Guide to Sales Tax in Texas in 2025

Navigating Texas sales tax complexities is crucial for businesses operating within the Lone Star State or selling to customers there. In our 10+ years of experience helping online businesses comply with taxes, we’ve found that tax policies are confusing. So we translated all the information from the Texas Comptroller’s website into language that’s easy to understand.

This comprehensive guide provides everything you need to know about Texas sales tax rates, exemptions, compliance, and more.

What is Texas sales tax?

Texas imposes a 6.25% state sales and use tax on most retail sales, leases, and rentals of both goods and many taxable services. In addition to the state rate, local jurisdictions (cities, counties, transit authorities, and special-purpose districts) can impose additional local sales taxes of up to 2%. This brings the maximum combined rate to 8.25%.

The sales tax is a destination-based system, meaning the tax rate is determined by the location of the buyer (the destination of the product or service), not the seller.

What's taxable in Texas?

In Texas, most physical products and some digital products are taxable. Below is an overview of products that are generally taxable in Texas. Some local cities or districts might have their own rules or exceptions, however. For example, check out the Houston Sales Tax Guide, the Dallas Sales Tax Guide, or the Austin Sales Tax Guide for specific rules in the state’s biggest cities.

• Tangible Products: Most physical items are taxable in Texas. However, specific exemptions apply (see the Exemptions section below).
• Services: The taxability of services in Texas can be complex. Generally, professional services like legal or medical advice are exempt, but certain repair, remodeling, and other services may be taxable, particularly for nonresidential property. It's always best to consult the official resources for specific classifications.
• Digital Products: Goods delivered or accessed electronically, such as media streaming services and eBooks, can fall into this category. Rules can vary, so checking with the Texas Comptroller is recommended.
• Software-as-a-Service (SaaS): Cloud-based software products accessed online are generally taxable in Texas. More on that below!

Is there a Texas SaaS sales tax?

Yes, Texas imposes sales tax on SaaS as it is considered taxable tangible personal property when accessed electronically. But there are nuances.

What are Texas sales tax exemptions?

Texas provides exemptions for certain goods and services. Understanding these can help you avoid overcharging customers and ensure compliance. Some common exemptions include:

• Groceries: Most unprepared food items, such as meat, fruits, and vegetables, are exempt. However, prepared food sold hot or with eating utensils is generally taxable.
• Prescription Drugs and Certain Medical Devices: These are typically exempt from sales tax.
• Clothing and Footwear: While generally taxable, Texas offers annual sales tax holidays where certain clothing and footwear items under a specific price threshold are exempt.
• School Supplies and Backpacks: Similar to clothing, these items can be exempt during the annual back-to-school sales tax holiday.
• Certain Services: As mentioned earlier, many professional services are exempt.

This is not an exhaustive list. For a complete and up-to-date list of exemptions, always consult the official Comptroller Guidelines to Texas Tax Exemptions.

Do you have sales tax nexus in Texas?

The word “nexus” refers to a commercial connection in the state. Nexus determines the following questions for a state tax agency: Do you do business here, what kind, and how much? And when you do have nexus, that means you’re obligated to collect tax on your sales there. So the first question for you to answer is whether you have nexus in Texas.

Texas physical nexus

Texas economic nexus

• Economic Nexus: Texas has an economic nexus threshold. If your business makes $500,000 or more in eligible sales into Texas within a calendar year, you establish economic nexus and are required to collect sales tax. This threshold is based on gross revenue from sales of all taxable and nontaxable tangible personal property and services.

Sales tax rates in Texas

Tax rates can vary based on the location of your business and the location of your customer, plus the levels of sales tax that apply in those specific locations. As mentioned, the statewide rate is 6.25%, with local rates imposed by cities, counties, and special districts adding up to 2%. This leaves a maximum of 8.25%. The exact rate you need to charge depends on the buyer's location.

Important Note for Remote Sellers: While destination-based sourcing is the general rule, Texas has specific provisions for remote sellers. Single Local Use Tax Rate. This rate is calculated annually by Texas and can be used statewide by remote sellers, simplifying compliance. For 2024, this rate was 1.75%.

For more details or to verify rates, visit the Texas’ Sales Tax Rate Locator.

Sales tax on shipping charges in Texas

In Texas, the taxability of shipping and delivery charges is generally tied to the taxability of the item being shipped.

• If the item you are selling is subject to sales tax, then the shipping charges are also subject to sales tax.
• If the item being shipped is not subject to sales tax, neither are the shipping charges.

If you ship a mix of taxable and nontaxable products in a single shipment, the shipping charges for the entire shipment are generally subject to tax.

How to calculate sales tax in Texas

Texas has a destination-based sales tax system, so you have to pay attention to the varying tax rates across the state. Charge the tax rate of the buyer’s address, as that’s the destination of your product or service. Add it to the price of your product, and collect the full payment.

How does Texas sales tax work with marketplaces?

In Texas, marketplace facilitators must collect, report, and remit both state and local sales tax on every sale processed through their platform, provided their sales exceed $500,000 within the state.

Individual sellers conducting sales via a marketplace, alongside direct sales to consumers through other channels, need to account for the total of all sales when determining their economic nexus status, including those executed through the marketplace.

Learn more about the obligations for marketplace sellers regarding Texas sales tax registration.

Texas sales tax holidays

Texas offers several sales tax holidays throughout the year, providing temporary exemptions for specific items. These holidays are popular with consumers and important for businesses to be aware of. While the exact dates are announced each year, here are examples of typical Texas sales tax holidays:

• Back-to-School Sales Tax Holiday: Usually held in August, exempting clothing, footwear, school supplies, and backpacks under a certain price.
• Energy Star Sales Tax Holiday: Often takes place in May, exempting qualifying Energy Star appliances.
• Emergency Preparation Sales Tax Holiday: Typically in April, exempting emergency supplies like generators and batteries.
• Water-Efficient Products Sales Tax Holiday: Also frequently in May, encouraging the purchase of water-conserving products.

Always check the official Texas Comptroller website for the confirmed dates and a complete list of eligible items for the 2025 sales tax holidays.

How to register for a Texas sales tax permit

If you have established nexus in Texas, the next critical step is to register for a Texas Sales and Use Tax Permit. It is illegal to collect sales tax without a valid seller's permit.

Remote sellers register for sales tax in Texas according to where you are based.

US businesses (or businesses that have a physical address in the US)

You can register for a TX sales tax permit via eSystems, an online tax portal. (This portal is also where you’ll file and pay your tax returns. For information on how to file, check out this Texas sales tax filing guide.)

It will take 2-3 weeks to receive your Texas sales permit. When you do, you’ll be assigned a tax filing frequency: monthly, quarterly, or yearly.

You’ll also receive a Webfile number. It’s a 6-digit number beginning with RT or XT. This is a unique identifier used to identify your business in a certain tax type. It’s also your access code to the electronic reporting feature within eSystems.

International businesses

To obtain a TX sales tax license, you must fill out Form AP-201, Texas application and email it to the Texas Comptroller office at [email protected] or fax the application to 512-936-0010.

Question 3 asks about a Federal Employer Identification Number (FEIN or EIN). If you aren’t familiar with this, take a moment to read about what an EIN number is and how to get one.

It will take at least 2-3 weeks to receive your sales tax permit. When you do, you’ll also be assigned a filing frequency: monthly, quarterly, or yearly.

Sales tax guides for other states

• Alabama Sales Tax Guide
• Alaska Sales Tax Guide
• Arizona Sales Tax Guide
• Arkansas Sales Tax Guide
• California Sales Tax Guide
• Colorado Sales Tax Guide
• Connecticut Sales Tax Guide
• Delaware Sales Tax Guide
• Florida Sales Tax Guide
• Georgia Sales Tax Guide
• Hawaii Sales Tax Guide
• Idaho Sales Tax Guide
• Illinois Sales Tax Guide
• Indiana Sales Tax Guide
• Iowa Sales Tax Guide
• Kansas Sales Tax Guide
• Kentucky Sales Tax Guide
• Louisiana Sales Tax Guide
• Maine Sales Tax Guide
• Maryland Sales Tax Guide
• Massachusetts Sales Tax Guide
• Michigan Sales Tax Guide
• Minnesota Sales Tax Guide
• Mississippi Sales Tax Guide
• Missouri Sales Tax Guide
• Montana Sales Tax Guide
• Nebraska Sales Tax Guide
• Nevada Sales Tax Guide
• New Hampshire Sales Tax Guide
• New Jersey Sales Tax Guide
• New Mexico Sales Tax Guide
• New York Sales Tax Guide
• North Carolina Sales Tax Guide
• North Dakota Sales Tax Guide
• Ohio Sales Tax Guide
• Oklahoma Sales Tax Guide
• Oregon Sales Tax Guide
• Pennsylvania Sales Tax Guide
• Rhode Island Sales Tax Guide
• South Carolina Sales Tax Guide
• South Dakota Sales Tax Guide
• Tennessee Sales Tax Guide
• Utah Sales Tax Guide
• Vermont Sales Tax Guide
• Virginia Sales Tax Guide
• Washington Sales Tax Guide
• Washington, D.C. Sales Tax Guide
• West Virginia Sales Tax Guide
• Wisconsin Sales Tax Guide
• Wyoming Sales Tax Guide