US Tax Guide for Texas Residents Living in Mexico

Texas has no state income tax, which makes it one of the most favorable states for Americans moving abroad. If you moved from Texas to Mexico, you have no Texas state tax to worry about — but you still have federal filing obligations and Mexican tax considerations.

Texas Residency Rules

Texas has no state income tax. Once you establish that you are no longer a Texas resident (by moving abroad), there are no Texas state tax implications. However, if you maintain significant Texas ties (property, driver's license, voter registration), Texas may still consider you a resident for other purposes (jury duty, etc.), but there is no state tax consequence.

Mexico Tax Implications

Mexico taxes worldwide income for tax residents (183-day test or center of vital interests). The US-Mexico tax treaty applies. Temporary vs permanent resident visa affects tax residency.

FEIE vs FTC for Texas Residents in Mexico

Texas has no state income tax, so state conformity is not an issue. You only need to consider federal FEIE vs FTC.

FEIE is generally better for Texas residents in their first years abroad or with income below the FEIE limit. FTC is generally better for standard Mexican tax residents paying high Mexican rates.

Common Mistakes Texas Residents Make in Mexico

1. Assuming no state tax means no filing obligations — You still must file federal returns.
2. Not establishing Texas residency properly before moving — Even though Texas has no income tax, establishing residency matters for other purposes.
3. Not reporting Mexican bank accounts on FBAR — All foreign accounts are reportable.
4. Not understanding Mexican tax residency — Temporary vs permanent resident status affects your Mexican tax obligations.

When to Get Professional Help

You should consider professional help if you have foreign accounts exceeding $10,000, self-employment income, property ownership in Mexico, or complex income situations.

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FileAbroad explains U.S. federal tax and U.S. international information-reporting consequences of documented foreign facts. It does not provide foreign-country legal or tax representation, valuation opinions, banking or remittance advice, or advice on what a foreign authority will accept.

Scope statement reviewed 2026-08-30 · FileAbroad product/content owner