The Roth IRA in Texas: Five Tax Bans in the Constitution, and the Two Places Texas Is Harder Than You Think

Texas does not tax Roth IRA withdrawals or conversions, and it has locked that answer into its constitution rather than merely leaving it out of the tax code: since 2019 the legislature may not impose an individual income tax, and as of November 2025 four further prohibitions cover wealth, capital gains, state death and gift taxes, and securities transactions. A $100,000 conversion costs a Texan $0 in state tax. Texas also shields a Roth IRA from creditors with no dollar cap and protects an inherited Roth by name. The two places it is harder than its reputation: it is a community-property state, and its Medicaid rules count your entire balance where Florida’s would not.

Five taxes Texas has written out of its constitution

Most states answer the Roth question with a rate schedule; Florida answers it with a conformity ceiling. Texas answers it with a flat prohibition and then, in November 2025, added three more. Art. VIII §24-a is the operative one for a Roth: “the legislature may not impose a tax on the net incomes of individuals.” It arrived by Proposition 4 in 2019 with 74.4% of the vote, and it replaced the older 1993 amendment rather than stacking on top of it.

Five taxes Texas has locked out of its constitution

Three of them added on a single day — November 4, 2025 · verified against the codified constitution

Tax	Section	Adopted	Ballot	What it bars
Individual income tax	Art. VIII §24-a	Nov 5, 2019	Prop 4 · 74.4%	The legislature may not impose a tax on the net incomes of individuals.
Wealth tax	Art. VIII §25	Nov 7, 2023	Prop 3 · 67.9%	Bars a tax based on the wealth or net worth of an individual or family.
Capital gains tax	Art. VIII §24-b	Nov 4, 2025	Prop 2 · 65.4%	Bars a tax on a realized or unrealized capital gain.
Death, inheritance and gift taxes	Art. VIII §26	Nov 4, 2025	Prop 8 · 72.2%	Bars a state estate, inheritance, legacy, succession or gift tax.
Securities transaction tax	Art. VIII §30	Nov 4, 2025	Prop 6 · 54.9%	Bars a state tax on securities transactions.

What follows for a Roth IRA holder:

• Conversions are free at the state level in any amount, at any age. There is no exclusion to qualify for because there is no return to exclude anything from — the opposite of New York, where the game is fitting conversions into a $20,000 annual window at 59½.
• No state early-withdrawal penalty. Only the federal 10% applies. California adds 2.5% of its own.
• No state withholding, no estimated tax, no safe harbour to miss. A December conversion creates no state-level underpayment problem.
• No local layer anywhere — no city, county, school district or special district may tax personal income.
• The Roth-versus-traditional comparison loses its state dimension entirely. No state deduction to forgo on a traditional contribution, no state tax to avoid on a Roth withdrawal.
• The franchise tax is not an income tax. Texas’s “margin” tax is a privilege tax on business entities and does not reach your IRA — though this rests on the structure of the tax rather than on a published line exempting IRAs by name.

Authority: H.J.R. 38, 86th Leg., R.S. (2019), §3 (repealing Tex. Const. Art. VIII §24, added by S.J.R. 49, 73rd Leg., R.S. (1993)); Texas Legislative Council, Amendments to the Texas Constitution Since 1876 (May 2026), Art. 8 tables · Tex. Const. Art. VIII §24-a, added by H.J.R. 38, 86th Leg., R.S. (2019), §2; election held Nov. 5, 2019 per §4 of the resolution · Tex. Const. Art. VIII §24-a; Texas Comptroller Pub. 96-1774 (Dec. 2025). Contrast Cal. Rev. & Tax. Code §17085(c) · Tex. Const. Art. VIII §24-b, added by S.J.R. 18, 89th Leg., R.S. (2025); adopted as Proposition 2, Nov. 4 · verified 2026-07-25

The inherited-Roth answer Texas wrote down before the Supreme Court asked the question

Tex. Prop. Code §42.0021 exempts qualifying retirement accounts from attachment, execution and seizure — with no dollar cap and no means test. Set that beside California, which protects an IRA only to the extent a judge finds it “necessary for support,” and the difference is the whole balance.

Then the part that is genuinely unusual. Most states left the inherited-IRA question to their courts, which is why it is a coin flip across much of the country: in Clark v. Rameker (2014) the Supreme Court held an inherited IRA is not a “retirement fund” for the federal bankruptcy exemption, and state law has had to fill the gap. Texas had already filled it. §42.0021(a)(5) exempts “a Roth IRA, including an inherited Roth IRA” — inherited-IRA language added in 2011, inherited-Roth language in 2013, both before the 2014 decision. A federal bankruptcy court has since confirmed the state exemption survives Clark.

The structural piece that makes it work: Texas is an opt-in bankruptcy state. A Texas debtor may elect the state exemptions instead of the federal list — so they claim §42.0021 and never touch the federal “retirement funds” test that Clark narrowed. Florida, by contrast, is opt-out.

The same account, four states

Every row sourced on its own state’s page · verified 2026-07-25

	New York	California	Florida	Texas
Taxes a Roth conversion?	Yes, minus a $20,000/yr window at 59½	Yes — in full, no exclusion	No	No
How the “no tax” is secured	—	—	Conformity ceiling (Art. VII §5)	Outright ban (Art. VIII §24-a)
Its own early-withdrawal penalty?	None	2.5% on top of the federal 10%	None	None
Your own Roth vs. creditors	Strong (CPLR §5205(c))	Weak — means-tested	Unlimited, no cap	Unlimited, no cap
An inherited Roth vs. creditors	Courts split	Unsettled	Protected by statute	Named in the statute
Community property?	No	Yes — equal division	No	Yes — “just and right” division
Senior property-tax break income-tested?	Yes — and STAR ignores conversions	Yes — $55,181 cap	Yes — $38,686 AGI cap	No — none of them
IRA countable for Medicaid?	Not in payout status	Asset test returned 2026	Not in payout status	Yes — no payout exemption
$100,000 conversion costs	~$11,949 (NYC)	~$9,300	$0	$0

The limits deserve as much attention as the protection. A child-support lien is not blocked by §42.0021 — the sharpest exception, and the one most likely to touch an ordinary family. A federal tax levy overrides it. Fraudulent transfers are recoverable on two separate tracks. A distribution keeps its exemption for only 60 days unless rolled over. And in a self-directed account a prohibited transaction can destroy the exemption along with the account’s tax status. Texas imposes no look-back window on recent contributions, and the homestead exemption is unlimited in value — limited instead by acreage, 10 urban or up to 200 rural, far more generous than Florida’s half-acre.

Authority: Acts 2011, 82nd Leg., R.S., Ch. 933 (S.B. 1810) §1, eff. 6/17/2011; Acts 2013, 83rd Leg., R.S., Ch. 91 (S.B. 649) §2, eff. 9/1/2013; Acts 2019, 86th Leg., R.S., Ch. 320 (H.B. 2779) §1, eff. 9/1/2019 · In re Kara, 573 B.R. 696 (Bankr. W.D. Tex. 2017); Clark v. Rameker, 573 U.S. 122 (2014); In re Enloe, 542 B.R. 414 (Bankr. S.D. Tex. 2015) · In re Kara, 573 B.R. 696, 702 (Bankr. W.D. Tex. 2017) (citing In re Bounds, 491 B.R. 440, 444 (Bankr. W.D. Tex. 2013)); 11 U.S.C. §522(b)(1)-(2) · Tex. Prop. Code §42.0021(a)(4)-(5), (c) · Tex. Prop. Code §42.0021(a), (a)(4)-(5) · Tex. Prop. Code & · verified 2026-07-25

The community-property half of the answer

This is where Texas stops resembling Florida and starts resembling California. Texas is a community-property state: a Roth funded with earnings during the marriage is community property regardless of whose name is on the account. Two divergences from California matter:

• Division at divorce is discretionary, not equal. Texas divides the community estate “in a manner that the court deems just and right” — California starts from a presumptive half-and-half. Equal is the intuition, not the rule.
• Quasi-community property applies only at divorce. Move to Texas from a separate-property state and the concept reaches your divorce, not your death — while everything you hold is presumed community property, and rebutting that presumption is your burden.
• The transfer mechanics are easy. A divorce decree itself divides an IRA and the transfer is tax-free; no QDRO is needed for an IRA. Draining a community Roth ahead of a divorce is separately actionable.

And one honest unsettled question. Your beneficiary designation is valid and nontestamentary, but you can only dispose of your own one-half of community property — and Texas has no spousal-consent requirement for an IRA beneficiary form, nor any controlling Texas decision applying the community-property rule to an IRA at death. The doctrine assembled from the estates code and the fraud-on-the-community cases points one way, but those cases are about life insurance, not IRAs. Anyone naming a non-spouse on a community-funded Roth in Texas should treat this as an open question rather than a settled plan.

Authority: Tex. Est. Code §§111.002(a), 112.051, 112.052; absence of any consent requirement in Tex. Fam. Code chs. 3-4 and Tex. Est. Code chs. 101, 111, 112; contrast ERISA §205 / IRC §417 · Tex. Est. Code §§111.052, 111.053, 111.054, 201.003(c); Madrigal v. Madrigal, 115 S.W.3d 32 (Tex. App.—San Antonio 2003, no pet.) · Tex. Fam. Code §7.001, §7.002; contrast Cal. Fam. Code §2550 · Tex. Fam. Code §7.002(a), (b); Tex. Estates Code chs. 101, 201 (silent); contrast Cal. Fam. Code §125 and Cal. Prob. Code §§66, 101(a) · Tex. Fam. Code §7.003; IRC &sec · verified 2026-07-25

Leaving California or New York: who taxes the conversion?

Texas is the destination; the risk sits behind you. 4 U.S.C. §114 bars any state from taxing a nonresident’s retirement income and names individual retirement plans expressly — California’s own guidance lists Roth conversions among what it cannot reach, and New York’s says conversion income is excluded “by reason of section 114.” Work thirty years in Los Angeles, retire to Texas, convert: California’s share is zero.

What makes Texas practically different from Florida here is what it lacks: there is no declaration-of-domicile statute, no Texas counterpart to the sworn instrument a Floridian files. Texas has no income tax, so it has no residency test, no day count and no departure audits of its own. Your domicile is proved by conduct and documents — and the strongest of them is the property-tax homestead application, which you must swear to and which requires that you claim no out-of-state homestead. Practical deadlines: a driver licence within 90 days, vehicle registration within 30.

The audit risk is entirely the old state’s. California applies a two-prong residency test plus a thirteen-factor closest-connections analysis, treats more than nine months in-state as a presumption of residency, resolves genuine doubt against the move, and runs a dedicated residency-audit programme. New York can make you a resident on a permanent home plus 184 days and demands clear and convincing evidence of departure. In both, conversion timing is all-or-nothing: the entire conversion is sourced to the period in which you received it, with no proration — so convert after the move is genuinely complete, not during it. And note the trap in the opposite direction: §114 protects retirement income only, so California can still tax other income sourced to it after you leave.

One asset-protection catch hides in the same move. In bankruptcy, federal law applies the exemptions of wherever you were domiciled for the 730 days before filing. Leave California in March, file in June, and you get California’s means-tested IRA exemption — not Texas’s unlimited one.

Authority: 11 U.S.C. §522(b)(3)(A); §522(n) · 4 U.S.C. §114(a), (b)(1)(E), (b)(3); P.L. 104-95 · FTB Pub. 1005 (2025) p.12; FTB Pub. 1031 (2025) §I; Cal. R&TC §17952.5 · FTB Pub. 1005 (2025) p.4; Cal. R&TC §17952.5(a), (b)(5) · FTB Pub. 1031 (2025) §G 'Guidelines for Determining Residency' · FTB Pub. 1100 (2025) §E Example 13; FTB Pub. 1031 (2025) §I · NY TSB-M-98(7)I (Dec. 24, 1998) at 1-2 · NY Tax Law §605(b)(1)(A)-(B); 20 NYCRR §105.20(c); Leach v. Chu, 150 A.D.2d 842; NY Nonresident Audit Guidelines (Dec. 2021) at 53 · Tex. Prop. Code §41.005(c), (e); a · verified 2026-07-25

Where a conversion costs you something — and where it cannot

Texas has among the highest property taxes in the country and the least income-tested relief. That combination produces the cleanest good news on this page and its sharpest bad news.

A Roth conversion cannot cost you a Texas property-tax break. Not one relief programme is income-tested — not the $140,000 school-district homestead exemption, not the additional $60,000 for owners 65 or older or disabled, not the school tax ceiling that freezes school taxes at 65, not the over-65 deferral, not the 10% appraisal cap. The application forms do not ask about household income at all. Florida caps its 65+ exemption at $38,686 of federal AGI, so a conversion there can cost a senior the benefit; in Texas the question does not arise. Both 2025 increases are in effect and retroactive to the 2025 tax year — and note the over-65 add-on went from $10,000 to $60,000, a change still widely mis-stated at the old figure.

Medicaid is the opposite story, and Texas is harder than Florida. Texas is an income-cap state — $2,982 a month for 2026 — and above the cap it requires a Qualified Income Trust rather than reducing the benefit. But the resource side is the bite: the state’s policy handbook treats retirement accounts as countable resources and grants no payout-status exemption for an applicant’s own IRA, so an entire Roth balance counts against a $2,000 limit. Florida would exempt an account in payout status; Texas does not. Texas’s escape route is different in kind — an annuity purchased with Roth IRA proceeds is treated as neither a resource nor a transfer — and one honest note: that policy section, while currently controlling, carries a 2009 revision date.

Medicare Savings Programs are the cliff nobody mentions. Texas keeps an asset test — $9,950 individual, $14,910 couple for 2026 — and because retirement accounts are countable here, a meaningful Roth balance can disqualify a Texas senior from premium assistance outright, no matter how low the income.

Texas runs no state auto-IRA programme. We searched the legislature’s bill records across the 2025 sessions and the prior one and found no bill that would create a state-facilitated retirement savings programme, and no national tracker lists Texas as having one — so the auto-enrolment excess-contribution trap that exists in California and New York simply cannot arise here. State law also preempts cities and counties from imposing employment-benefit mandates, which would void a municipal version.

Authority: S.B. 4 §1.01 and S.B. 23 §1.01, 89th Leg., R.S. (2025); S.J.R. 2 (Prop. 13) and S.J.R. 85 (Prop. 11), approved Nov. 4, 2025; Tex. Const. art. VIII, §1-b(c) · Tex. Labor Code §1.005(b), added by HB 2127, 88th Leg., R.S. (2023) (Texas Regulatory Consistency Act); enforcement via Tex. Civ. Prac. & Rem. Code ch. 102A · Tex. Tax Code §11.13(b), as amended by S.B. 4, 89th Leg., R.S. (2025), contingent on S.J.R. 2 (Prop. 13, approved Nov. 4, 2025); Tex. Const. art. VIII, §1-b(c) · Tex. Tax Code §11.13(c), (d), (q), as amended by S.B. 23, 89th Leg., R.S. (2025), contingent on S.J.R. · verified 2026-07-25

Mineral rights inside a Roth IRA — the Texas question nobody answers

Mineral ownership is ordinary in Texas and it collides with a Roth IRA in a way almost no retirement guide addresses. The distinction is royalties versus working interests.

Passive royalty income, including overriding royalties, is excluded from unrelated business taxable income and stays tax-free inside the account. An operating working interest is not excluded: once gross unrelated income passes $1,000, the custodian files Form 990-T and the IRA itself pays the tax from inside the account. That is the one circumstance in which a Roth IRA — the account whose whole point is tax-free growth — owes income tax. Debt-financing can pull even royalties into the same treatment, and operating or servicing the property yourself risks a prohibited transaction that disqualifies the entire account.

The consolation is specifically Texan: an IRA that owes this tax keeps its Texas creditor exemption, because §42.0021 treats a plan as exempt even where it is taxed solely under the unrelated-business rules.

Authority: 2025 Instructions for Form 990-T (Who Must File); IRC §512(b)(12); §408(h) · 26 CFR §1.512(b)-1(b); IRC §512(a)(1), §513 · 26 CFR §1.512(b)-1(b); IRC §512(b)(2) · IRC §408(e)(1); IRC §408A(a); IRC §511 · IRC §408(e)(2)(A); IRC §4975(c)(1)(C), (D), (E); §4975(e)(2) · IRC §514(a)(1), §514(b)(1); IRC §512(b) · Tex. Prop. Code §42.0021(a); §42.0021(b); §42.001(a) · verified 2026-07-25

The public-employee corner

Texas’s public workforce has uneven Roth access, and one gap is worth knowing before you choose a plan:

• State employees: Texa$aver offers a Roth option in both the 401(k) and the 457.
• Teachers: TRS of Texas offers no Roth vehicle at all — Roth access for school employees runs through a district-sponsored 403(b), so it depends on your district’s vendor list. Texas repealed its 403(b) vendor-certification regime in 2019, so the state no longer pre-screens those products for you.
• Cities: availability varies — Dallas documents Roth in both its 457 and its 401(k); other cities are inconsistent about publishing it.
• Higher education: the Optional Retirement Program is administered institution by institution and statewide guidance does not address Roth availability.
• The simplification: because Texas exempts no retirement income, none of New York’s $20,000-exclusion complexity about which plan’s distributions qualify exists here.
• Federal rule now live: high earners must make catch-up contributions as Roth contributions, triggered at $150,000 of prior-year wages — though governmental plans received transition relief.

Authority: City of Dallas HR, Deferred Compensation; City of Austin HR, Active Employee Benefits · IRS Notice 2025-67; IRC §414(v)(7)(A); SECURE 2.0 §603; TD 10007 (final regs, Sept. 16, 2025); IR-2025-91 · TRS of Texas, Understanding 403(b) Retirement Plans · Tex. Comptroller, Texas Payroll/Personnel Resource — Deferred Compensation Plans; Tex. Gov't Code §§609.001, 609.007, 609.502; 34 TAC §87.5(a) · Tex. Const. art. VIII, §24-a (added Nov. 5, 2019) · Tex. H.B. 2820, 86th Leg., R.S. (2019) (repealing Sec. 8A, art. 6228a-5, Vernon's Tex. Civ. Stat.), eff. Sept. 1, 2019; TRS of Texas 403( · verified 2026-07-25

Four Texas beliefs you can retire

A state with no income tax attracts confident folklore. Each of these is wrong:

• verified“Texas could add an income tax whenever it wants” — not since 2019, and not easily. Art. VIII §24-a states plainly that “the legislature may not impose a tax on the net incomes of individuals.” Undoing it takes a constitutional amendment ratified by voters, not a bill. And the older 1993 amendment it replaced was repealed outright rather than left underneath — the codified constitution reads simply “Sec. 24. (Repealed Nov. 5, 2019.)”
• verified“Texas is basically Florida” — on tax yes, on almost everything else no. They give the same answer on conversions and both protect retirement accounts without a dollar cap. Then they part company: Texas is community property and Florida is not; Texas income-tests none of its senior property-tax breaks while Florida caps its 65+ exemption at $38,686 of federal AGI; and Texas Medicaid counts an IRA that Florida would exempt in payout status.
• verified“My old state can chase my IRA for years after I leave” — federal law says otherwise. 4 U.S.C. §114 bars any state from taxing the retirement income of a nonresident, and it names individual retirement plans expressly. California’s own guidance lists Roth conversions among the income it cannot reach; New York’s says conversion income is excluded “by reason of section 114.” The fight is never the rule — it is whether you genuinely stopped being a resident.
• verified“The Texas franchise tax will hit my IRA” — it taxes business entities, not your retirement account. The franchise or “margin” tax is a privilege tax on taxable entities doing business in Texas. It is not an individual income tax and does not reach an IRA’s contributions, growth, conversions or distributions. Worth stating precisely though: the Comptroller’s published list of entities outside the tax names certain exempt trusts without naming IRAs, so this rests on the structure of the tax rather than on a line that says “IRAs are exempt.”

The fine print that actually bites

Everything below comes from statutes, the constitution, official policy handbooks and agency forms surfaced during verification:

• priority_highA child-support lien goes straight through Texas’s uncapped shield. §42.0021 protects a Roth IRA from creditors without a dollar limit — but the exemption does not reach a child-support lien. An uncapped shield against a commercial judgment is not a shield against everything, and this is the exception most likely to matter to an actual family.
• priority_highMoving to Texas for the asset protection doesn’t work for two years in bankruptcy. Federal law picks your exemption state by where you were domiciled for the 730 days before filing (11 U.S.C. §522(b)(3)(A)). Leave California in March, file in June, and you get California’s means-tested IRA exemption — not Texas’s unlimited one. The protection is real; the clock is too.
• priority_highTexas Medicaid counts your entire Roth balance, with no payout escape. This is the sharpest Texas-versus-Florida divergence and it runs against Texas. Florida exempts an IRA in payout status; the Texas policy handbook grants no payout-status exemption for an applicant’s own IRA, so the whole balance counts against a $2,000 resource limit. Texas’s narrow escape is different in kind: an annuity purchased with Roth proceeds is treated as neither a resource nor a transfer.
• priority_highMedicare Savings Programs are the cliff nobody mentions. Texas keeps an asset test for QMB/SLMB/QI-1 — $9,950 individual / $14,910 couple for 2026. Because retirement accounts are countable resources here, a meaningful Roth balance can disqualify a Texas senior from premium help outright, regardless of how low their income is.
• priority_highYour spouse may own half of a Roth with only your name on it. Texas is a community-property state: a Roth funded with earnings during the marriage is community property regardless of title. At divorce the court divides it in a manner it deems “just and right” — discretionary, not California’s presumptive half-and-half, so equal is the starting intuition rather than the rule.
• priority_highA tort judgment against one spouse can reach all the community property. A Texas-specific wrinkle with no Florida analogue: liability rules mean a tort judgment against either spouse can reach community property generally, which widens the exposure surface around jointly-built savings even where the retirement account itself is exempt.
• priority_highWorking interests are the mineral trap, not royalties. Passive royalties inside an IRA are excluded from unrelated business taxable income. An operating working interest is not: past $1,000 of gross unrelated income the custodian files Form 990-T and the IRA itself pays the tax from inside the account — the one way a Roth pays income tax. Debt-financing can drag even royalties in, and servicing the property personally risks blowing up the account under §4975.
• priority_highA distribution only stays exempt for 60 days. Money that leaves the account keeps its Texas exemption for 60 days unless it is rolled over. Cash sitting in a checking account past that window is ordinary cash to a creditor.

Methodology & update log

This page is built from a 148-fact dataset researched exclusively from primary sources — the Texas Constitution, Texas codes, enrolled legislation, Comptroller publications and forms, the state Medicaid policy handbook, federal statutes and court opinions. An independent adversarial pass then re-fetched every cited source, checked each quote verbatim, hunted for superseding guidance and re-derived the arithmetic: 126 of 148 facts confirmed. The nineteen corrections caught two pieces of dead law that would otherwise have been published as current, several citations that pointed at the right conclusion through the wrong authority, and one negative finding that a landing page appeared to support but its own linked documents contradicted. Three questions are labelled unsettled on purpose, and one figure — the comparison against New York and California — was independently rederived from statute rather than carried over from our own earlier pages, after we found and corrected an error in one of them.

• 2026-07-26 — page published; all 148 facts verified 2026-07-25. Watch-list: whether any Texas court or attorney general construes the November 2025 amendments, and in particular whether §24-b’s capital-gains bar is read to reach gains inside a retirement account; the appellate posture of the municipal-preemption statute; annual indexing of the Medicaid and Medicare Savings Program figures; and the 2009-vintage policy section governing the Roth annuity treatment.

Spot an error? Tell us — corrections are logged in the changelog.

Texas Roth questions, answered plainly

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