Texas Sales Tax Guide 2025: A Step-by-Step Guide for Businesses

Texas Sales Tax: 2025 Overview

Sales tax in Texas is a 6.25% statewide rate in 2025, with local taxes of up to 2%, bringing the maximum combined rate to 8.25%. Texas does not participate in the Streamlined Sales Tax initiative (SSUTA), leaving compliance responsibilities entirely to businesses.

Known for its broad tax base, Texas exempts groceries and prescription medications but imposes sales tax on a wide range of other goods and services.

Texas State Sales Tax Due Date

In Texas, the due dates for paying sales taxes depend on your assigned filing frequency, which is determined by your total taxable sales and tax liability.

Filing Frequency	Criteria	Due Date
Monthly	Required for businesses collecting $500 or more in sales tax per month.	Due on the 20th of the following month.
Quarterly	For businesses collecting $100–$500 in sales tax per month.	Due on the 20th of the month following the quarter (e.g., April 20 for Q1).
Annually	For businesses collecting less than $100 in sales tax per month.	Due on January 20 of the following year.

Key Notes

• If the due date falls on a weekend or holiday, payments are typically due on the next business day.
• Late filings or payments may result in penalties and interest, so timely compliance is essential.
• Payments and filings can be completed through the Texas Comptroller eSystems Portal.

Texas Sales Tax Rate in 2025

Texas imposes a statewide sales tax of 6.25%, with additional local sales taxes that can bring the combined rate up to 8.25% in some areas.

Tax Type	Rate	Description
State Sales Tax	6.25%	Applies to most retail sales of tangible personal property and certain services.
Local Sales Tax	Varies by Location	Additional sales tax imposed by cities, counties, and special districts, up to 2%.

Notes

• Texas exempts groceries, prescription medications, and certain medical devices from sales tax.
• The total sales tax rate depends on the location of the transaction, combining state and local rates.

2025 Texas Local Sales Tax Rates Table

Below is a table highlighting the 20 largest cities in Texas along with their respective local and combined sales tax rates:

City	Local Sales Tax Rate	Total Sales Tax Rate
Amarillo	2.0%	8.25%
Arlington	2.0%	8.25%
Austin	2.0%	8.25%
Brownsville	2.0%	8.25%
Corpus Christi	2.0%	8.25%
Dallas	2.0%	8.25%
El Paso	2.0%	8.25%
Fort Worth	2.0%	8.25%
Frisco	2.0%	8.25%
Garland	2.0%	8.25%
Houston	2.0%	8.25%
Irving	2.0%	8.25%
Laredo	2.0%	8.25%
Lubbock	2.0%	8.25%
McAllen	2.0%	8.25%
Plano	2.0%	8.25%
San Antonio	2.0%	8.25%
Sugar Land	2.0%	8.25%
Tyler	2.0%	8.25%
Waco	2.0%	8.25%

Notes

• Texas imposes a statewide sales tax of 6.25%, with local jurisdictions allowed to add up to 2.0%, resulting in a maximum combined rate of 8.25%.
• Groceries, prescription medications, and certain medical devices are exempt from sales tax.
• The total sales tax rate is consistent across many cities due to the maximum local rate being reached in most jurisdictions.
• For more details or to verify rates, visit the Texas Comptroller of Public Accounts.

Texas Sales Tax Calculator Example with Customers in Multiple Locations

An online retailer based in Florida establishes economic nexus in Texas by exceeding $500,000 in annual sales, requiring them to collect and remit sales tax for purchases made by Texas residents. The retailer makes sales to customers in multiple locations, each with different local tax rates.

Detail	Description
Business	Online retailer based in Florida with economic nexus in Texas.
Customer Purchases	Customer A in Dallas $1,200 total, $800 taxable, $400 exempt (e.g., groceries or medications). Customer B in Austin $900 total, $600 taxable, $300 exempt. Customer C in Houston $500 total, $400 taxable, $100 exempt.
Customer Locations	Dallas 8.25% total sales tax. Austin 8.25% total sales tax. Houston 8.25% total sales tax.

Texas Sales Tax Calculations

Customer	Taxable Amount	Total Tax Rate	Total Tax Due
Customer A	$800	$800 × 8.25% = $66.00	$66.00
Customer B	$600	$600 × 8.25% = $49.50	$49.50
Customer C	$400	$400 × 8.25% = $33.00	$33.00

Total Sales Tax Due in Texas

$66.00 (Customer A) + $49.50 (Customer B) + $33.00 (Customer C) = $148.50

Key Considerations for Businesses

• Location Accuracy: Verify customer addresses to apply the correct local tax rates. Texas has a statewide 6.25% sales tax with local rates adding up to 2%, making the maximum rate 8.25%.
• Exemption Management: Groceries, prescription medications, and certain medical devices are exempt from sales tax. Ensure exempt items are properly documented.
• Tax Reporting: Accurately track taxable and exempt sales for timely and accurate filing through the Texas Comptroller of Public Accounts’ eSystems portal.

Is there a Texas SaaS sales tax?

Yes, Texas imposes sales tax on Software as a Service (SaaS) as it is considered taxable tangible personal property when accessed electronically.

Category	Details	Examples
Taxable SaaS	SaaS products are subject to Texas’s 6.25% state sales tax, plus any applicable local taxes, when the software is prewritten and delivered electronically.	Cloud-based accounting software, CRM tools.
Non-Taxable SaaS	Custom software or SaaS solutions primarily considered a service may be exempt depending on the transaction structure.	Custom-built software solutions.
Requirements for Businesses	SaaS providers with nexus in Texas must collect and remit sales tax for taxable transactions.	Out-of-state providers meeting nexus thresholds.

Additional Considerations

• Texas differentiates between prewritten (taxable) and custom (non-taxable) software in its tax code, impacting SaaS taxability and guiding the methodology for tax compliance.
• Businesses can streamline compliance by getting started with Kintsugi for sales tax automation, ensuring accurate tax calculations and filings.
• For further guidance, consult the Texas Comptroller of Public Accounts or a tax professional.

Is there sales tax on clothing in Texas?

Yes, Texas imposes sales tax on clothing, but specific exemptions apply during the annual sales tax holiday:

Category	Details	Examples
Taxable Clothing	Most clothing and footwear are subject to Texas’s 6.25% state sales tax, plus any applicable local sales taxes.	Shirts, pants, shoes, jackets.
Sales Tax Holiday	During the August sales tax holiday, clothing, footwear, and certain school supplies priced under $100 per item are exempt.	Backpacks, sneakers, school uniforms.
No General Exemptions	Outside of the sales tax holiday, there are no general exemptions for clothing purchases.	Formal wear, athletic gear, casual clothing.

FAQs

What is the sales tax rate in Texas?

Texas imposes a 6.25% statewide sales tax, with local taxes of up to 2%, resulting in a maximum combined rate of 8.25%.

How do you calculate Texas sales tax?

Multiply the taxable amount by the 6.25% state rate and add applicable local taxes, which vary by location.

Sales Tax Nexus in Texas

Sales tax nexus in Texas establishes a business's obligation to collect and remit sales tax, influenced by revenue generated through physical presence, economic activity, or relationships with in-state entities.

Type of Nexus	Description	Threshold/Criteria
Physical Nexus	Created by having a physical presence in Texas, such as a location, employees, or inventory.	Office, warehouse, storefront, or employees operating in Texas.
Economic Nexus	Triggered by making substantial sales into Texas, even without a physical presence.	More than $500,000 in gross sales annually into Texas.
Affiliate Nexus	Created through relationships with in-state businesses that help facilitate sales.	A Texas-based affiliate promotes or sells products for the out-of-state retailer.
Marketplace Nexus	Applies to sales made through marketplace facilitators operating in Texas.	Facilitators must collect and remit sales tax on behalf of sellers.
Inventory Nexus	Triggered by storing inventory in Texas, even if through a third party (e.g., warehouses or fulfillment centers).	Any physical inventory located in Texas.
Employee or Agent Nexus	Having employees, independent contractors, or agents perform services in Texas.	Sales or service activities conducted by representatives in Texas.

Notes

• Texas uses both physical presence and economic presence to determine sales tax nexus.
• Businesses with nexus in Texas must register for a sales tax permit and collect sales tax on taxable sales.
• Marketplace facilitators are responsible for collecting and remitting sales tax for third-party sales made through their platforms.

FAQs

What is the sales tax nexus in Texas?

Sales tax nexus in Texas is established through physical presence or economic nexus, triggered by exceeding $500,000 in annual sales into the state.

Texas Sales Tax Exemptions in 2025

In 2025, Texas maintains its 6.25% state sales tax, with exemptions for groceries, prescription medications, medical devices, and certain agricultural equipment.

What is a Texas state tax-exempt certificate?

A Texas state tax-exempt certificate, also known as Form 01-339, is a document that allows eligible buyers to make tax-exempt purchases in Texas. It certifies that the buyer qualifies for an exemption under Texas sales tax law.

• Purpose: Used for transactions exempt from sales tax, such as purchases by government agencies, nonprofit organizations, or for resale purposes.
• Usage: The buyer provides the certificate to the seller at the time of purchase to avoid paying sales tax.
• Retention: Sellers must keep a copy of the certificate on file to validate tax-exempt transactions in case of an audit.

Valid Reasons for Exemption

Exemption Category	Description	Examples
Resale	Items purchased for resale.	Products bought by retailers for inventory.
Manufacturing	Materials or equipment used directly in production.	Machinery, raw materials, and tools for manufacturing.
Nonprofit Organizations	Tax-exempt entities making qualified purchases.	Purchases by charitable, educational, or religious organizations.
Government Agencies	Federal, state, or local government entities.	Supplies or equipment bought by government offices.
Agricultural Use	Equipment and supplies used exclusively in farming.	Tractors, feed, and seed.
Energy Conservation	Items used in qualifying renewable energy projects.	Solar panels, wind turbines, or energy-saving equipment.

What is exempt from sales tax in Texas?

Over 85% of Texas businesses leverage sales tax exemptions to manage costs effectively. This table outlines key Texas sales tax exemptions to help businesses streamline compliance and maximize savings:

Category	Exempt Items
Essential Goods	Prescription medications, over-the-counter drugs, and certain medical equipment.
Nonprofit Organizations	Purchases by qualifying charitable, religious, and educational organizations.
Government Entities	Transactions made by federal, state, and local government agencies.
Agricultural Products	Seeds, fertilizers, pesticides, and farm machinery used in production.
Manufacturing	Machinery and equipment used directly in manufacturing or processing.
Resale	Items purchased for resale with proper resale documentation.
Educational Materials	Textbooks and educational supplies purchased for school use.
Occasional Sales	Casual or isolated sales by individuals not engaged in regular business activities.

Additional Notes

• Texas offers specific exemptions for groceries, while prepared foods and beverages are taxable.
• Exemptions for manufacturing and agriculture often require submission of valid exemption certificates.

Texas Sales Tax Permits, Registration, and Filing in 2025

This section simplifies obtaining permits, filing returns, and meeting payment deadlines effectively for businesses with buyers in Texas.

How do I get a Texas sales tax permit?

To obtain a sales tax permit in Texas, follow these steps:

• Register Online: Visit the Texas Comptroller of Public Accounts website to start your registration for a sales tax permit.
• Provide Business Details: Submit information such as your business name, address, type of business entity, and federal EIN or Social Security number.
• Pay the Registration Fee: Texas does not charge a fee for obtaining a sales tax permit.
• Receive Your Permit: Once approved, you'll receive a Texas Sales and Use Tax Permit, which allows you to collect and remit sales tax.
• Note: Texas requires businesses with physical or economic nexus to register for a sales tax permit before collecting sales tax.

How do I submit a Texas sales tax registration?

To register for Texas sales tax, follow these steps. Texas also offers customer support for registration through the Texas Comptroller of Public Accounts at (800) 252-5555.

Determine if You Need to Register

You must register for Texas sales tax if your business:

• Has a physical presence (nexus) in Texas (e.g., office, warehouse, employees).
• Meets economic nexus thresholds by making over $500,000 in gross sales annually from sales in Texas.

Gather Required Information

Before starting, ensure you have:

• Business Information: Legal name, DBA (if applicable), federal EIN or SSN.
• Address Details: Physical and mailing addresses.
• Business Type: LLC, sole proprietorship, corporation, etc.
• Sales Estimates: Estimated taxable sales in Texas.
• Bank Account Information: For filing and payment setup.

Register Online

• Visit the Texas Comptroller of Public Accounts website.
• Create an account or log in to the eSystems portal.
• Select Register a New Business and follow the prompts to complete your sales tax registration.

Submit Application

• Review the form for accuracy before submitting.
• Once approved, you will receive a Texas Sales and Use Tax Permit, which allows you to collect and remit sales tax.

Begin Collecting and Filing Sales Tax

• Start collecting Texas sales tax on taxable transactions.
• File and remit collected sales tax through the eSystems portal based on your assigned filing frequency (monthly, quarterly, or annually).

Texas Sales Tax Filing

This section breaks down Texas' sales tax requirements, including filing rules, taxable items, and permits.

What are the main Texas filing requirements?

Texas sales tax filing requirements depend on the size and frequency of taxable sales:

• Filing Frequency: Businesses must file monthly, quarterly, or annually based on their total sales tax liability.
• Due Date: Returns are due on the 20th of the month following the reporting period.
• Filing Method: Returns must be filed electronically through the Texas Comptroller of Public Accounts eSystems portal.
• Additional Requirements: Businesses must report all taxable and exempt sales and remit payment for collected taxes by the due date to avoid penalties and interest.

Filing Frequency Criteria

Filing Frequency	Criteria
Monthly	For businesses collecting $500 or more in sales tax per month.
Quarterly	For businesses collecting $100 to $499 in sales tax per month.
Annually	For businesses collecting less than $1,000 in sales tax annually.

Note: Texas requires electronic filing for most businesses. Retailers must track and report both the 6.25% state sales tax and any applicable local taxes, which can bring the total rate to a maximum of 8.25%. Accurate reporting of taxable and exempt sales is critical.

What does Texas sales and use tax apply to?

Texas sales tax applies to the following categories, with certain exemptions such as for groceries, prescription medications, and medical devices.

Category	Description	Examples
Tangible Personal Property	Most goods, unless exempt.	Furniture, electronics, clothing.
Taxable Services	Certain services are subject to sales tax.	Amusements, telecommunications, cleaning services.
Digital Goods	Digital products transferred electronically.	Prewritten software, e-books, digital media.
Leases and Rentals	Rentals of equipment and property.	Equipment rentals, car rentals.
Prepared Foods	Meals and drinks sold by food service businesses.	Restaurant meals, takeout, catering.

Note: Texas imposes a 6.25% statewide sales tax, with local taxes that can bring the total rate up to 8.25%. Businesses must report and remit both state and local taxes while ensuring compliance with applicable exemptions.

How to file sales and use tax in Texas

To file sales tax in Texas, follow these steps:

• Log in to eSystems: Access the Texas Comptroller eSystems portal using your credentials.
• Complete the Sales Tax Return: Enter total taxable sales, exempt sales, and any applicable local sales taxes.
• Calculate Tax Due: The portal automatically calculates the sales tax owed based on your entries and local tax rates.
• Submit Payment: Pay electronically through the portal or by other approved methods.
• Meet Deadlines: Returns are due by the 20th of the month following the reporting period (monthly, quarterly, or annually, depending on your assigned frequency).
• Maintain Records: Keep copies of filed returns and payment confirmations for audit purposes.

FAQs

What day is Texas sales tax due?

Texas sales tax is due on the 20th of the month following the reporting period for monthly and quarterly filers, or January 20th for annual filers.

Does Texas have a sales tax holiday?

Yes, Texas offers multiple sales tax holidays annually, including exemptions for back-to-school items, emergency preparedness supplies, and energy-efficient products.

Automate Your Texas Sales Tax with Kintsugi

Managing Texas sales tax compliance can be complex, from verifying local tax rates to tracking exemptions and meeting filing deadlines. Kintsugi simplifies this process with powerful automation tools designed for modern businesses.

Feature	Description
Accurate Tax Rate Calculations	Automatically apply the correct state and local sales tax rates based on your customer’s location.
Exemption Management	Seamlessly identify and apply exemptions for groceries, prescription medications, and other qualifying items.
Effortless Filing	Streamline your tax reporting and filing process with integrations that calculate, track, and submit sales tax payments.
ERP and eCommerce Integration	Connect with platforms like Shopify, QuickBooks, Amazon, and more for seamless tax data management.

Let Kintsugi handle the complexities of Texas sales tax so you can focus on growing your business. Visit our Product Platform and Pricing pages to learn more and get started today!