Texas Sales and Use Tax: The Complete 2026 Guide to Rates, Forms, Exemptions and Filing

Quick Answer

Texas charges a 6.25% state sales and use tax, and cities, counties, transit authorities and special-purpose districts can add up to 2% more, for a combined maximum rate of 8.25% anywhere in the state (Texas Comptroller, rate schedule updated July 2026). Texas has no state income tax, so sales and use tax — along with property tax — is the state’s primary revenue tool. If you sell taxable goods or services in Texas, or buy them without paying tax and then use them here, you owe one of the two halves of this single tax.

If you run payroll, bookkeeping, or multi-state filings alongside sales tax, KMK Ventures’ outsourced tax services team handles the full compliance calendar so nothing slips through a due date.

What Is Texas Sales and Use Tax?

Texas sales and use tax is really two taxes working as one system. Sales tax applies when a taxable item or service is sold, leased, or rented inside Texas. Use tax applies at the same rate when a Texas business or resident buys a taxable item from an out-of-state or online seller who didn’t collect Texas tax, then stores, uses, or consumes that item in Texas. The two exist together so that buying from Dallas and buying from a seller in another state end up costing the same in tax — nobody gets a price advantage just because a seller sits outside Texas.

Both taxes are administered by the same agency, filed on the same return, and taxed at the same combined rate. That’s why the state calls it one tax: “sales and use tax,” not two separate ones.

Is Texas Sales Tax 6.25% or 8.25%?

Both, depending on where you’re standing. 6.25% is the state-only rate that applies everywhere in Texas with no exceptions. 8.25% is the ceiling once local jurisdictions — city, county, transit authority, and special-purpose district — stack their add-ons on top, capped at 2% combined. Most major metro addresses sit at the full 8.25% because local jurisdictions there have already claimed the entire 2% allowance. Rural and unincorporated addresses are more likely to land somewhere between 6.25% and 8.25%.

Local rates are set individually by each jurisdiction and change quarterly, so the exact rate depends on the delivery address, not just the city name. Texas is an origin-based state for sellers with a physical presence here — meaning if you have a Texas location, you generally charge the rate where your business sits — while remote/online sellers without a physical presence typically source tax to the customer’s destination address, or may elect the state’s Single Local Use Tax Rate as a simplification (see below).

Combined Sales Tax Rate by Major Texas City (illustrative)

Most major Texas metros, including Dallas sales tax, sit at the 8.25% ceiling because the city, county, and transit authority together already use up the full 2% local allowance. Smaller towns and unincorporated areas can be lower. Always confirm the exact rate for a specific address using the Comptroller’s Sales Tax Rate Locator before filing, since local rate changes take effect quarterly.

If your business operates across several Texas locations or e-commerce channels, small rate mismatches compound fast. KMK’s sales tax compliance service reconciles rate tables to actual filing data every period so you’re never over- or under-collecting.

What Is the Texas Use Tax Rate for Remote Sellers?

Out-of-state sellers with no Texas physical presence have a simplification option most guides skip: instead of tracking the exact local rate for every delivery address, they can elect the Single Local Use Tax Rate of 1.75%. Added to the 6.25% state rate, that’s a flat 7.95% collected on every Texas sale, regardless of destination. The Comptroller updates this flat rate annually, effective each January 1. It trades precision for simplicity — useful for sellers without the systems to calculate address-level rates, but it can mean collecting slightly more or less than the true local rate on any given order.

Is Texas Part of the Streamlined Sales Tax (SST) Program?

No. Texas is not a member of the Streamlined Sales Tax Governing Board, unlike roughly half of U.S. states. This matters for multi-state sellers evaluating centralized registration and filing services — Texas has to be registered and filed separately rather than through the SST’s single-registration system.

How to Calculate Texas Sales Tax

The formula is straightforward: Sales Tax = Price × Combined Tax Rate. To find the total you’ll pay, add that figure to the sticker price.

Example: A $25 item purchased in a city with the full 8.25% combined rate.

• Tax owed: $25 × 0.0825 = $2.0625, rounded to $2.06
• Total after Texas sales tax: $27.06

For quick math on any purchase, use this shortcut: multiply the price by 1.0825 (for the 8.25% ceiling) or by 1.0625 if you’re in an area with no local add-on. A dedicated Texas sales tax calculator or the state’s own online tool is more precise when a purchase involves mixed taxable and exempt items, quantity discounts, or shipping charges, since those can each be treated differently.

Businesses should not rely on manual multiplication for every invoice — point-of-sale and accounting software should apply the rate automatically by address. If your books are showing sales tax variances, KMK’s bookkeeping and reporting teams can audit the setup and fix the mapping before it snowballs into a filing discrepancy.

What’s Taxable in Texas? A Category-by-Category Breakdown

Rate questions only answer half the picture — the other half is whether an item is taxable at all. Here’s how major categories are generally treated:

This is a general summary, not an exhaustive taxability matrix — specific product classifications can shift with legislative changes, so confirm anything borderline against the Comptroller’s current guidance or with an advisor before relying on it for filing.

Texas Sales Tax Holidays in 2026

Texas runs several temporary exemption windows each year where qualifying purchases are exempt from both state and local sales tax. These are easy to miss if you’re only tracking the standard rate:

• Emergency preparation supplies holiday — April 25–27, 2026: hurricane shutters, emergency ladders, and similar items priced under $300 qualify.
• Water-efficient products holiday — May 23–25, 2026: WaterSense-labeled products and certain other water-conserving items qualify tax-free, for both business and personal use.
• Annual back-to-school holiday — August 7–9, 2026: the best-known one. Clothing, footwear, school supplies, and backpacks priced under $100 per item are exempt. The $100 cap applies per item, not per receipt — five $80 shirts on one $400 order all qualify.

A few rules apply across all of these: the exemption generally doesn’t require any certificate from the buyer, applies to both in-store and online purchases from sellers doing business in Texas, and typically excludes items purchased for a trade or business rather than personal use. Because the Legislature and Comptroller confirm exact dates and qualifying items annually, verify specifics on the Comptroller’s site close to each date before relying on them for a large purchase or a POS configuration change.

Does Texas Have State Income Tax?

No. Texas is one of a small group of states with no state income tax on individuals, and no state-level personal income tax bracket exists to look up. This is a key reason sales and use tax carries so much weight in Texas: without an income tax, the state leans more heavily on consumption taxes and property taxes to fund public services. Businesses still owe Texas franchise tax (a margin-based tax on many entities, separate from sales tax) and, if applicable, federal income tax — but there is no “Texas state income tax rate” table to reference for individuals.

This distinction trips up a lot of new residents and out-of-state companies expanding into Texas, since they assume a “no income tax” state means lighter compliance overall. In practice it usually means more attention on sales tax and franchise tax correctness, not less. If you’re standing up a new Texas entity, business formation support up front prevents this exact mix-up.

Who Has to Collect Texas Sales and Use Tax? (Nexus Rules)

You must register and collect Texas sales tax if you have nexus — a legal connection to the state — through either:

• Physical presence: an office, warehouse, employee, inventory, or other physical footprint in Texas.
• Economic nexus: for remote/online sellers with no physical presence, Texas requires registration once your Texas revenue crosses $500,000 in the preceding 12 months. Collection must begin on the first day of the second month after the threshold is met.

Marketplace facilitators (large platforms that process sales on behalf of third-party sellers) generally collect and remit tax on those marketplace sales directly, which can change what an individual seller still owes to file. Multi-entity groups — LLCs, partnerships, S corps, and C corps operating in Texas — each need this evaluated separately, since nexus is assessed per legal entity. KMK supports this across structures through LLC/LLP/partnership tax returns, S corporation tax returns, and C corporation tax returns.

Texas Sales and Use Tax Resale Certificate (Form 01-339)

The Texas resale certificate lets a business buy taxable goods without paying sales tax up front, as long as those goods are being purchased for resale, lease, or rental — not for the business’s own use. The form is 01-339, Texas Sales and Use Tax Resale Certificate / Exemption Certification, and it’s a single two-sided form: the front is the resale certificate, the back is the general exemption certification used for other exempt purchases.

To issue a valid resale certificate, a buyer needs their 11-digit Texas Sales and Use Tax Permit Number and must describe the type of business or the items normally resold. The certificate goes directly to the seller — it is never filed with the Comptroller — and the seller must keep it on record for four years as proof of why tax wasn’t collected. A customer’s permit number alone is not a substitute for the completed certificate; sellers who skip collecting a proper 01-339 can end up owing the uncollected tax themselves.

You can download the current form directly from the Texas Comptroller’s forms page.

Texas Sales Tax Exemption Certificates and Who Qualifies

The back of Form 01-339 doubles as the Texas tax exemption form for exempt purchases that aren’t for resale. Common categories of state of Texas tax-exempt buyers and purchases include:

• Federal, state, and local government entities
• Qualifying nonprofit and religious organizations with an exempt determination
• Certain manufacturing and production equipment used directly in the manufacturing process
• Items that qualify for a specific statutory exemption (agricultural production, some data centers, etc.)

Unlike the resale side, the exemption certification doesn’t require a permit number — it requires a valid, specific reason for the exemption. Overusing or misapplying an exemption certificate is one of the most common findings in a Texas sales tax audit, so documentation matters as much as eligibility. This is an area where a tax planning and advisory review before audit season pays for itself.

Registering for a Sales Tax Permit, Entity Search & Tax ID Lookup

Before collecting any tax, a business needs a Texas Sales and Use Tax Permit from the Comptroller, obtained free of charge through the Comptroller’s online registration. This is separate from — but often confused with — two other lookups businesses commonly need:

• Texas entity search: to confirm a business’s legal formation status, registered agent, and standing with the state, use the Texas Secretary of State’s SOSDirect entity search. This is the authoritative source for whether an LLC or corporation is active and in good standing.
• Tax ID number lookup: a federal Employer Identification Number (EIN) is issued by the IRS, not the Comptroller. The IRS EIN guidance covers how to apply for one and verify it; a Texas Sales and Use Tax Permit number is a separate, state-issued number used only for sales tax filings.
• Comptroller sales tax verification: the Comptroller’s own Sales Taxpayer Search lets you confirm whether a Texas seller currently holds an active sales tax permit before you accept a resale certificate from them.

Keeping these three identifiers straight — Texas SOS filing, IRS EIN, and Comptroller sales tax permit — is one of the most common early-stage mistakes for founders. KMK’s business formation and client accounting advisory teams typically set up all three in the same engagement so nothing gets registered out of order.

Filing Frequency, Due Dates, and Available Discounts

The Comptroller assigns your filing frequency — monthly, quarterly, or annually — based on your reported or estimated sales volume; higher-volume filers file more often. Returns are generally due on the 20th of the month following the reporting period, and a zero return is still required even if you had no taxable sales in a period — skipping it can trigger a penalty even with nothing owed. Returns are filed through the Comptroller’s Webfile system.

Texas rewards on-time filers with two stackable discounts:

• Timely filing discount: 0.5% of the tax due, for filing and paying by the due date.
• Prepayment discount: an additional 1.25% for monthly or quarterly filers who prepay at least 90% of the current tax due.

On the accounting side, sales tax collected from customers isn’t revenue — it’s a liability recorded as sales tax payable until it’s remitted to the Comptroller. If your books show sales tax revenue and payable amounts that don’t reconcile month to month, that’s usually a sign the tax rate mapping, exemption tracking, or filing cadence needs a closer look. This reconciliation is a core piece of what KMK’s reporting and virtual CFO services teams manage for growing businesses.

Penalties for Late or Missed Filings

Texas penalties scale with how late a return is:

• 5% of the tax due if filed within 30 days of the due date.
• 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, compounding the longer it goes unaddressed.

Catching a mismatch during monthly reconciliation is far cheaper than catching it in an audit notice.

Common Penalties and Filing Mistakes

The most frequent issues the Comptroller flags in Texas sales and use tax audits are:

1. Missed zero returns — treating “no sales” as “no filing required.”
2. Weak exemption/resale documentation — accepting a permit number instead of the actual signed 01-339.
3. Wrong local rate applied — using a city’s rate instead of the exact delivery-address rate, especially after a quarterly rate change.
4. Use tax left unreported — out-of-state purchases used in Texas that never had tax collected at the point of sale.
5. Mixing sales tax payable into general revenue, which distorts both the balance sheet and the actual amount owed at filing time.

Texas Sales and Use Tax: Retail Tax vs. Broader “Use” Obligations

“Texas retail tax” isn’t a separate tax — it’s simply the sales tax as it applies at the point of retail sale. The distinction that actually matters operationally is retail sale (sales tax) versus self-assessed use (use tax): if you bought equipment, software, or supplies from an out-of-state vendor who didn’t charge Texas tax, and you’re now using those items in a Texas business, you generally owe use tax directly, self-reported on your own return, even though no retailer collected it from you at checkout.