Texas Sales Tax Rate & Rules (2026)

Last updated: 2026-03-27

What is the sales tax rate in Texas?

What is taxable in Texas?

How do you register to collect sales tax in Texas?

What is the economic nexus threshold for Texas?

How to register for sales tax in Texas

Before you can collect sales tax, you need to register with the Texas Comptroller of Public Accounts. Here is the step-by-step process.

1. Apply for a Sales Tax Permit online through the Texas Comptroller's eSystems at comptroller.texas.gov
2. Submit Form AP-201 with your FEIN or SSN, business entity type, and Texas location details
3. The permit is free — Texas does not charge a registration fee
4. A separate permit is required for each place of business
5. Most online applications are processed within 2-3 weeks; you may begin collecting immediately upon application

How to collect sales tax in Texas

Once registered, you are responsible for charging the correct amount of sales tax on every taxable transaction. Here is how the collection process works in Texas.

1. Determine taxability — Texas taxes most tangible goods and some services (including SaaS at 80% of sales price) but exempts groceries
2. Calculate the combined rate (state 6.25% + local, capped at 2% for a maximum of 8.25%) based on the place of business — Texas uses origin-based sourcing
3. Charge the correct rate at the point of sale and itemize on receipts
4. Accept Texas resale certificates (Form 01-339) from qualifying buyers
5. Keep records of all transactions, exemption certificates, and local rate determinations for at least 4 years

How to file and remit sales tax in Texas

Filing your sales tax return on time is critical to avoid penalties. Texas requires electronic filing for most businesses.

1. File electronically through WebFile at comptroller.texas.gov
2. Filing frequency is assigned: monthly (if tax exceeds $1,500/quarter), quarterly ($500-$1,500/quarter), or annually (under $500/quarter)
3. Returns are due on the 20th of the month following the reporting period
4. Report gross sales, taxable sales, exempt sales, and tax due
5. Timely filers may keep 0.5% of the tax collected as a collection allowance (capped at $2,083/quarter)
6. Pay electronically — Texas requires electronic payment for businesses owing $10,000+ per year
7. Retain all records for at least 4 years

What is exempt from Texas sales tax?

Not everything is subject to sales tax. Texas provides exemptions for certain products, buyers, and uses. Always verify the specific exemption requirements with the Texas Comptroller of Public Accounts.

• •Sales for resale with a valid Texas resale certificate (Form 01-339)
• •Grocery food for home consumption (unprepared food items)
• •Prescription drugs, over-the-counter medicines, and certain medical devices
• •Manufacturing equipment and machinery used in production
• •Agricultural equipment, feed, seed, and fertilizer
• •Sales to the federal government and Texas state/local agencies
• •Qualifying nonprofit organizations with a valid Texas exemption certificate
• •Items sold during Texas sales tax holidays (back-to-school, emergency prep, Energy Star)

What are the highest combined sales tax rates in Texas?

Because Texas allows local jurisdictions to add their own sales taxes on top of the state rate, combined rates vary by location. Here are some of the highest combined rates in major Texas cities.

What is use tax in Texas?

Texas use tax applies at the same combined rate when you purchase taxable goods from out-of-state vendors who do not collect Texas sales tax. Businesses report use tax on their regular sales tax return. The use tax rate is 6.25% (state only, plus applicable local rate for your location). Common triggers include online purchases, out-of-state equipment, and supplies from non-collecting vendors.

Does Texas have marketplace facilitator rules?

Texas requires marketplace facilitators with $500,000 or more in Texas sales to collect and remit sales tax on behalf of third-party sellers. Amazon, eBay, Etsy, and similar platforms collect Texas sales tax on marketplace transactions. Sellers using marketplace facilitators are not required to collect on those marketplace sales but must still collect on direct sales.

What are the penalties for sales tax non-compliance in Texas?

Texas imposes a 5% penalty if payment is 1-30 days late, and 10% if more than 30 days late. Interest accrues at the prime rate plus 1%. A $50 penalty applies for each late-filed report. Failure to hold a permit results in a penalty of 5% of tax due (minimum $1 per day). Collection allowance is forfeited for late filing. Criminal penalties for fraud include fines up to $10,000 and imprisonment up to 10 years.

This is general information, not legal or tax advice. Tax rules change frequently — always verify with the official state agency. Sources: Texas Comptroller of Public Accounts.