Deep in the Heart of Taxes: What We Pay to Call McKinney Home
Courtney Leffall, CFP®
Living in McKinney, Texas, comes with a tax profile as unique as our Lone Star State—no income tax, higher property taxes, and a sales tax that tags every purchase from boots to brisket at Local Yocal. For us in McKinney, these aren’t just quirks; they dictate how we budget, save, and plan for the future. With recent tax relief—like our 2024 property tax rate cut—and occasional talk of axing property taxes (don’t count on it), now’s the perfect moment to step back and think about tax planning across local, state, and federal levels. Taxes rank among our biggest lifetime costs, and a solid strategy can shift the game in our favor.
Our Texas Tax Trifecta: No Income, High Property, Steady Sales
We start with what we Texans love to tout: no personal income tax, one of just seven states to skip it. That’s a plus for our paychecks, whether we’re tech pros along U.S. 380 or retirees in Stonebridge Ranch. But our state doesn’t run on grit alone—it leans on other taxes. Property taxes are the heavyweight, averaging 1.47% statewide, one of the nation’s highest. In McKinney, with Collin County and McKinney ISD included, that’s about $9,118 a year for a $500,000 home—keeping our schools, roads, and city services humming. Then there’s our sales tax: a 6.25% state rate plus McKinney’s 2% local piece (1% city, 1% county) hits 8.25%. That adds up when we’re shopping at District 121 or grabbing a brew at Tupps Brewery. These taxes fuel our state, but they demand a financial plan that can handle costs newcomers might not expect.
McKinney Tax Updates: Relief on the Horizon
We’ve scored some relief recently. In September 2024, our McKinney City Council lowered the property tax rate to $0.415513 per $100 valuation for FY 2024-25—down over a penny from $0.427513. For a $500,000 home, that cuts our city tax by about $60. Add the 2023 Proposition 4 relief package—raising homestead exemptions to $100,000 for school taxes and compressing school rates—and we’re saving around $714 annually on that $500,000 home. McKinney ISD also trimmed its rate by 6.3 cents in 2022-23 with federal ESSER funds, part of a 35.7-cent drop over seven years. But with home values climbing 6-8% in Collin County from 2023-2024, some relief gets offset. Scrapping property taxes entirely? It’s a pipedream we hear now and then—they fund over half our local budgets—but replacing them with higher sales tax or an income tax isn’t likely. We plan with what we’ve got.
The Bigger Picture: Tax Planning Across All Levels
Our Texas tax structure is just one slice of the pie. Federal income taxes still apply, and while our W-2s dodge a state cut, Uncle Sam’s share grows with investment gains or retirement payouts. The federal estate tax kicks in at $13.61 million in 2025—Texas skips a state version, but for McKinney folks building serious wealth, federal rules matter. This layered tax reality drives home why planning is key. Over a lifetime, taxes can claim 20-30% of our income yearly. A McKinney couple earning $150,000 might skip state income tax but still face $25,000 federally, $9,000 in property taxes, and thousands in sales tax. That’s big money—without a plan, we’re leaving it on the table.
Strategies to Stay Ahead
How do we manage? Start with the essentials: max out IRAs or 401(k)s to ease our federal burden. For property taxes, we grab every exemption—Collin County offers breaks for seniors, veterans, and homesteaders. On estates, gifting or trusts can trim what’s taxable before federal limits hit. For sales tax, we time big buys—like furniture for a Trinity Falls home—during tax-free weekends. But every situation’s unique, so we always suggest consulting a CPA or tax advisor. They’ll shape a plan for our McKinney life, whether we’re young families near Craig Ranch or retirees near Downtown. Need one? We work with top advisors who know our Texas taxes inside out and can make a referral.
Let’s Talk Taxes in McKinney
Taxes might not dazzle, but they’re a powerful tool for our financial future. At lxparker.com, we’re here to help us navigate this landscape—property tax shifts, sales tax realities, and federal duties included. Want to dive deeper? Schedule an appointment to meet us in our McKinney office at 300 East Davis Street, Suite, 112 McKinney, TX 75069. We’d love to run the numbers and craft a plan that keeps more of our hard-earned cash right here with us.
Disclosures:
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
