Texas Sales Tax
Texas Sales Tax At a Glance
State rate: 6.25%
Maximum combined rate: 8.25%
Sourcing: Origin
Tax Holidays: Weather Preparedness, Energy Star, WaterSense, Back-to-School
Governing Body: Texas Comptroller of Public Accounts
Streamlined Sales Tax Member: No
Texas is a large state with a complicated system of sales and use tax. Texas retailers, as well as out-of-state merchants selling to Texas customers, will do well to familiarize themselves with the requirements and regulations for Texas sales tax. If you are required to collect sales tax in the state, be diligent about taxation rules and their applicable rates.
Texas Sales Tax Rates
Texas sales tax varies by location. There is a statewide sales tax of 6.25%. In addition, local taxing jurisdictions such as counties, cities, special purpose districts, and transit authorities can impose additional taxes. This means the total tax can vary widely by location.
Texas has a few transit authorities, departments, and districts that impose their own sales and use tax. Find those rates and districts here.
Tax Sourcing
Texas uses a hybrid sourcing structure under 34 Tex. Admin. Code § 3.334:
- In-State Sellers: Sourced on an origin basis. Local sales tax is determined by the seller’s “place of business” in Texas where orders are received or fulfilled.
- Remote Sellers: Sourced on a destination basis (based on customer delivery location). Alternatively, remote sellers can elect to collect a flat single local use tax rate of 1.75% statewide (resulting in an effective combined remote seller tax rate of 8.00%).
Texas Nexus
Physical Nexus
SUnder Texas Tax Code § 151.107, a business establishes physical nexus if it maintains a physical presence in the state. This includes:
- Maintaining a physical office, retail outlet, distribution center, or warehouse.
- Having employees, sales reps, agents, or contractors operating in Texas.
- Storing seller-owned inventory in a third-party warehouse or fulfillment center located inside Texas.
Economic Nexus
Enforced under Texas Tax Code § 151.107(a)(4) and 34 Tex. Admin. Code § 3.286:
- The Trigger: Exceeding $500,000 in total gross revenue delivered into Texas during the preceding 12 calendar months.
- No Transaction Threshold: Texas does not impose a transaction count minimum; nexus is triggered strictly by reaching $500,000 in gross revenue.
- Inclusions: Gross receipts calculations include taxable sales, tax-exempt transactions, wholesale/resale sales, and marketplace-facilitated sales.
Marketplace Facilitators
Under Texas Tax Code § 151.0242, marketplace providers (such as Amazon, eBay, or Etsy) meeting the $500,000 economic threshold are legally classified as sellers responsible for collecting and remitting sales tax on all facilitated sales into Texas. Remote sellers must include marketplace sales when determining whether they exceed the $500,000 threshold.
What is Taxable in Texas
Tangible Goods
All retail sales, leases, or rentals of tangible personal property are subject to sales tax unless an explicit statutory exemption applies.
Services
Under Texas Tax Code § 151.0101, services are tax-exempt unless specifically enumerated as taxable. Taxable service categories include:
- Data processing and information services.
- Real property repair, remodeling, and maintenance (commercial).
- Personal property repair, maintenance, and restoration.
- Telecommunications, cable/satellite television, security services, and debt collection.
Click here for information that outlines Texas’s taxable services with complete descriptions.
Shipping and Handling
Delivery, freight, and shipping charges billed by the seller are taxable if associated with the sale of a taxable product or service. If the underlying item is tax-exempt, the associated shipping fee is exempt.
Digital Goods and Services
- Downloaded Digital Products: Downloadable digital products (music, movies, e-books, and applications) are classified as tangible personal property and taxed at 100% of the sales price.
- SaaS & Cloud Computing: Partially Taxable. Under 34 Tex. Admin. Code § 3.330, Software-as-a-Service (SaaS) and hosted software applications are classified as data processing services. By statute, 80% of the sales price is taxable, while 20% is exempt.
- Streaming Services: Taxable. Subscription streaming services for video or music are taxable as digital products or cable/amusement services.
Exemptions
- Groceries: Unprepared food items and groceries are exempt from state and local sales tax. Prepared food, soft drinks, and alcoholic beverages remain taxable.
- Prescription Medicine: Prescription drugs, insulin, and qualifying medical devices prescribed by licensed medical practitioners are exempt from sales tax.
Texas Sales Tax Holidays
Texas holds four annual statutory sales tax holidays:
- Back-to-School Tax Holiday (August): Held annually from Friday through Sunday during the second weekend in August. Most clothing, footwear, school supplies, and elementary/secondary student backpacks priced under $100 per item are exempt from state and local sales tax.
- Other Holidays: Texas also holds annual tax-free weekends for Emergency Preparation Supplies (April), EnergyStar® Products (Memorial Day Weekend), and Water-Efficient Products (Memorial Day Weekend).
Registration and Filing
If you are engaged in business in Texas and subject to collect Texas sales tax, you must register for a tax permit. According to their website, you should allow 2-3 weeks for this process. Click here to apply for a seller’s permit through the online application process. You can also update your existing account from this page.
Check out the Texas Comptroller’s site for more information:
Electronic filing for sales tax is required for businesses that have paid $10,000 or more in the preceding fiscal year. Electronic filing may be done through WebFile, a part of the state’s eSystems portal. It may also be done via Electronic Data Interchange (EDI). To find out more about filing electronically, visit the Texas Comptroller website. They even have a series of instructional videos about how to use WebFile.
If you’ve paid less than $10,000 in the prior fiscal year, you may file a paper report, but the electronic method is encouraged.
If you have a sales tax permit and no taxable sales to report you may also report via Telefile.
Filing Frequencies
Once a business’s sales tax application has been approved, it will receive a letter with instructions on how often it must file a sales tax return. Returns may be due monthly, quarterly, or yearly.
Monthly Filers: Due on the 20th of the following month.
| Period | Due Date |
|---|---|
| January | February 20 |
| February | March 20 |
| March | April 20 |
| April | May 20 |
| May | June 20 |
| June | July 20 |
| July | August 20 |
| August | September 20 |
| September | October 20 |
| October | November 20 |
| November | December 20 |
| December | January 20 |
Quarterly Filers: Due on the 20th of the month following the end of the quarter
| Period | Due Date |
|---|---|
| January – March (Q1) | April 20 |
| April – June (Q2) | July 20 |
| July – September (Q3) | October 20 |
| October – December (Q4) | January 20 |
Annual Filers: Due on January 20 for the previous year’s taxes.
If a due date falls on a Saturday, Sunday, or legal holiday, the deadline is extended until the next business day.
Penalties and Interest
The state of Texas charges both penalties and interest for late sales tax reports and payments. The penalties are as follows:
- Each report filed after the due date will be assessed a $50 penalty.
- If the tax due is paid 1-30 days late, Texas will charge the payer a 5% penalty.
- If the tax due is paid 30+ days late, Texas will charge the payer a 10% penalty.
After 60 days beyond the due date, unpaid taxes are also charged interest. The interest rate changes yearly and is the prime rate plus 1%. You can visit this page to look up the current year’s rate and for instructions on calculating the interest due.
Sales Tax Discounts
When permitted, taxpayers can claim a discount of 0.5% of tax reported and paid on time. Those who prepay can also claim a 0.5% discount plus 1.25% for prepaying.
Resources
- Texas Sales & Use Tax General Info
- Find Sales and Use Tax Rate by Address
- Calculate Interest on Tax Credits and Refunds
Texas Sales Tax Software
AccurateTax’s TaxTools products completely handle all aspects of Texas’s sales tax rate lookup and calculation for all destinations within the state of Texas, and all special tax classes such as prepared food. Configuring sales tax on your ecommerce store has never been easier. Contact us for more information or register for a free trial of the TaxTools software.
You can also use our free sales tax calculator to look up the rate for any address in the state of Texas.
Last updated October 2026