Most businesses that sell products or services in Texas are subject to sales tax and local taxes. Here’s everything you should know about Texas sales tax.
This comprehensive Texas sales tax guide offers all the information you need to properly collect and remit taxes and avoid paying penalties.
| State Taxing Authority | Texas Comptroller of Public Accounts |
|---|---|
| Base Sales Tax Rate | 6.25% |
| Local Sales Tax Rates | Up to 2% sales and use tax |
| 2025 Texas Tax Rate Range | 6.25% to 8.25% |
| Economic Nexus Threshold | $500,000 in sales revenue (applies only to marketplace facilitators and remote, or out-of-state, sellers; |
| Sales Tax Model | Origin-based for in-state sellers |
| Streamlined Sales Tax Membership | No |
| Website | https://comptroller.texas.gov/ |
| Tax Line | 800-252-5555 |
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.
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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.
| Type of Nexus | Threshold |
|---|---|
| Physical presence | Have a physical location, employees, or representatives in Texas. |
| Economic nexus | Sell remotely (out-of-state) and have earned over $500,000 in Texas sales in the previous 12 months. |
| Nexus with marketplaces | Marketplace providers that facilitate $500,000+ in annual sales to Texas buyers. |
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 refers to the sales threshold that requires out-of-state businesses to collect and remit sales tax. A company establishes economic nexus in Texas when its total sales in the state exceed $500,000 in a 12-month period.
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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.
Texas is an origin-based state, meaning sellers charge tax based on where their business is located.
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.
Texas charges sales tax on retail sales, leases, and rentals of most goods and services. Below are some examples of taxable and exempt items.
From clothing and jewelry to pet food, most ecommerce products are subject to sales tax. Here are the main categories:
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.
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:
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.
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:
These motor fuel taxes are paid upfront by licensed distributors when fuel is purchased wholesale for resale:
The controlled substance tax was repealed in 2015. It was previously $3.50 per gram of marijuana.
To register for Texas sales tax, visit the Texas Comptroller registration page and create an account. You will need to provide the following details:
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.
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.
To fully comply with sales tax requirements in Texas, businesses may need to register with the following agencies:
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.
Depending on your sales volume, you must file TX sales tax 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.
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.
| Filing Frequency | Tax Period | Due Date |
|---|---|---|
| Monthly | January | February 20 |
| Monthly | February | March 20 |
| Monthly | March | April 20 |
| Quarterly | Jan–Mar | April 20 |
| Monthly | April | May 20 |
| Monthly | May | June 22 |
| Monthly | June | July 20 |
| Quarterly | Apr–Jun | July 20 |
| Monthly | July | August 20 |
| Monthly | August | September 21 |
| Monthly | September | October 20 |
| Quarterly | Jul–Sep | October 20 |
| Monthly | October | November 20 |
| Monthly | November | December 21 |
| Monthly | December | January 20 (2027) |
| Quarterly | Oct–Dec | January 20 (2027) |
| Annual | Jan–Dec | January 20 (2027) |
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:
You will also be charged an extra $50 for each late report, even if you don't owe any tax.
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.
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:
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.
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:
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.
Clothing is taxable in Texas. Even on a sales tax holiday, the clothing item must be under $100 to qualify for an exemption.
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.
Some services are taxable in Texas. Examples include:
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.
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.
Online businesses selling taxable items in Texas must collect sales tax on shipping charges.
No, you cannot ask for an extension on filing your sales returns unless a disaster has been declared in your business area.
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.
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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