No it is not illegal. You can sell a firearm to other Texans no problem, as long as you have no reason to suspect they are from out of state or are restricted from purchasing a gun in the first place (i/e a felon). A quick look at a TX ID or DL insures the state residency part. As far as the other side, there is no requirement for you to do any sort of check into the buyers background...use your personal judgement and you may sell it to them. Some people however prefer to only sell to those with a CHL, that way their "conscience" is clear as the background check is already done as well.