Quick Highlights on Texas Sales Tax
| Detail | Value |
|---|---|
| State Sales Tax Rate Range | 6.25–8.25% |
| Base State Sales Tax Rate | 6.25% |
| Local Rate Range | 0–2% |
| Economic Nexus Sales Threshold | $500,000 |
| Reference Period | Preceding 12 calendar months |
| Registration Deadline | 1st day of the month following the 4th month after threshold is crossed |
| Revenue Authority | Texas Comptroller of Public Accounts |
| Online Filing Portal | Webfile |
As a business, do I need to collect sales tax in Texas?
Businesses are required to collect sales tax in Texas if they have a sales tax nexus in the state. This includes having a physical presence or reaching a specific sales level, which establishes an economic nexus. This is why understanding Texas state sales tax obligations is crucial for compliance.
Do I have a physical nexus in Texas?
A physical nexus in the state of Texas is established if your business has a physical presence in the state, like an office, warehouse, or store. Even temporary physical presence, like participating in trade shows or craft fairs, can create a nexus.
In Texas, physical nexus is triggered by employees or contractors in any role — including back-office, administrative, and support functions, not just customer-facing roles.
How do I know if I have an economic nexus in Texas?
An economic nexus in Texas is determined by your sales volume. If your enterprise meets the threshold, you must register for a Texas sales tax permit, collect tax on sales shipped to Texas, and remit that tax to Texas Comptroller of Public Accounts.
In Texas, economic nexus is established if your sales in the state exceed $500,000, based on Preceding 12 calendar months.
Marketplace sales (e.g., Amazon, eBay) are included when calculating whether you've exceeded the Texas economic nexus threshold.
Sales made for resale are included in the nexus threshold calculation for Texas.
Non-taxable sales are included in the nexus threshold calculation for Texas.
Once you cross the threshold, you must register by 1st day of the month following the 4th month after threshold is crossed.
Which goods are taxable in Texas?
In Texas, sales tax applies to:
- Retail sales of tangible personal property
- Prewritten (canned) computer software
- Data processing services (taxable at 80% of the price)
- Certain services including amusement, cable TV, credit reporting, debt collection, insurance, and security
- Prepared food and beverages
- Motor vehicles
Most professional and personal services are not taxable in Texas unless specifically enumerated.
What items are exempt from sales tax in Texas?
Texas exempts the following from sales tax:
- Food and food ingredients for home consumption (unprepared groceries)
- Prescription drugs and over-the-counter medicines
- Agricultural supplies and equipment
- Manufacturing and processing equipment
- Natural gas and electricity used in manufacturing
- Sales to government entities and qualifying nonprofits
Texas also holds annual sales tax holidays for back-to-school items, energy-efficient products, and emergency preparation supplies.
Is SaaS taxable in Texas?
In Texas, SaaS is partially taxable. The following categories are taxable:
Texas taxes SaaS as a data processing service, with a built-in exemption on 20% of the price:
- SaaS — Data processing services: Taxable at 80% of the subscription price (20% is automatically exempt).
- Prewritten software: Fully taxable when delivered on tangible media or downloaded.
- Custom software: Custom-developed software may be exempt.
- Information services: Generally exempt unless they involve data processing.
The 20% exemption applies automatically — sellers collect tax on 80% of the price of data processing services.
If you are uncertain about the taxability of your specific software product in Texas, consult with a tax specialist.
How can a business get a sales tax permit in Texas?
To obtain a sales tax permit in Texas, businesses need to register with the Texas Comptroller of Public Accounts. Registration can be completed online through the Webfile.
You will need to provide detailed information about your business, including business type, ownership details, and the nature of your business activities.
When should a business file sales tax in Texas?
Sales tax returns in Texas are generally due on the 20th day of the following month for the previous period. Based on your annual tax liability, you may qualify for a less frequent filing schedule:
- Quarterly filing: Available if your annual tax liability is below $1,500 (returns due Last day of the month following the end of the quarter)
- Annual filing: Available if your annual tax liability is below $500 (returns due January 20th of the following year)
Note: $500,000 nexus threshold includes all sales (taxable, nontaxable, resale). Texas also offers a 1.25% prepayment discount for filers who prepay at least 90% of current tax due. R&D equipment sales tax exemption ended January 2026.
You can file your Texas sales tax return through the Webfile at https://comptroller.texas.gov/taxes/file-pay/.
Does Texas offer a timely filing discount?
Yes, Texas offers a timely filing benefit for businesses that file and pay on time:
Texas provides a timely filing discount for sales tax:
- 0.5% of the tax due for timely reporting and payment
- Additional 1.25% prepayment discount for monthly/quarterly filers who prepay at least 90% of current tax due
Both discounts are applied when the return is filed and paid by the due date.
What are the penalties for late filing in Texas?
Texas imposes the following penalties for non-compliance:
- Late filing penalty: 5% of the tax due if filed within 30 days of the due date
- Extended late filing: 10% of the tax due if filed more than 30 days late
- Interest: Accrues on unpaid tax from the due date at the statutory rate
- Criminal penalties: Willful failure to collect or remit tax can result in fines and imprisonment
Texas may waive penalties for first-time offenses or reasonable cause.
Is shipping taxable in Texas?
In Texas, the taxability of shipping and handling depends on how the charge is presented. Generally: • Taxable: If the shipping charges are mandatory or included in the price of a taxable item. • Non-Taxable: If shipping is separately stated on the invoice and provided as an optional service to the customer. Note: If you ship a mix of taxable and non-taxable goods in Texas, the shipping charge must usually be prorated to determine the taxable portion. Confirm current rules with Texas Comptroller of Public Accounts at https://comptroller.texas.gov/.
Does Texas have a Remote Seller program?
Texas requires remote sellers who exceed the economic nexus threshold to register, collect, and remit sales tax using standard state rates.