Texas Sales and Use Tax

Texas Sales and Use Tax is the state's principal transaction-based tax, imposed on retail sales of tangible personal property and certain enumerated services in Texas (sales tax) and on the use, storage, or consumption of taxable items purchased outside Texas (use tax). The state rate is 6.25%; local jurisdictions (cities, counties, special-purpose districts, transit authorities) may add up to 2% additional, capped at a combined rate of 8.25%. The tax is administered by the Texas Comptroller of Public Accounts.

What is taxable

Tangible personal property is broadly taxable except as exempted. Texas taxes far fewer services than many states, but selected services are taxable, including: amusement services, cable television, credit reporting, data processing services, debt collection, information services, insurance services, internet access (up to $25/month exemption), motor vehicle parking, nonresidential real property repair/remodeling, personal property repair, personal services, real property services (e.g., landscaping, janitorial), security services, telecommunications, telephone answering, and utility transmission/distribution. Sales for resale are exempt with a properly executed resale certificate; sales to exempt entities require an exemption certificate.

Economic nexus, post-Wayfair

Following South Dakota v. Wayfair, Texas adopted economic nexus for remote sellers effective October 1, 2019. Threshold: total Texas revenue of $500,000 or more in the preceding twelve calendar months, a rolling twelve-month test, not calendar-year-based, with no transaction-count component. Total Texas revenue includes gross revenue from sales of tangible personal property and taxable services for storage, use, or consumption in Texas, including taxable, exempt, and resale transactions. Remote sellers crossing the threshold must obtain a permit and begin collecting tax by the first day of the fourth month after the month in which the threshold was exceeded.

Single Local Use Tax Rate

Remote sellers may elect to collect local use tax at a "Single Local Use Tax Rate" (1.75% as of 2026) instead of computing the actual rate at each customer's destination, a substantial simplification given Texas's 1,800+ local taxing jurisdictions. The election is made via Form 01-799 and applies to all of the seller's Texas use-tax obligations going forward. In-state sellers cannot use the Single Local Rate option.

Marketplace facilitator collection

Marketplace facilitators (Amazon, eBay, Etsy, Walmart Marketplace, etc.) are responsible for collecting and remitting Texas sales tax on sales they facilitate, regardless of whether the underlying seller has nexus. Marketplace sales count toward the $500,000 economic nexus threshold for the underlying seller (since April 1, 2020), but if all of a remote seller's Texas sales are made through marketplace facilitators that certify they collect tax, the seller is not required to obtain its own permit.

Filing frequency and reports

Filing frequency depends on tax liability: monthly (most permittees with significant tax), quarterly (typically collecting under $1,500 per quarter), or annually (under $1,000 annually with timely filing history). Reports are due on the 20th of the month following the reporting period. Texas Tax Code Ch. 151 imposes meaningful penalties for late filing (5% if 1-30 days late, 10% over 30 days) plus interest, and significant penalties for failure to obtain a required permit.