Texas sales tax is a tax added to most purchases at the point of sale

When you buy something in Texas, the seller adds a tax to your bill. That tax goes to the state and to your local government. The amount you pay depends on where you are in Texas — the state sets a base rate, but cities and counties add their own taxes on top. Unlike income tax, which Texas does not have, sales tax is collected every time you spend money on taxable goods or services.

The tax is calculated as a percentage of the purchase price. If an item costs $100 and the total sales tax rate where you are is 8.25%, you pay $8.25 in tax, for a total of $108.25. The seller collects this money and sends it to the state and local tax authorities.

Key Takeaways

  • Texas has a state sales tax of 6.25%, and most cities and counties add between 1% and 2% on top, bringing the total to between 7.25% and 8.25% depending on location.
  • Sales tax applies to most physical goods and some services, but groceries, prescription medications, and certain medical equipment are not taxed.
  • Online purchases from out-of-state sellers may or may not have sales tax added, depending on whether the seller has a physical presence in Texas.
  • The tax is collected by the seller at checkout and sent to the Texas Comptroller of Public Accounts, which distributes it to state and local governments.

State and local tax rates vary by location

Texas charges a state sales tax of 6.25% on all taxable purchases. On top of that, your city or county adds a local sales tax. Most cities charge between 1% and 2%, and most counties add another 0.25% to 1%. The combination means the total rate you pay ranges from 7.25% to 8.25% depending on exactly where you are in Texas.

A purchase in Austin has a different total rate than a purchase in Houston or Dallas because each city and county sets its own local rate. If you buy something near the border between two cities, the rate depends on which city's jurisdiction the store is in, not where you live. You can find the exact rate for your location on the Texas Comptroller of Public Accounts website by entering your zip code or address.

What is and is not taxed in Texas

Most physical items you buy are subject to sales tax — clothing, furniture, electronics, gasoline, and restaurant meals all get taxed. Some services are taxed too, such as repairs, haircuts, and certain professional services, though the rules for services are more complex and vary by type.

Several categories are not taxed. Groceries — unprepared food you buy at a store to cook at home — are not taxed. Prescription medications are not taxed. Medical devices prescribed by a doctor, such as wheelchairs or hearing aids, are typically not taxed. Certain items for children, like car seats and safety equipment, may have reduced or no tax depending on the specific item. If you are unsure whether something is taxed, ask the cashier or check the receipt after purchase.

How sales tax works for online and out-of-state purchases

If you buy something online from a company that has a warehouse, office, or other physical location in Texas, sales tax is usually added to your order. If you buy from a company with no presence in Texas, the seller may not add Texas sales tax at checkout. However, Texas law says you owe sales tax on those purchases anyway — you are supposed to report and pay it yourself when you file your taxes, though most people do not.

Large online retailers like Amazon now collect sales tax on orders shipped to Texas because they have distribution centers in the state. Smaller sellers or international companies may not. The rule is based on whether the seller has what is called "nexus" — a physical or economic connection — to Texas. If you are buying from a small out-of-state seller and no tax is added, you are technically responsible for the tax, but enforcement is rare for individual purchases.

Who collects and receives the sales tax money

The seller — the store, restaurant, or online company — collects sales tax from you at the time of purchase. They hold that money and send it to the Texas Comptroller of Public Accounts, usually monthly or quarterly depending on the volume of sales. The Comptroller then distributes the money to the state general fund and to the cities and counties where the purchases happened.

The state uses its share for schools, highways, and other state services. Cities and counties use their share for local services like police, fire, libraries, and roads. When you see sales tax on your receipt, you are funding both levels of government.

Sales tax on specific items and situations

Clothing and shoes are taxed at the full rate in Texas — there is no special exemption for clothing like some states have. Used items sold by individuals are generally not taxed, but used items sold by a business are taxed. A car sold by a private person does not have sales tax, but a car sold by a dealership does.

Resale items — goods a business buys to resell to customers — are not taxed when the business buys them if the business has a resale certificate. The tax is collected only when the final customer buys the item. If you are starting a business and need a resale certificate, you get one from the Texas Comptroller.

Frequently Asked Questions

Is sales tax included in the price shown on the shelf?

No. The price on the shelf or tag is the pre-tax price. Sales tax is added at checkout. This is why your total bill is higher than the price you saw. Some stores show the after-tax price on their website or app, but in-store prices are almost always before tax.

Do I pay sales tax on groceries?

No. Unprepared food you buy at a grocery store — produce, meat, dairy, bread, canned goods — is not taxed. However, prepared food like rotisserie chicken, deli items, or anything from a hot bar is taxed. Alcohol and tobacco are also taxed.

What if the cashier charges me the wrong sales tax amount?

Check your receipt. If the rate is wrong, tell the cashier or manager. Most errors are caught and corrected on the spot. If you notice an error after you leave, contact the store. Overcharges are usually refunded, though the process depends on the store's policy.

Do I owe sales tax on items I buy out of state and bring into Texas?

Technically, Texas law says you owe use tax — which is essentially sales tax on out-of-state purchases — but it is rarely enforced for personal purchases. If you buy a car out of state and register it in Texas, you will owe tax when you register it. For most other items, the tax is not collected or enforced.

Why is sales tax different in different parts of Texas?

Each city and county votes on whether to add a local sales tax and at what rate. Some areas chose to add 1%, others 1.5% or 2%. The state rate is the same everywhere, but the local portion stacks on top, creating different totals in different places.