This comprehensive Texas sales tax guide offers all the information you need to properly collect and remit taxes and avoid paying penalties.
Key takeaways
- Texas has a base sales and use tax of 6.25%, which applies to retail sales, rentals, and leases. Local jurisdictions may impose an additional sales tax of up to 2%.
- Remote vendors and marketplace facilitators with $500,000+ in Texas sales in the previous year must collect and remit sales tax. This requirement also applies to businesses with a physical presence or employees in the state.
- Qualifying businesses must register for a sales tax permit online or by mail. This service is free, but the Comptroller’s office may impose a security bond.
- Texas requires both retailers and wholesalers to apply for a seller's permit. Wholesalers are not required to collect sales tax, but they still need a permit to do business in the state.
The Texas sales tax rate is 6.25% statewide. Local jurisdictions can add up to 2% in additional sales taxes for a maximum possible rate of 8.25%.
Sales Tax 101: Sales tax is a state-imposed tax on the sale or lease of products and services. Vendors are legally required to collect it from customers at the point of sale and then remit it to the government.
The tax applies to most tangible goods and some services, depending on the state. For example, Texas doesn't charge sales tax on essential items like water, fruits, and vegetables, but other states do. Failure to comply with these regulations can result in penalties and interest.
Whether you’re a startup or an established business, Numeral provides the tools you need to navigate sales tax compliance. Our platform automates sales tax registration, filing, remittance, and other operations so you can focus on your customers.
Recent tax rate changes in Texas
- As of January 1, 2025, several Texas cities have imposed, raised, or abolished local sales and use taxes. Additionally, two special purpose districts (SPDs), the Ellis County Emergency Services District No. 2 and Fort Bend County Emergency Services District No. 2, have introduced such taxes.
- Similar changes took place in April 2025, when three Texas cities implemented new sales and use taxes. Two other cities have repealed similar taxes, and three SPDs enacted a local sales and use tax.
Do I need to collect Texas sales tax?
Retail businesses with a physical or economic nexus in Texas must register for, collect, and remit sales tax. Ecommerce vendors are subject to these regulations, too.
Nexus in Texas: What it means and how it affects your business
Physical nexus
Physical nexus is the tangible connection between a business and a state. For example, having an office, brick-and-mortar store, inventory, or employees in Texas creates a physical nexus, meaning you must collect and remit sales tax.
Regularly sending sales reps or employees to Texas for business purposes can trigger a physical nexus, too, and require sales tax registration.
Economic nexus
Economic nexus refers to the sales threshold that requires out-of-state businesses to collect and remit sales tax. Per Texas law, a company establishes economic nexus when its total sales in the state exceed $500,000 in a 12-month period.
Out-of-state (remote) sellers
Remote sellers can unintentionally create nexus by storing inventory in third-party warehouses, fulfilling orders from distribution centers, or using dropshipping services.
Say you're a California-based online retailer using Amazon's Fulfillment by Amazon (FBA) service. If you store your inventory in Amazon's Texas warehouses, you'll establish a physical nexus in the state. Consequently, you must collect Texas sales tax.
TIP: Apart from the state tax of 6.25%, remote sellers can collect and remit a 1.75% use tax across all states instead of the total local tax based on the destination address. Simply put, you can collect a 7.95% tax across Texas for remote sales. This option is only available to out-of-state sellers, and the rate is updated each year by January 1.
Is Texas’s sales tax destination-based or origin-based?
Texas is an origin-based state, meaning sellers charge tax based on where their business is located.
What’s the difference between destination-based and origin-based sales tax states?
In origin-based states, sales tax is based on the vendor’s location, or where the seller ships from. For example, if you ship a product from your Houston warehouse to a customer in Austin, you must apply the Houston sales tax rate.
By comparison, destination-based states like Kansas, Michigan, and Florida require vendors to charge tax based on the customer's location.
TIP: If you deliver from multiple locations in Texas, track and apply the correct local tax rate for each shipping point. Consider using Numeral to manage nexus compliance across all states and jurisdictions.
What's taxable in Texas?
Texas charges sales tax on retail sales, leases, and rentals of most goods and services. Below are some examples of taxable and exempt items.
Which ecommerce goods are taxable?
From clothing and jewelry to pet food, most ecommerce products are subject to sales tax. Here are the main categories:
- Home goods (e.g., furniture, appliances)
- Fashion accessories
- Sports equipment
- Electronics
- Footwear
- Beauty and personal care products
- Toys, games, and hobby items
- Tools and hardware
Is software-as-a-service (SaaS) taxable in Texas?
Software-as-a-service (SaaS) is taxable in Texas. Apart from the local sales taxes that apply to all taxable goods and services, Texas does not have a specialized tax on SaaS or other cloud computing services.
However, SaaS is still subject to the 6.25% sales and use tax if accessed within the state. The tax is applied to the subscription fees or other charges for using the SaaS.
Texas sales tax exemptions
Groceries like sugar, bread, milk, and eggs are exempt from sales tax in Texas. Non-food items (e.g., paper products, pet products, cigarettes) sold in grocery stores are taxable.
Below are other exemptions from sales tax in Texas:
- Unprepared food products like flour, meat, fruits, and vegetables
- Water, milk beverages, milk substitutes, and drinks with at least 50% vegetable or fruit juice
- Baby food and formula
- Bakery items from a bakery
- Baking supplies
- Dairy products
- Frozen meals
- Over-the-counter drugs and supplements
- Newspapers
Note that prepared food and beverages sold at restaurants, bars, concessions, food trucks, etc., are subject to the regular Texas state sales tax rate, which is currently 6.25%. This includes dine-in, takeout, and delivery.
Another aspect to be aware of is that sales tax on food products is very nuanced because the rules vary based on the type of food, how it’s prepared, and where it’s sold.
For instance, snack foods are taxable if sold in single-serve portions (under 2.5 ounces) or from vending machines. Larger snacks or multi-serving packages are generally tax-free unless sold as part of a meal.
Similarly, beverages can be taxable or not, depending on their composition and how they are sold. For example, bottled or canned coffee and tea are not subject to sales tax unless they are sold heated, in a glass or jar, or contain sweeteners.
Excise taxes in Texas
Texas and most other states charge excise taxes on specific goods or services (e.g., fuel, tobacco, and alcohol). These taxes are set by state law, but local jurisdictions may impose additional fees on certain items, such as hotel occupancy and mixed beverages.
Below are some examples of excise and discretionary taxes:
Alcohol
- Wine with less than 14% alcohol: $0.204 per gallon
- Wine with over 14% alcohol: $0.408 per gallon
- Sparkling wine: $0.516 per gallon
- Distilled spirits: $2.40 per gallon
- Malt beverages (e.g., ale): $0.193 per gallon
- Beer: $6 per 31-gallon barrel / $0.194 per gallon
- Mixed beverages: An additional 8.25% mixed beverage sales tax on alcoholic beverages for on-premise consumption. This tax is in addition to the regular sales tax.
Tobacco
- Cigarette tax: $1.41 per pack of 20 cigarettes
- Cigar and tobacco products tax: various rates based on weight and price
Gasoline/fuel
These motor fuel taxes are paid upfront by licensed distributors when fuel is purchased wholesale for resale:
- Gasoline: $0.20 per gallon
- Diesel fuel: $0.20 per gallon
- Liquefied gas: $0.15 per gallon
Marijuana
The controlled substance tax was repealed in 2015. It was previously $3.50 per gram of marijuana.
How to register for a Texas sales tax permit
To register for Texas sales tax, visit the Texas Comptroller registration page and create an account. You will need to provide the following details:
- Business information, including activities, ownership, addresses, and contacts
- Owner IDs like Social Security Numbers or Taxpayer Identification Numbers
- NAICS industry code
- Details on physical and online sales presence
- Sales volume estimates
- Supplier information
Once you have registered for a sales tax permit, you must collect and remit sales tax on all your sales in Texas. You can do this using a sales tax software program like Numeral or by manually calculating and remitting sales tax.
Cost of registration for a Texas sales tax license
There is no fee to register for a sales tax permit in Texas. However, you may be required to pay a security bond, which ensures any taxes owed are covered if your business closes. The Comptroller’s office will determine the deposit amount during the application process.
Agencies to register within Texas
To fully comply with sales tax requirements in Texas, businesses may need to register with the following agencies:
- Texas Comptroller of Public Accounts: Issues sales tax permits and handles sales tax registration and filing. Register online at comptroller.texas.gov.
- Texas Secretary of State: For registering your company and obtaining a certificate of authority to do business in Texas (required only for out-of-state, or foreign, entities). Apply online at sos.texas.gov.
- Local Municipalities: Cities, counties, and special districts may require additional local business licenses and permits. Check the requirements with your local city hall, county administration office, or special district department.
I didn't collect any Texas sales tax. Do I still have to submit a return?
Yes, you still need to file a “zero return” even if you didn't collect any sales tax. This is because you may be eligible for a refund.
Texas sales tax return filing schedule and due dates
Depending on your sales volume, you must file returns monthly, quarterly, or annually, either through the Texas Comptroller's website or by mail. Remember to document your total sales, taxable sales, and the sales tax collected.
Texas sales tax return due dates
The returns are due on the 20th of the month following the reporting period. When a reporting due date falls on Saturday, Sunday, or a federal legal holiday, it shifts to the next business day.
Texas sales tax filing penalties
If you don't file your tax return on time, the Comptroller's office will send you a bill based on an estimate. You might also face legal action.
Penalties for past due taxes include:
- If you pay your tax one to 30 days late, you’ll get a 5% penalty. If it's more than 30 days late, the penalty increases to 10%. If you ignore the official notice, another 10% penalty is added, making it 20%.
- Interest starts adding up 61 days after the due date. The rate changes each year.
You will also be charged an extra $50 for each late report, even if you don't owe any tax.
Special cases
- For International Fuels Tax, the minimum penalty is $50 or 10% of your tax, whichever is higher. Interest starts the day after the due date.
- If you underpay your taxes, you'll get a bill for the remaining amount, along with details on extra penalties and how to appeal.
Collection actions
- If you refuse to pay, the state may seize your assets, suspend your business licenses, or even file criminal charges.
- If you get a notice from a private collection agency, pay the amount in the envelope provided. The payment will go to the Comptroller's office, which will credit it to your account.
What to do
- If you're facing collection actions, contact the Comptroller's office immediately.
- Payment plans may be available, but your account will still be considered delinquent.
If the Comptroller's office cannot collect the tax, your case may go to the Attorney General. At that stage, only the Attorney General can decide on the next steps.
Audit & appeals process
The Texas Comptroller conducts regular audits to ensure compliance, discourage tax evasion, and maintain the integrity of the tax system. Most audits are not random — they're often triggered by inconsistent filings, customer complaints, and other red flags.
In the Lone Star State, a sales tax audit can go back four years or longer and take several months. It involves several steps, including:
- Audit notification: The Comptroller's office will notify you by mail about the upcoming audit and request that you complete Form 00-750. They will also schedule an initial meeting, or entrance conference, giving you time to gather relevant documentation.
- Preliminary review: The auditor reviews your tax account to create a risk profile and determine what to focus on. For example, they may check your past filings for under- or overpaid tax, unusual patterns, or inconsistencies.
- Initial conversation: Next, they will request more information about your business and ask for clarification or additional documents (e.g., exemption certificates, sales records, bank statements). During the meeting, they'll set a date to begin the audit.
- Entrance conference: After receiving your documents, the auditor will contact you to discuss the next steps.
- Fieldwork: At this stage, the auditor will analyze your records and conduct further research. They may also visit your business location to interview key personnel and understand your processes. If they find you have overpaid or underpaid tax, they will adjust the amounts accordingly.
- Audit findings: Auditors will present their findings, offer recommendations, and inform you of any amount owed. If you disagree, you may request a reconciliation conference.
- Final assessment: Once these steps are completed, you'll get a written report detailing the audit results. You can either comply and take the recommended action or request a hearing and appeal the findings.
If you decide to file an appeal, request a reconciliation or independent audit. Both options involve an informal conference aimed at addressing disagreements. At this point, it's advisable to hire an attorney or tax professional to help you build a strong case.
As you can see, sales tax audits are complex and vary in structure, duration, and scope based on industry, business size, and other factors. A sales tax automation platform like Numeral can streamline this process, making it easier to achieve and maintain compliance.
FAQs
How do you calculate Texas sales tax?
You can use this formula to calculate Texas sales tax:
Sales tax = (state tax rate + local tax rate) x taxable purchase
For example, if you purchase a taxable item for $100 in a location with a 1.5% local rate, the sales tax would be:
- State rate: 6.25%
- Local rate: 1.5%
- Taxable purchase: $100
- Calculation: (6.25% + 1.5%) x $100 = $7.75
Is Texas a streamlined sales tax state?
Texas is not a Streamlined Sales Tax State.
The Streamlined Sales Tax Project (SSTP) aims to simplify sales tax collection across states that adopt its Streamlined Sales and Use Tax Agreement (SSUTA). Texas still needs to join the SSTP or implement the SSUTA.
Is clothing taxable in Texas?
Clothing is taxable in Texas. Even on a sales tax holiday, the clothing item must be under $100 to qualify for an exemption.
Are digital products taxable in Texas?
Per Section 151.010 of the Texas Tax Code, tangible personal property includes products and services delivered in electronic form. Therefore, digital goods like software, music, and movies are taxable. This includes both downloadable and streamable products.
Are services taxable in Texas?
Some services are taxable in Texas. Examples include:
- Car repairs
- Dry cleaning
- Hotel stays
- Car rentals
- Electronic equipment rentals
- Tickets to sporting events and concerts
- Telecommunications services
- Photography and videography
Do I need a Texas seller's permit if I’m a wholesaler?
You need a Texas seller's permit anytime you want to sell in Texas. This applies to wholesalers just as it applies to retail businesses. While wholesalers typically don't charge sales tax on sales to retailers, the permit is still required to operate in the state.
Note that Texas doesn’t issue a separate permit for wholesalers. The standard sales tax permit covers both retail and wholesale sales.
Do I need a Texas seller's permit if I only sell temporarily in the state?
Yes, you need a Texas seller's permit if you only sell temporarily in the state.
However, vendors who make only one or two sales of taxable items (except for amusement services) in a 12-month period and don’t sell such products regularly are exempt from sales tax.
The third sales of a taxable item within one year causes you to become a retailer. From that point, you must apply for a permit and collect sales tax from Texas customers.
Here’s an exception: If someone sells no more than ten tickets to amusement events in a year and doesn’t provide such services regularly, it’s considered an occasional sale and isn’t subject to sales tax.
Should You Collect Sales Tax on Shipping Charges in Texas?
Online businesses selling taxable items in Texas must collect sales tax on shipping charges.
- For instance, if you sell an office desk for $800 and require a transport and assembly fee of $200, you will collect sales tax on the total $1,000.
- If the buyer provides you with an exemption certificate for the office desk, you don’t need to collect the sales tax on shipping, as the office desk is also exempt from taxes.
Can I get an extension on filing my Texas sales tax return?
No, you cannot ask for an extension on filing your sales returns unless a disaster has been declared in your business area.
Can I amend a Texas sales tax return?
Yes, you can file an amended return in Texas. Simply add a line stating “Amended Return” at the top of the return filing form. Alternatively, file and submit an amended return electronically.
For instance, if you overpaid $20,000 in a previous filing year and want to adjust the same in this one, fill out the amended return with proper filing and documentation to help verify the additional taxes.
Information & contacts
For sales tax filing and appeals in Texas, you may contact:
Texas Comptroller of Public Accounts
Website: comptroller.texas.gov/
Tax line: 800-252-5555
There you have it — a complete guide on Texas' sales tax laws for remote sellers and other businesses. However, knowing the rules doesn't ensure compliance. You must also take proactive steps to track, manage, and meet your tax obligations.
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