Texas has a base sales tax rate of 6.25%, but your actual rate depends on local additions

The state of Texas charges 6.25% sales tax on most purchases. However, that is not the full amount you pay at the register. Cities and counties in Texas can add their own local sales taxes on top of the state rate, which means your total rate varies by location. In some areas you might pay 8.25% total; in others, 7.25% or another combination. The rate that applies is determined by where the sale physically happens — the store's location, not where you live.

Texas does not have a state income tax, which is why the state relies on sales tax revenue. This also means sales tax is one of the main ways Texas funds schools, roads, and local services. Understanding your local rate matters because it affects what you actually pay on groceries, clothing, gas, and other goods.

Key Takeaways

  • Texas state sales tax is 6.25%, but most cities and counties add local taxes that raise your total rate to between 7.25% and 8.25%.
  • The rate that applies is based on the physical location of the store where you make the purchase, not your home address.
  • You can find your exact local rate by entering your ZIP code on the Texas Comptroller of Public Accounts website or by asking a cashier.
  • Some items like unprepared food, prescription medications, and medical devices are exempt from sales tax in Texas.
  • Online purchases from out-of-state sellers may not include Texas sales tax, though this has changed for some large retailers.

How local taxes stack on top of the state rate

The 6.25% state rate is the floor. On top of that, cities can add up to 2% in local sales tax, and counties can add up to 2% as well. Some special districts — like transit authorities or economic development zones — can add smaller amounts. This means a city in one county might have a total rate of 8.25%, while a city in a neighboring county might be 7.25%.

The breakdown works like this: you pay the 6.25% state tax on every purchase, then you pay whatever local rate applies in that specific city and county. A $100 purchase in Austin (Travis County) costs $8.25 in tax because Austin and Travis County together add 2% to the state rate. The same $100 purchase in a different location might cost $7.25 or $8.25 depending on local decisions.

Local rates change when city councils or county commissioners vote to raise or lower their portion. These changes are not frequent, but they do happen. If you move to a new area or shop in a different city, your rate may be different.

Finding your exact sales tax rate

The Texas Comptroller of Public Accounts maintains a searchable database of sales tax rates by ZIP code. You can visit the Comptroller's website and enter your ZIP code to see the exact combined rate for that area. This is the most reliable way to know what you will pay.

You can also call your city or county tax assessor's office and ask directly. Many retailers, including grocery stores and gas stations, will tell you the rate if you ask. Some receipt paper even prints the rate at the bottom.

If you are shopping online, the rate that applies depends on where the seller ships from or where they have a physical presence. Large online retailers like Amazon now collect Texas sales tax on most items, but smaller sellers may not. The responsibility to pay tax on untaxed online purchases technically falls to the buyer, though enforcement is limited.

What items are exempt from sales tax in Texas

Not everything sold in Texas is subject to sales tax. Unprepared food — groceries you cook at home — is exempt. This includes raw meat, vegetables, bread, milk, and eggs. However, prepared food from a restaurant, deli counter, or food truck is taxed.

Prescription medications and certain medical devices are also exempt. Over-the-counter medications like pain relievers or cold medicine are taxed, but prescription drugs are not. Insulin, diabetic testing supplies, and some mobility aids fall under exemptions as well, though the rules can be specific.

Clothing and shoes under $100 per item are exempt from sales tax in Texas. This is a state-level exemption that applies everywhere. A $99 shirt is tax-free; a $150 jacket is taxed on the full amount. Items like hats, belts, and accessories may have different rules depending on how they are classified.

Agricultural equipment, certain industrial machinery, and items purchased for resale by businesses also have exemptions. If you are a business owner, you can provide a resale certificate to avoid paying tax on inventory you plan to sell.

How sales tax affects your budget

Sales tax is a hidden cost that adds up quickly. On a $50 grocery bill, you might pay $4.13 in tax (at 8.25%), making your actual cost $54.13. Over a year, a family spending $10,000 on taxable goods pays $800 to $825 in sales tax depending on location. This is why understanding what is and is not taxed helps you plan spending.

Sales tax hits lower-income households harder because they spend a larger percentage of their income on taxable goods like food and clothing. Wealthier households spend more on services and investments that are not subject to sales tax. The exemptions for groceries and prescription medications help offset this burden somewhat, but the effect is still regressive.

If you are budgeting for a large purchase, remember to factor in sales tax. A car priced at $30,000 will cost you $2,475 more in tax (at 8.25%), bringing the total to $32,475. Furniture, appliances, and electronics all carry the same tax burden.

Sales tax on specific purchases in Texas

Gasoline is taxed at the pump. The 6.25% state rate plus local taxes applies to the price per gallon. A gallon costing $3.00 will include roughly 24 cents in state and local tax.

Utilities — electricity, water, and natural gas — are subject to sales tax in Texas. Your utility bill includes the tax as a line item. Internet and phone services are also taxed.

Vehicle purchases are taxed based on the sale price. When you buy a car from a dealer, sales tax is calculated on the full purchase price (or the trade-in value if you are trading in another vehicle). This is separate from vehicle registration fees and title fees, which are handled by the Texas Department of Motor Vehicles.

Haircuts and personal services are taxed. A $40 haircut will include sales tax. However, services like medical care, dental work, and veterinary services are generally not taxed.

Frequently Asked Questions

What is the highest sales tax rate in Texas?

The highest combined rate is 8.25%, which occurs in some cities and counties where both the city and county have added the maximum 2% local tax on top of the 6.25% state rate. The lowest rate is 7.25%, found in areas where only the county has added local tax or where local additions are minimal.

Do I pay sales tax on online purchases from Texas sellers?

Yes, if the seller has a physical presence in Texas or meets certain sales thresholds, they must collect and remit sales tax. Large retailers like Amazon, Walmart, and Target collect Texas sales tax on most items. Smaller online sellers may not, but the tax is technically still owed by the buyer.

Is there sales tax on groceries in Texas?

Unprepared groceries — items you take home and cook — are not taxed. This includes produce, meat, dairy, bread, and pantry staples. However, prepared foods from a deli, bakery section, or restaurant are taxed at the full rate.

Do I pay sales tax when I buy used items?

Yes, used items sold by a business or dealer are subject to sales tax. A used car from a dealership is taxed. However, private sales between individuals are generally not taxed, though this varies by item type and circumstance.

Can I get a refund of sales tax I paid?

No, sales tax is not refundable once you have paid it. If you return an item and receive a refund, the sales tax you paid is also refunded as part of that return. If you overpaid due to an error, you would need to contact the retailer or the tax authority to dispute it.