s how Texans—especially high-income earners, real estate investors, and business owners—are affected, and why it’s crucial to have a qualified tax planner on your side.

Texas does not have a state income tax.

This is true—and it’s one of the reasons many people move to the Lone Star State. But federal tax law still governs your:

• Standard and itemized deductions

• Business expense deductions

• Estate tax exemptions

• Charitable giving strategies

• Real estate depreciation and passive loss limits

The new bill reshapes many of these rules—permanently. And just because Texas doesn’t collect income tax doesn’t mean you’re insulated from those changes. You still file a federal return, and that’s where your money is made or lost.

You’re affected if you…

Own rental real estate

You’ll need to revisit depreciation schedules, passive activity loss rules, and aggregation elections. Even if you filed a Real Estate Professional Election (REPE) under Rev. Proc. 2019-38, this federal bill may shift how your rental losses are recognized and what you can deduct this year versus future years.

Claim QBI deductions

The Qualified Business Income (QBI) deduction was extended under OBBBA, but the phaseout thresholds and calculation mechanics are still income-sensitive. If you’re married filing jointly with income over $364,200, your eligibility may shrink or vanish—unless you proactively plan entity structure or payroll levels.

Have stock options or business interest expenses

If you hold ISOs, NSOs, or private equity, the new expensing rules and EBITDA-based interest limits can shift your timing strategy. Poor planning can push income into unfavorable tax years, or miss opportunities for capital loss harvesting.

Operate a pass-through entity

LLCs, S Corps, or partnerships may now deduct more up front under expanded §179 expensing rules—but only if you’re coordinated with the latest rules. DIY tax software often can’t distinguish what applies and what doesn’t.

Plan on leaving a legacy

Estate tax thresholds are now permanently higher, but charitable deduction rules also changed. A $1,000 universal deduction sounds nice—but it masks bigger planning shifts around charitable lead trusts and gift exclusions that require foresight and documentation.

Why DIY Tax Software and Retail Tax Chains Just Don’t Cut It Anymore

Before diving into the specifics of Texas, here’s your friendly but firm warning:

DIY tax software isn’t built for federal-state policy divergence.

• They miss conformity issues, misclassify deductions, and often can’t simulate state-specific changes from federal laws.

• They rarely model future tax impact, which is essential for real estate investors, business owners, or high-income families.

Brick-and-mortar retail tax services? They’re built for speed, not strategy.

• Seasonal staffers. One-size-fits-all templates.

• They react to your tax documents. They don’t plan proactively.

Lakeline Tax: The Right Expertise, Right Here in Austin, Texas

With over 20 years of hands-on tax strategy experience, our team has been helping Texans:

• Maximize benefits from federal tax changes

• Avoid pitfalls from state non-conformity

• Integrate federal & Texas-specific opportunities into a custom plan

We specialize in:

• Advanced Tax Planning for Texas Professionals & Business Owners

• Real Estate Tax Strategy (We know the passive activity loss limits and how to navigate Rev. Proc. 2019-38)

• Proactive Tax Projections for High-Income Families

💬 “We came in with rental losses and confusion—left with a plan that saved us $14K. Thank you Lakeline Tax!” — ⭐⭐⭐⭐⭐ Google Review

Tax Changes Are Inevitable. Wasting Money Isn’t.

Here’s the biggest mistake we see people make in 2025:

“It’s just a federal change. I’m in Texas. We don’t have income tax—so I’m fine, right?”

Wrong.

Because you:

• Still file federally

• Still structure income, deductions, and depreciation schedules

• Still pay business franchise taxes, and manage compliance

• Still risk IRS scrutiny if software or advisors miss the nuances of new code sections