Texas sales tax: rates, exemptions, and filing rules

Published Thursday 16 April 2026

Table of contents

• What is Texas sales tax?
• How much is sales tax in Texas?
• Texas sales tax rates by location
• How to calculate Texas sales tax
• Who needs to collect Texas sales tax?
• How to register for a Texas sales tax permit
• What's taxable in Texas?
• Sales tax exemptions in Texas
• Filing schedules and due dates
• Use tax vs. sales tax in Texas
• Online sales tax rules for Texas businesses
• Penalties for non-compliance
• Manage your Texas sales tax with confidence
• FAQs on Texas sales tax

Key takeaways

• Recognize that Texas charges a base sales tax rate of 6.25%, with local jurisdictions adding up to 2% more, bringing the maximum combined rate to 8.25% in cities like Houston, Dallas, and Austin.
• Register for a Texas sales tax permit before making any taxable sales, and know that your filing frequency (monthly, quarterly, or annually) is assigned based on how much tax you collect each period.
• Collect sales tax from Texas customers even if your business has no physical presence in the state, as remote sellers who exceed $500,000 in Texas sales within 12 months must register and remit tax.
• Avoid penalties by filing and paying on time, keeping accurate transaction records, and paying use tax on any taxable purchases where Texas sales tax wasn't collected at the point of sale.

What is Texas sales tax?

Texas sales tax is a consumption tax applied to the sale, lease, or rental of most goods and certain services within the state. Across the country, sales tax is an important revenue source, making up an average of about one-third of states' total tax collections. The state imposes a base rate, and local jurisdictions can add their own percentages on top of it.

As a business owner, you act as a collection agent for the state. You collect the tax from your customers at the point of sale and remit it to the Texas Comptroller. When you understand how this tax works, you can price your products correctly and avoid compliance issues.

How much is sales tax in Texas?

Texas sales tax is 6.25% at the state level, with local jurisdictions adding up to 2% more. The maximum combined rate is 8.25%.

This tax applies to most retail sales, leases, rentals, and taxable services. When you know your exact rate, you can collect the right amount and stay compliant.

Texas sales tax rates by location

Local sales tax rates vary by city and county, creating combined rates between 6.25% and 8.25% across Texas. Here are the key details:

• Cities, counties, transit authorities, and special purpose districts can each impose additional taxes.
• Maximum total: 8.25% (6.25% state + 2% local)
• Rate verification: Check the Texas Comptroller website for current rates in your area.

Here are tax rates in several Texas cities:

• Houston: 8.25% (6.25% state + 2% local)
• Dallas: 8.25% (6.25% state + 2% local)
• Austin: 8.25% (6.25% state + 2% local)
• San Antonio: 8.25% (6.25% state + 2% local)
• Fort Worth: 8.25% (6.25% state + 2% local)
• El Paso: 8.25% (6.25% state + 2% local)

Check the Texas Comptroller of Public Accounts website for the latest local sales tax rates.

How to calculate Texas sales tax

Sales tax = tax rate × item price. Multiply your combined local rate by the item price, then round to the nearest penny.

Follow these steps:

1. Find your local rate: Combine state (6.25%) plus local taxes.
2. Convert to decimal: Divide rate by 100 (8.25% = 0.0825).
3. Calculate tax: Multiply item price by decimal rate.
4. Round correctly: Follow Texas Comptroller rounding guidance for accurate calculation.

Find your local sales tax rates on the Texas sales tax page.

Who needs to collect Texas sales tax?

You must collect Texas sales tax if your business has a physical presence, or nexus, in the state and you sell taxable goods or services. Physical presence includes having an office, storefront, warehouse, or employees based in Texas.

Out-of-state businesses may also need to collect this tax if they meet the economic nexus threshold. Due to the 2018 South Dakota v. Wayfair Supreme Court decision, states can now require businesses to collect sales taxes even without a physical presence. If your business generates significant revenue from Texas customers, you must register and collect the tax just like a local business.

How to register for a Texas sales tax permit

A Texas sales tax permit allows you to legally collect sales tax from customers. You must register before making any taxable sales.

Follow these steps to get your permit:

1. Gather your information: You'll need identifying information such as your Social Security number or EIN, business entity details, ownership information, and your North American Industry Classification System (NAICS) code.
2. Complete the application: Visit the Texas Comptroller's eSystems website to fill out the application for a sales tax permit.
3. Receive your permit: Once your application is approved, you'll receive your permit and be assigned a filing frequency.

What's taxable in Texas?

Texas applies sales tax to the sale, lease, or rental of most tangible personal property. This includes everyday items like furniture, clothing, electronics, and business equipment.

Certain services are also taxable in Texas. For example, data processing, amusement services, and some repair or remodeling services fall under the taxable category. Review your specific offerings to determine if they require you to collect tax from your customers.

Sales tax exemptions in Texas

Sales tax exemptions are items and services you don't need to charge tax on. When you know these exemptions, you can charge customers correctly and avoid over-collection.

Common exempt items include:

• Groceries: Food products such as meat, fruits, vegetables, and other unprepared foods.
• Medical items: Prescription drugs and certain medical devices.
• Professional services: Legal advice, medical consultations, and similar services.
• Manufacturing supplies: Items used directly in manufacturing processes.

Filing schedules and due dates

Your filing frequency depends on how much sales tax you collect. The Texas Comptroller assigns your schedule when you register: monthly, quarterly, or annually.

Here's how the thresholds work:

• Monthly filing: Required if you owe more than $1,500 in state tax per quarter.
• Quarterly filing: Required if you owe between $1,000 and $1,500 in state tax per quarter.
• Annual filing: Required if you owe less than $1,000 in state tax per year.

Returns are due on the 20th of the month following each reporting period.

Use tax vs. sales tax in Texas

Use tax is what you owe when you buy taxable items without paying sales tax at purchase. It applies the same rate as sales tax but you pay it directly to the Texas Comptroller.

Key differences between sales tax and use tax:

• Sales tax: Collected by the seller at the point of purchase.
• Use tax: Paid by the buyer when sales tax wasn't collected.
• Rate: Both taxes use identical rates (6.25% state plus local).
• Payment method: Use tax is paid directly to the Texas Comptroller.

Use tax applies to:

• out-of-state purchases where Texas sales tax isn't collected
• online transactions from sellers who don't collect sales tax
• tax-free purchases that are used in Texas
• purchases of taxable items in another country or state that are brought to Texas

For instance, if you purchase office equipment online from a seller that doesn't charge sales tax, you must report and pay use tax directly to the Texas Comptroller of Public Accounts, though most states have now shifted tax collection obligations directly to the company facilitating the sale, like Amazon or eBay. Similarly, a Texas business that purchases manufacturing materials tax-free from an out-of-state vendor but uses the materials in Texas must pay use tax.

When you know when use tax applies, you can stay organized and manage your business finances.

Online sales tax rules for Texas businesses

Remote sellers must collect Texas sales tax if they exceed $500,000 in Texas sales within the previous 12 months. Physical presence in Texas is not required, a rule that contributes to an estimated $30 billion in nationwide remote sales tax collections annually.

Here are the key requirements:

• Threshold: $500,000 in Texas sales in the previous 12 months.
• Effective date: October 1, 2019.
• Rate: State rate (6.25%) plus applicable local taxes.
• Who must comply: Remote sellers and online marketplaces meeting the threshold.

Penalties for non-compliance

Late filing penalties start at 5% of the tax due, with an additional 5% if you're more than 30 days late. Interest also applies to unpaid tax.

The Texas Comptroller can audit your business and impose fines for repeated noncompliance. File and pay on time to avoid these costs.

Manage your Texas sales tax with confidence

Managing Texas sales tax is simpler with the right tools. Xero gives you a real-time view of your finances so you can track what you owe and file on time.

Try Xero free for one month and see how it can help your business stay compliant.

FAQs on Texas sales tax

Here are answers to common questions about Texas sales tax.

Do you need a sales tax permit in Texas?

Yes. Any business selling taxable goods or services in Texas must register for a sales tax permit with the Texas Comptroller before collecting tax.

How often do you need to file Texas sales tax returns?

Your filing frequency depends on how much sales tax you collect. The Texas Comptroller assigns your schedule: monthly, quarterly, or annually.

Is labor subject to sales tax in Texas?

It depends on the type of work. Here's how different labor is taxed:

• Taxable labor: Work that creates or installs a taxable product, such as furniture assembly or appliance installation.
• Exempt labor: Professional services like legal advice, medical consultations, and consulting.
• Sometimes taxable: Repair and remodeling services for nonresidential property.

Check the Texas Comptroller of Public Accounts for specific situations.

Is all of Texas 8.25 percent sales tax?

No. The state sales tax rate is 6.25 percent. Local jurisdictions, such as cities, counties, transit authorities, and special purpose districts, can add up to 2 percent to this base rate. This means the total combined rate varies depending on where the transaction takes place, with 8.25 percent being the maximum possible rate.

Do nonprofit organizations have to pay Texas sales tax?

Most nonprofits must pay sales tax unless they hold tax-exempt status from the Texas Comptroller.

To qualify for exemption, your organization must meet specific criteria and obtain a Texas sales tax exemption certificate. Even with exempt status, some purchases and sales may still be taxable depending on your activities.

Is there a sales tax on real estate transactions in Texas?

No. Real estate sales are not subject to sales tax in Texas. Real property rentals and leases are generally not subject to sales tax. By contrast, leases and rentals of tangible personal property may be taxable. Real estate transactions in Texas may involve property taxes, recording fees, title charges, and other transaction costs, but Texas does not impose a documentary transfer tax.

Does Texas charge sales tax on vehicle purchases?

Yes. Texas charges a 6.25% motor vehicle sales tax on all vehicle purchases, whether from dealerships or private sellers.

If you buy from a private seller, report and pay the tax when you register the vehicle with the Texas Department of Motor Vehicles. Local sales taxes do not apply to vehicle purchases.

How does Texas's sales tax apply to shipping and delivery charges?

Shipping charges follow the item's tax status. Here's how it works:

• Taxable items: Shipping charges are taxable.
• Exempt items: Shipping charges are also exempt.
• Bundled shipping: If shipping is included in the total price, it's taxable when the item is taxable.
• Separate shipping on exempt items: Not taxed if listed separately.

Does Texas offer sales tax holidays?

Yes. Texas offers several sales tax holidays each year when certain items are temporarily exempt:

• Back-to-school (August): Clothing, footwear, school supplies, and backpacks priced under $100.
• Energy Star (May): Qualifying Energy Star appliances including air conditioners, refrigerators, and washing machines.
• Emergency preparation (April): Emergency supplies like generators, batteries, and flashlights.

Check the Texas Comptroller of Public Accounts for exact dates and eligible items.

What happens if a business doesn't collect or remit Texas sales tax?

Failing to collect or remit sales tax can result in penalties and interest. The Texas Comptroller may audit your business and impose fines.

Penalties include 5% for late filing, plus an additional 5% if you're more than 30 days late. Interest applies to all unpaid amounts. Repeated noncompliance can lead to business suspension.

What items are not subject to sales tax in Texas?

Common exempt items include:

• Groceries: Meat, fruits, vegetables, and other unprepared foods.
• Medical: Prescription drugs and certain medical devices.
• Professional services: Legal and medical advice.

For a complete list, see the "Sales tax exemptions in Texas" section or visit the Texas Comptroller's website.