Texas Republicans Are Doubling Down on Banning Capital Gains Taxes
If passed, the constitutional amendment would lock out a potential source of future state funding and disproportionately benefit wealthy households.
Greg Abbott, governor of Texas, during a news conference in September 2025.
(Mark Felix / Getty)
In Texas, 17 constitutional amendments will be up for a vote this November, on issues from bail reform to funding for dementia prevention. But the majority of the proposed measures concern tax rights, bans, and exemptions. Among them is Proposition 2, which calls to “Prohibit Capital Gains Tax on Individuals, Estates, and Trusts.”
If passed, the state of Texas would not be able to collect taxes on both “realized and unrealized capital gains,” meaning profits generated from selling or holding an investment—including stocks, bonds, real estate and personal vehicles. Though there has been no polling on the issue, voters in the state are likely to pass Prop 2. Since 1993, the state has proposed three tax bans, and all three have been approved by voters. Under the 2019 income tax ballot proposal, capital gains taxes were already effectively banned, and in 2023, voters in Texas approved a ban on a “wealth tax” with nearly 68 percent of the vote.
In a video from May, Texas Governor Greg Abbott was eager to sign a joint resolution that would allow voters to “ensure that we are not going to have a capital gains tax on Texans in the state of Texas.” He later shared that it is “an extension of our collective disdain in Texas for any type of tax.”
Most states only tax realized capital gains (and none of them tax unrealized gains). Though Texas does not currently impose any capital gains tax, the proposal, if passed, “erects a permanent barrier to a future legislature or electorate willing to adjust our tax code to changing needs,” wrote Dr. Cathy McAuliffe, a former candidate for the Rockport-Fulton Independent School District school board, in a letter to the editor to the Rockport Pilot. “Texans deserve the flexibility to address evolving challenges.”
The ban would disproportionately benefit wealthy households, many of whom have flocked to the state in recent years. In 2025, over 10 percent of the people on the Forbes 400 List of the richest people in the United States were Texas residents, and the state has one of the most regressive tax systems in the country, according to the Institute on Taxation and Economic Policy, with lower-income households in the state paying the greatest proportion of their income in taxes.
Several editorial boards across the state have expressed a negative opinion of Prop 2, including the Houston Chronicle and the San Antonio Express-News. In October, the editorial board of the Austin American-Statesman asked readers to vote no on the proposal, saying that, if passed, the constitutional amendment would remove a potential source of funding in the future. “Tax breaks on capital gains primarily benefit wealthy households and worsen racial wealth inequality,” wrote The Statesman. “Those at the top shouldn’t be permanently shielded if Texas ever needs new funding sources.”
Support independent journalism that does not fall in line
Even before February 28, the reasons for Donald Trump’s imploding approval rating were abundantly clear: untrammeled corruption and personal enrichment to the tune of billions of dollars during an affordability crisis, a foreign policy guided only by his own derelict sense of morality, and the deployment of a murderous campaign of occupation, detention, and deportation on American streets.
Now an undeclared, unauthorized, unpopular, and unconstitutional war of aggression against Iran has spread like wildfire through the region and into Europe. A new “forever war”—with an ever-increasing likelihood of American troops on the ground—may very well be upon us.
As we’ve seen over and over, this administration uses lies, misdirection, and attempts to flood the zone to justify its abuses of power at home and abroad. Just as Trump, Marco Rubio, and Pete Hegseth offer erratic and contradictory rationales for the attacks on Iran, the administration is also spreading the lie that the upcoming midterm elections are under threat from noncitizens on voter rolls. When these lies go unchecked, they become the basis for further authoritarian encroachment and war.
In these dark times, independent journalism is uniquely able to uncover the falsehoods that threaten our republic—and civilians around the world—and shine a bright light on the truth.
The Nation’s experienced team of writers, editors, and fact-checkers understands the scale of what we’re up against and the urgency with which we have to act. That’s why we’re publishing critical reporting and analysis of the war on Iran, ICE violence at home, new forms of voter suppression emerging in the courts, and much more.
But this journalism is possible only with your support.
This March, The Nation needs to raise $50,000 to ensure that we have the resources for reporting and analysis that sets the record straight and empowers people of conscience to organize. Will you donate today?
