Ultimate Texas Sales Tax Guide

Wondering how to navigate the Texas sales tax process?

In this Texas sales tax guide, we’ll explore how you can calculate sales tax rates for counties and cities in Texas and if you fulfill economic nexus rules in the state. We'll also show you how to collect and file sales tax in Texas.

We’ll also suggest a white-glove sales tax solution to ensure sales tax compliance throughout the sales tax lifecycle. 

Texas Sales Tax Rate Range 2024

The minimum sales tax in Texas is 6.250%. 

Counties, cities, and towns in Texas can impose local sales tax of up to 2%. Some counties also impose multiple district tax rates within cities. 

For instance, cities like Decordova in Hood County have a minimum sales tax rate of 6.750%, which includes a Madison County local tax of 0.500% and a Texas sales tax rate of 6.250%. 

Whereas some other cities in Dallas County, such as Carrollton, impose an additional city tax of 1.000%. This brings the total sales tax rate to 8.250% — the highest sales tax rate in Texas.

The Texas Tax Comptroller of Public Accounts undertakes various tax responsibilities, like tax collection, revenue estimation, and more. 

Note: Texas has around 850 special purpose districts that impose a sales tax. There are nearly 40 types of special districts that provide various services like water conservation, toll roads, hospitals, and more. Depending on the purposes, these districts levy sales, property, and use taxes. 

How to Calculate Sales Tax in Texas?

You need to add these rates to calculate tax in Texas accurately:

• State tax
• District tax (also known as county/city tax)
• Special tax

For instance, let’s calculate the sales tax rate of Cooper, Delta County.

• Texas state sales tax of 6.250%
• Delta County sales tax of 0.500%
• Cooper City tax of 1.000%
• Special tax of 0.500%

This brings the total sales tax rate of Cooper to 8.250%.

You can find the sales tax rates of your specific Texas city here.

Sales Tax Rates in Texas by County

Let’s take a look at the sales tax rate in various Texas counties:

County	Sales Tax Rate
Dallas County	6.250%
Navarro County	6.750%
Dewitt County	7.250%
Harris County	7.750%

 

Collecting Texas Sales Tax from Customers

Here are the answers to some common questions regarding sales tax collection you may have:

Do I Have to Collect Texas Sales Tax from Customers?

According to the Texas Comptroller of Public Accounts, retailers who meet these requirements must collect sales tax in Texas if: 

• You are engaged in business in Texas.
• You sell or lease tangible personal property in Texas.
• You sell taxable services in Texas.

What Creates a Sales Tax Nexus in Texas?

Under Texas code 151.024, Texas considers “sellers” or “retailers” to have nexus in the state. 

Texas sales tax nexus rules include:

• Economic Nexus: Businesses that sell goods worth $500,000 or more in the state within the previous or current calendar year.

• Physical Location: Businesses with a warehouse, office, or distribution center. 

• Employee Location: Businesses with employees or any other type of representation in Texas should pay taxes.

• Affiliate Nexus: Out-of-state or remote sellers that receive substantial referrals from in-state businesses in Texas.

• Trade Shows: Businesses participating in even a single day of trade show activities can create a sales tax nexus for an entire 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 are exempt from sales taxes.  

Learn more about the sales tax nexus and when you’re required to collect sales tax.

Do I Have to Collect Sales Tax from Texas Customers if I Sell on Amazon, Walmart, Ebay, or Etsy?

Texas has a marketplace facilitator law, which means that marketplace providers like Walmart or Amazon are required to collect sales tax on behalf of 3rd party sellers on their platforms. 

If you have a sales tax nexus in Texas, remember that you are still required to collect sales tax on your other non-marketplace Texas sales.

Taxable Products in Texas

Most tangible personal property and services like clothing and furniture are subject to sales tax in Texas.

However, like some other states, Texas avoids imposing taxes on basic necessities like over-the-counter medications and water. 

Let’s take a closer look at how items are taxed in Texas: 

Are Groceries Taxable in Texas? 

Grocery items like flour, sugar, milk, etc., are non-taxable, while candies and candied nuts are taxable. 

To find more information, read how taxes are collected on groceries across the United States.

Is Clothing Taxable in Texas?

Yes, clothing is a taxable item in Texas.

Are Digital Products Taxable in Texas?

Digital products are taxable in Texas if their tangible equivalent is also taxable. 

For instance, this applies to things like an eBook version of a book that will also be sold in hardback at a bookstore. Or the electronic version of a movie that would also be sold on a Blu-ray disc. 

Is Software-as-a-Service (SaaS) Taxable in Texas?

Texas taxes SaaS as a data processing service, and it is subject to an 80% sales tax on the price of the service. 20% of the price of these services is eligible for a Texas sales tax exemption.

Are Services Taxable in Texas? 

Taxable services in Texas include:

• Amusement services
• Cable television services and bundled cable services
• Credit reporting services
• Data processing services
• Debt collection services
• Information services
• Insurance services
• Internet access services
• Laundry, cleaning, and garment services
• Motor vehicle parking and storage services
• Nonresidential real property repair, restoration, or remodeling services
• Personal property maintenance, remodeling, or repair services
• Personal services
• Real property services
• Security services
• Telecommunications services
• Telephone answering services
• Utility transmission and distribution services
• Taxable labor – photographers, draftsmen, artists, tailors, etc.

Note: You can apply for a Texas sales tax exemption certificate to buy a taxable item tax-free for resale, rent, or lease-out purposes.

Read more about which services are subject to sales tax in Texas here.

Tax-exempt Items

Tax-exempt items in Texas are:

• Baby products like baby food (canned, packaged, etc.) and milk (canned, dry, etc.)

• Bakery items (non-taxable when sold at a grocery and convenience store without eating utensils or heated). For example, items 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 eggs, canned fruits and vegetables (canned, dried, and frozen) and snacks such as breakfast bars and frozen yogurt unless sold in individual-sized portions. 

• Beverages like coffee, water, and fruit and vegetable juices (more than 50 percent fruit or vegetable juice, canned, bottled, or frozen).

• Grains and pasta like pasta and rice.

• Meat, poultry, and fish like canned, dried, and deli meats.

• Nutritional supplements including herbal and mineral products and vitamins. According to the FDA regulations, these products should either fulfill the criteria for dietary supplements or be labeled with a “Supplement Facts” panel.

• 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.

But to collect these taxes, you must first have a sales tax license. Let’s find out how you can get one.

How to Register for a Texas Sales Tax License

You can register for a Texas sales tax license online at the Texas Tax Comptroller website.

However, not all states follow the same procedure. Learn how to register for a sales tax license in every US state here.

Do I need a Texas sales tax permit if I only sell temporarily in the state?

Yes, you need a sales tax permit— even if you temporarily do business in the state.  

How to Collect Sales Tax in Texas

Texas is responsible for collecting sales tax, income tax, business tax, and property tax from its counties and cities. 

It collects sales tax in two ways:

• Origin-based sourcing state for intrastate sales.
• Destination-based sales tax sourcing state for interstate sales. 

Learn more about origin-based and destination-based sales tax sourcing here.

A. How to 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. 

Texas is an “origin-based” sales tax sourcing state. This means that if you make a sale originating in Texas and the buyer’s ship-to address is also in Texas, you would charge the sales tax rate at the sale’s origin point. 

For example, your business is in Bexar County, Texas, and you make a taxable sale to a buyer in Harris, Texas. Then, you should charge the buyer the sales tax rate at your Bexar County location.

B. How to Collect Sales Tax on Interstate Texas Sales

A sale is considered “interstate” if the item ships from outside Texas and the seller isn’t otherwise “engaged in a business” in the state.  

For sales that don’t originate in Texas, you’d generally charge the sales tax rate at your buyer’s location. 

For instance, if your business is located in Idaho Falls, Idaho, and you make a taxable sale to a buyer in Bartonville, Denton County, Texas, you may have to charge the buyer the Alpine sales tax rate.

Texas allows remote sellers to opt for a "single local rate" for all Texas buyers. As of 2024, this rate is 1.750% on top of Texas state tax. 

Learn more about Single Local Rates in Texas here.

Should You Collect Sales Tax on Shipping Charges in Texas?

Yes, shipping charges are subject to sales tax in Texas.

Find out more about sales tax on shipping in every US state.

How to File and Pay Sales Tax in Texas

You can file and pay Texas sales tax online or by mail.

If you paid $50,000 or more in sales tax, you need to file and return sales tax electronically. And if you paid $10,000 or more in sales tax in the previous Texas fiscal year, you must file electronically and pay via electronic funds transfer (EFT).

Meanwhile, taxpayers who paid $500,000 or more need to transmit payments using TEXNET.

Taxpayers can use the following methods to file and pay taxes:

• File Texas Sales Tax Online
• File by Mail - Use sales tax form 01-117 or 01-114 (short form)
• File by phone - this method is only available to file a “zero return” if you have no sales tax to report
• Let Zamp handle your Texas sales tax so you never have to worry about a sales tax return again! 

Explore how you can file and pay sales tax in other US states.

FAQs on Paying and Filing Texas Sales Tax

What Is Use Tax?

Sometimes, taxpayers purchase goods from outside the state but use them within the state.

That’s when you must file a Texas use tax return.

Use tax is a nonrecurring tax that’s complementary to sales tax. It’s imposed on the storage, use, or other consumption of tangible personal property or a taxable service in Texas.

The use tax rate is typically similar to sales tax rates and only applies when consumers don’t pay sales tax.

The Texas use tax rate is 6.250%. Depending on where taxpayers use and store these goods, they may have to pay additional local sales tax of up to 2%. 

 

What Is a Mixed Beverage Sales Tax?

In Texas, businesses with a mixed beverage permit need to collect and pay the Texas Alcoholic Beverage Commission a mixed beverage sales tax on every mixed drink they sell, make, or serve. This tax applies to all drinks containing distilled spirits, beer, ale, and wine.

The Texas Alcoholic Beverage Commission is responsible for giving out permits for alcoholic beverages and collecting alcohol-related taxes.

What Is the Sales Tax Audit Period in Texas?

Sales tax audits are conducted to prevent sales tax evasion, ensure sales tax rules are applied uniformly, and promote voluntary compliance. 

The sales tax audit period in Texas is four years, so taxpayers must keep all records for at least four years. The Comptroller’s office may audit for more than four years if fraud or other discrepancies are detected.

I didn’t collect any Texas Sales Tax During this Period. Do I still Need to File a Return?

Yes. Texas requires that you file a “zero return” even if you did not collect any sales tax over the taxable period.

Failure to file a zero return can result in a $50 penalty.

Can I Get a Discount on My Texas Sales Tax?

Some taxpayers claim 0.5% of the tax amount if they file and pay taxes on time and get a 1.25% discount if they prepay their taxes. 

You can also claim a sales tax refund if you overpay or are eligible for one.

What is the Penalty for Filing and/or Paying Texas Sales Tax Late?

Texas assesses late filing and payment penalties based on how late the filing and/or payment is received. They will send a notice of Texas tax due with an estimated assessment of tax owed if your payment is late.

Late filing period	Penalty
1-30 days	5%
More than 30 days	10%
Failing to file by the due date of your notice of estimated tax due	An additional 10% (for a total of 20%)

After 61 days, you will be charged interest on your tax dues. 

Can I Get an Extension on Filing My Texas Sales Tax Return? 

No. Texas does not provide sales tax extensions or a sales tax holiday except in cases where a disaster has been declared in your area.

Can I Amend a Texas Sales Tax Return? 

Yes. Texas allows you to either amend your previously filed return or file a completely new one for the same time period but with the corrected information. 

Mail the amended return, along with any underpaid taxes, penalties, and interest, to:

Comptroller of Public Accounts

111 E. 17th Street

Austin, Texas 78774-0100

How Often will I be Required to File and Pay Sales Tax in Texas? 

When you register for a Texas sales tax license, the state will assign you a sales tax filing frequency and due dates.

The more sales tax liability you have in a state, the more often you need to file and remit tax.

Texas Sales Tax Due Dates

Texas sales tax filings are due on the 20th of the month after the end of the taxable period. 

Texas Period	Filing Due Date
January 2023	February 20, 2024
February 2023	March 20, 2024
March 2023	April 22, 2024
April 2023	May 20, 2024
May 2023	June 20, 2024
June 2023	July 22, 2024
July 2023	August 20, 2024
August 2023	September 20, 2024
September 2023	October 21, 2024
October 2023	November 20, 2024
November 2023	December 20, 2024
December 2023	January 20, 2025

Texas Quarterly Sales Tax Filing Due Dates:

Taxable Period	Filing Due Dates
Q1 (Jan-March) 2023	April 20, 2024
Q2 (Apr-June) 2023	July 22, 2024
Q3 (July-Sept) 2023	October 21, 2024
Q4 (Oct-Dec) 2023	January 20, 2025

Texas Annual Sales Tax Filing Due Date:

Taxable Period	Filing Due Date
2024	January 20, 2025

Let The Experts Handle Your Sales Taxes

Filing sales tax takes up precious time and effort that could be better spent on other key aspects of running your business.

And that’s exactly why you need Zamp!

Zamp is a white-glove solution that offers precise calculations and click-to-approve registrations and filings to manage and file your taxes on time. This way, an expert platform and team will handle all the heavy lifting while you focus on the exciting stuff that makes your business scale.

Get started with Zamp now! 

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