Texas

Texas does not levy income tax. The US State is among the few states that do not tax individual income. This means that wages, salaries, and other forms of personal income are not subject to state income tax. However, it is important to note that while Texas does not have an income tax, it does have other forms of taxation, such as Sales tax and Property tax.

Texas does not impose a corporate income tax, which can result in substantial savings for foundations and family offices structured as corporations. However, businesses are subject to franchise tax, a tax on the right to do business in Texas.

Individual counties in Texas levy property taxes and the state has one of the highest average effective property tax rates (7th in the US) in the nation at 1.63%3. This factor should be carefully considered when evaluating real estate investments or establishing a physical presence in Texas.

Texas offers a supportive environment for philanthropic endeavours. The state’s favourable treatment of charitable donations allows donors to maximise their tax deductions, further incentivising philanthropic activities.

Due to their liability protection and flexible management structures, LLCs are a popular legal structure choice for family offices. The owners of an LLC, referred to as members, are generally not personally liable for the business’s debts and liabilities. This liability protection typically shields their personal assets from business creditors, offering a level of security that other business structures may not provide.

Trusts are another popular legal tool for families seeking to manage their assets and ensure a smooth transfer of wealth in Texas. However, when creating trusts in the State, it is essential to work with an experienced estate planning attorney to ensure that the trust is properly drafted and meets the family’s specific needs and goals.

Family offices can also establish corporations in Texas. These legal structures offer liability protection and potential tax benefits, especially for family offices with employees. When structuring a family office as a corporation, it’s essential to consider the advantages of a multidisciplinary team, including legal, tax, and ERISA specialists, to ensure compliance and optimise benefits.

In addition to traditional legal structures, family offices can also utilise fund structures to hold and manage their wealth. This approach can be particularly beneficial for family offices that operate like fund managers, providing a clear legal framework, control over investments, and potential for incentivising performance through structures like carried interest.

The state of Texas has a positive economic outlook with projections for continued growth in 2025. Texas’s energy sector is a significant contributor to its economy, and high energy production is expected to support high-wage employment and incomes. The state’s economy is the eighth-largest in the world, with a GDP of $2.6 trillion. These factors suggest a healthy and resilient economy, which can be attractive to family offices seeking long-term stability.

Texas is largely known for its conservative political climate, which significantly influences its policies and administration. This conservative approach is clear in its fiscal strategies, usually promoting lower taxes and limits on government expenditure. The state also tends to adopt socially conservative views regarding topics like abortion and gun rights. Moreover, Texas’s energy policies reflect this same conservative trend, placing a strong focus on the oil and gas sector and generally being careful with environmental regulations.

Texas fosters a supportive environment for family offices through a combination of factors. Its business-friendly policies create a fertile ground for wealth management and investment activities. The state’s regulatory landscape is notably absent of onerous restrictions specifically targeting family office operations. This allows for a high degree of flexibility in terms of how these entities are structured and managed. Family offices in Texas can tailor their operations to the specific needs and goals of the families they serve without being constrained by rigid legal frameworks.

Texas’s robust international relations, especially with Mexico, its largest trading partner, can be a significant advantage for family offices with international interests. This strong economic relationship can facilitate trade and investment opportunities, making Texas an attractive location for family offices managing cross-border assets and businesses.

However, the complexities surrounding immigration and border security can pose challenges for international family offices operating in Texas. Family offices may need to develop strategies to mitigate the potential risks associated with immigration and border security issues, such as working with experienced immigration attorneys and staying informed about policy changes.

Texas participates in the federal E-Verify program, which mandates that all employers verify the employment eligibility of their new hires. This is particularly relevant for family offices that may seek to employ foreign talent. Navigating the complexities of immigration law and ensuring compliance with the E-Verify program can be a considerable challenge. Family offices may need to engage immigration attorneys or specialised HR professionals to manage this process effectively and mitigate the risk of legal complications arising from non-compliance.

Major cities like Dallas and Houston have a strong presence of financial institutions, wealth management firms, and legal and accounting professionals specialising in family office services. These firms offer a wide range of services, including investment management, tax planning, estate planning, and philanthropy. The concentration of these specialised services in major Texas cities creates a fertile ecosystem for family offices to thrive, fostering collaboration and knowledge-sharing among professionals and facilitating access to a wide range of resources and expertise.

Texas boasts a highly skilled and diverse workforce, making it an attractive location for businesses across various industries. The state’s strong education system, including top-tier universities and research institutions, produces a steady stream of qualified graduates in fields such as engineering, technology, healthcare, and business. Additionally, Texas’s pro-business environment and lower cost of living compared to other major metropolitan areas attract skilled professionals from across the country and around the world.

Texas boasts a rich and diverse cultural heritage, with attractions ranging from historical sites like the Alamo and the San Jacinto Battleground to world-class museums and art centres. The Texas State Capitol in Austin is another notable landmark, recognised as the largest state capitol in the U.S. by square footage. Major cities offer a thriving arts and entertainment scene, with numerous theatres, music venues, and festivals.

Texas has several networking communities oriented towards family offices and ultra-high-net-worth individuals. These communities provide opportunities for peer-to-peer learning, sharing best practices, and accessing valuable resources. For example, the Dallas Family Office & Wealth Management Conference offers a platform for local and international families to connect and learn from experts. The Family Office Association (TFOA) provides a peer network for single-family offices, hosting events and fostering collaboration among members..

Texas boasts a robust and well-established education system, catering to a diverse range of students through numerous public and private schools. In addition to public schools, Texas is home to a thriving private school sector. Private schools offer a variety of educational philosophies and approaches, including religious, Montessori, and Waldorf education. The state also has a strong higher education system, with numerous public and private colleges and universities offering undergraduate and graduate programs, including renowned institutions such as the University of Texas at Austin, Texas A&M University, Rice University, and Southern Methodist University.

While English is the official language of Texas, meaning it is the language used for all government and legal proceedings, Spanish holds a significant presence due to the state’s historical ties with Mexico and its geographic proximity. A considerable portion of the Texan population is bilingual, speaking both English and Spanish. For international family offices establishing a presence in Texas, being mindful of the linguistic landscape is crucial.