Ultimate Houston Sales Tax Guide
In this guide, we’ll walk you through everything about sales tax in Houston, Texas.
We'll show you how to calculate the sales tax rate for the city and answer a few other questions you may have.
Plus, we’ll explore how to collect and remit a sales tax return in Houston. We’ll also share a solution to help you stay compliant across the entire sales tax lifecycle.
| Further Reading: • Explore all the details about Sales Tax in Texas with our comprehensive guide. • Dive into our guide to discover the intricacies of Sales Tax Rules in California. |
Houston Sales Tax Rate 2023
Houston, located in Harris County in Texas, has a sales tax rate of 8.250%.
Along with other local taxes, a special purpose district may impose additional local tax rates.
Let’s look at the breakdown of Houston sales tax rates:
| Local Taxing Jurisdiction | Sales Tax Rate |
| Texas state sales tax | 6.250% |
| Houston tax | 1.000% |
| Special tax | 1.000% |
| Total sales tax | 8.250% |
Sales Tax Rates in Houston by Zipcode
Here are the local tax rates in different regions of Houston:
| Zipcode | Total Tax Rate |
| 77001, 77002, 77003, 77004, 77005, 77006, 77007, 77008, 77009, 77010, 77011, 77012, 77013, 77014, 77015, 77016, 77017, 77018, 77019, 77020, 77021, 77022, 77023, 77024, 77025, 77026, 77027, 77028, 77029, 77030, 77031, 77033, 77034, 77035, 77036, 77037, 77038, 77039, 77042, 77043, 77044, 77045, 77046, 77048, 77049, 77050, 77051, 77052, 77053, 77054, 77055, 77056, 77057, 77058, 77059, 77060, 77061, 77062, 77063, 77066, 77067, 77068, 77069, 77070, 77071, 77072, 77073, 77074, 77075, 77076, 77077, 77078, 77079, 77080, 77081, 77085, 77086, 77087, 77088, 77089, 77090, 77091, 77092, 77093, 77094, 77095, 77096, 77098, 77099, 77201, 77202, 77203, 77204, 77205, 77206, 77207, 77208, 77209, 77210, 77212, 77213, 77215, 77216, 77217, 77218, 77219, 77220, 77221, 77222, 77223, 77224, 77225, 77226, 77227, 77229, 77230, 77231, 77233, 77234, 77235, 77236, 77237, 77238, 77242, 77243, 77244, 77245, 77248, 77249, 77251, 77252, 77253, 77254, 77255, 77256, 77257, 77259, 77261, 77262, 77263, 77265, 77266, 77267, 77269, 77270, 77271, 77272, 77274, 77275, 77277, 77279, 77280, 77282, 77287, 77288, 77289, 77291, 77292, 77297 and 77299. | 8.250% |
How Does the Houston Sales Tax Compare to the Rest of Texas?
Texas imposes a minimum sales tax rate of 6.250%, seen in towns like La Blanca (in Hidalgo County). The Houston sales tax rate is around 32% higher than in these cities.
It’s also higher in other states like Colorado and South Carolina.
Now, the highest Texas sales tax rate is 8.250%, which also applies to cities like Dallas City and Austin.
Let’s compare Houston's sales tax rate with other cities and counties to get a better understanding:
| City | County | Sales Tax Rate |
| Gail | Borden County | 6.250% |
| La Blanca | Hidalgo County | 6.250% |
| Ozona | Crocket County | 6.750% |
| Inez | Victoria County | 6.750% |
| Fabens | El Paso | 7.250% |
| La Grulla | Starr County | 7.250% |
| Morton | Cochran County | 7.750% |
| Lockney | Floyd County | 7.750% |
| Elkhart | Anderson County | 8.000% |
| Larue | Henderson County | 8.000% |
| Houston | Harris County | 8.250% |
| Galveston | Galveston County | 8.250% |
| Leander | Travis County | 8.250% |
Did COVID-19 Impact Sales Tax Filing Due Dates in Houston?
The Texas Comptroller of Public Accounts offered short-term payment agreements, like waivers of penalties and interest, to support businesses that couldn’t pay the sales tax dues of February 2020 due to Covid-19.
The waivers were only valid till April 1, 2020, and postponement or deadline extensions were only given on a case-by-case basis.
What Creates Sales Tax Nexus in Houston?
Houston, being located in Texas, is subject to the Texas state sales tax nexus rules. The city doesn’t have any special sales tax nexus rules.
Texas state sales tax nexus rules include:
- Economic Nexus: When a business sells goods of $500,000 or more in the state within the previous or current tax year.
- Physical Location: This could be a warehouse, office, or distribution center.
- Employee Location: If a company has employees or any other type of representation in a particular state or city, they should pay taxes.
- Affiliate Nexus: When an out-of-state business receives substantial referrals from in-state businesses.
- Trade Shows: Businesses that participate in a single day of trade show activities create sales tax nexus for a full year following the date of trade show participation.
- Tangible Personal Property: Sales of tangible personal property like equipment, supplies, or IT systems. Tangible personal properties used for a final sale and those that help make a chemical or physical change in final products are exempt from sales taxes.
What Products Are Exempt from Houston Sales Tax?
A tax exemption is granted by the Texas state and applies to Houston, too. Houston doesn’t have any separate tax exemption rules for taxpayers.
Tax exemptions granted by Texas sales tax law include:
- Baby products like baby food (canned, packaged, etc.) and ilk (canned, dry, etc.)
- Bakery items (nontaxable when sold at a grocery and convenience stores without eating utensils or heated) like, bagels, cookies, and strudels. This includes baking supplies like almond paste, marzipan, and baking chocolate (blocks and chips)
- Condiments and spices such as catsup and herbs
- Dairy products like butter, milk, and milk substitutes (canned and dry).
- Food produce like canned fruits and vegetables and other food categories: frozen meals, sauces (pasta, tomatoes, garlic), and soups (canned, dry mix, or frozen).
- Snacks (unless sold in an individual-sized portion). For example, breakfast bars and frozen yogurt.
- Beverages like coffee, water, and fruit and vegetable juices (more than 50 percent fruit or vegetable juice, canned, bottled, or frozen).
- Eggs and egg substitutes (fresh and frozen).
- Grains and pasta like pasta and rice
- Meat, poultry, and fish, including canned meats, dried meats, fresh and frozen beef, poultry, pork, and fish.
- Nutritional supplements like herbal and mineral products. The product should either fulfill the criteria for dietary supplements or be labeled with a “Supplement Facts” panel according to the regulations of the FDA.
- Over-the-Counter Drugs and Medicines (when required by the FDA to be labeled with a Drug Facts panel) like acne and allergy treatment products. It also includes wound Care Items such as adhesive bandages (including strip adhesive bandages, large adhesive bandages, and butterfly closures), corn cushions, and liquid bandage products.
Who Needs a Sales Tax Permit in Houston?
A sales tax permit is issued by states in the United States. For businesses in Houston, a sales tax permit is issued by Texas.
You can apply at the Texas Comptroller of Public Accounts website if you:
- Sell taxable services in Texas.
- Sell tangible personal property in Texas.
- Lease or rent tangible personal property in Texas.
- Sell or lease tangible personal property or taxable services to customers in Texas from an out-of-state business and have revenue from Texas of $500,000 or more in the past 12 months.
How to Collect Sales Tax in Houston?
Sales tax, along with income tax and property tax, is collected by the Texas state.
Texas is an origin-based sourcing state for intrastate sales and a destination-based sales tax sourcing state for interstate sales.
Here’s how you can collect sales tax on:
- Intrastate Texas sales: A sale is considered intrastate if it ships from an origin in Texas to a buyer's address in Texas.
For example, if your business is located in Marathon, Texas, and you make a sale to a buyer in Round Rock, Texas, you’ll have to charge the sales tax rate in your Marathon location.
- Interstate Texas sales: A sale is considered interstate if the item ships from outside Texas and the seller isn’t otherwise “engaged in the business” in the state. In such cases, you’d generally charge the sales tax rate at your buyer’s location.
For instance, if your business is located in Leander, Idaho, and you make a sale to a buyer in Alpine, Texas, you will charge the buyer the Alpine sales tax rate.
Note: Sellers can collect use tax on a taxable item clients haven’t paid a sales tax for. Usually, the sales tax and use tax have similar rates.
How to File and Pay Sales Tax in Houston?
There are several ways to file your sales tax return:
- File Houston sales tax online at the Texas Comptroller eSystems website.
- File by mail by using sales tax form 01-117 or 01-114 (short form)
- File by phone if you have a zero sales tax return or no sales tax to report.
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