Where Texas Senate Candidates Ken Paxton and James Talarico Stand on Taxes

Texas voters are getting two very different tax messages in the 2026 U.S. Senate race. In reporting published Sept. 15, the Fort Worth Star-Telegram outlined how Republican Ken Paxton and Democrat James Talarico are framing affordability, with Paxton emphasizing new deductions and Talarico focusing on higher taxes for billionaires and corporations alongside expanded credits.

The divide matters beyond campaign rhetoric because taxes and household costs are central issues ahead of the Nov. 3 midterms, with early voting scheduled for Oct. 19 through Oct. 30, according to the Star-Telegram. For higher-income households, business owners and families with substantial wage or investment income, the candidates' proposals point in opposite directions on who would pay more and who might qualify for larger tax breaks.

What Changed

Paxton, the Texas attorney general, has rolled out what the Star-Telegram described as an affordability plan built around a series of tax deductions. His proposals include making so-called Trump Accounts permanent and doubling the existing Child Tax Credit. He also backs a $25,000 tax deduction for out-of-pocket medical expenses for individuals, plus an additional $25,000 deduction for each dependent.

Paxton's plan also includes a $50,000 deduction for first-time homebuyers and Texans who move to a new primary home, along with a $5,000 deduction for what his campaign calls healthy lifestyle spending. The Star-Telegram reported that those expenses would include gym memberships, nutrition plans, GLP-1 medications and sports for dependents.

Talarico, an Austin-area state representative, is taking a different approach. According to the Star-Telegram's review of his campaign platform, he supports increasing taxes on billionaire income and capital gains, ending loopholes used by billionaires to grow untaxed wealth, rolling back tax breaks for corporations and closing loopholes that allow hedge funds to avoid paying billions.

He also supports eliminating the Social Security tax cap for those earning more than $400,000 a year, expanding the Child Tax Credit and Earned Income Tax Credit, reinstating the Affordable Care Act's enhanced premium tax credits, expanding the Low-Income Housing Tax Credit, repealing Trump tariffs and suspending the federal diesel tax.

Who Is Affected

Paxton's plan is structured around deductions, which generally become more valuable as taxable income rises, though the exact effect would depend on how any proposal is written into federal law. Households with large medical expenses, families with several dependents, and buyers planning a move to a new primary residence could see the biggest potential tax benefit if Congress ever enacted deductions in the form he described.

His proposed healthy lifestyle deduction could also matter for affluent families already spending on fitness, organized youth sports, nutrition programs or GLP-1 medications. But the Star-Telegram's account did not include details such as income limits, phaseouts, whether the deductions would be above the line or itemized, or how they would interact with existing federal rules. Those details would determine who could actually use the deductions.

Talarico's agenda is aimed more directly at upper-income taxpayers and corporations. Households with income above $400,000 would be especially affected by his proposal to eliminate the Social Security tax cap above that level. Investors with large capital gains and owners of closely held businesses could also face changes if taxes on high-income households and corporations were increased and if current loopholes were narrowed.

At the same time, some parts of Talarico's plan would extend or expand credits that could lower taxes for families lower down the income scale, including the Child Tax Credit, Earned Income Tax Credit, Affordable Care Act premium tax credits and the Low-Income Housing Tax Credit.

The After-Tax Math

Neither campaign proposal is current federal law, and the Star-Telegram report did not provide revenue estimates or legislative text. Still, the structure of the plans shows the broad after-tax tradeoffs.

Example: a high-earning family that incurs $25,000 of out-of-pocket medical expenses and qualifies for one additional $25,000 dependent deduction under Paxton's framework would have $50,000 of deductions tied to medical costs alone, before any homebuyer or healthy lifestyle deduction. By contrast, a household earning more than $400,000 could face a larger payroll tax burden under Talarico's Social Security proposal, while also seeing different outcomes depending on any Child Tax Credit or other credit expansions.

Because both agendas are campaign positions rather than enacted law, the precise dollar effect has not been published.

Moves to Discuss With Your Advisor

For Texas households watching the race, the immediate tax bill does not change on Sept. 15. But the proposals show what each candidate may push in Washington if elected, and they offer clues about which records and planning issues may matter later.

Families with large medical bills or recurring spending on fitness, sports or GLP-1 medications may want to keep clean records of those costs, since Paxton's plan leans heavily on deduction-based relief. Households with income above $400,000, substantial capital gains or business income may want to monitor whether Talarico's rhetoric around taxing billionaire income, capital gains and corporate loopholes broadens into more detailed proposals affecting a wider slice of affluent taxpayers.

For business owners, it may also be worth tracking any more specific language around corporate tax breaks and hedge fund loopholes. For families claiming health insurance subsidies or child-related credits, Talarico's support for enhanced Affordable Care Act premium tax credits and an expanded Child Tax Credit could become relevant if those items move into a federal bill. These are planning conversations rather than immediate action items, and households in these situations may want to review them with a CPA or financial planner if more legislative detail emerges.

What to Watch

The next question is whether either campaign turns broad themes into detailed federal legislation. The Star-Telegram report summarizes policy positions, but many practical issues remain unanswered, including income thresholds, eligibility limits, effective dates, and whether deductions would stack with or replace existing federal tax benefits.

Voters will also be watching whether economic issues stay at the center of the race through early voting from Oct. 19 to Oct. 30 and Election Day on Nov. 3. For affluent Texas households, the main takeaway is straightforward: Paxton is selling tax relief through new deductions, while Talarico is arguing for a redistribution model that raises more revenue from top earners and corporations while expanding selected credits and subsidies.

After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.