Texas has a statewide sales tax of 6.25 percent, plus local taxes that vary by county and city

Texas charges a state sales tax of 6.25 percent on most goods and some services. On top of that, your county and city may add their own local sales taxes. The total you pay at checkout depends on where you live. In some areas, the combined rate is as low as 8.25 percent. In others, it reaches 8.875 percent or higher. You cannot avoid this by shopping online if the seller has a physical location in Texas or meets certain sales thresholds — they must collect and send the tax to the state.

Texas does not have a state income tax, which is why the state relies heavily on sales tax to fund schools, roads, and other services. This means the sales tax burden falls more directly on what you spend than on what you earn.

Key Takeaways

  • Texas state sales tax is 6.25 percent, but your actual rate includes local taxes added by your county and city, which can range from 2 to 2.625 percent.
  • Groceries, prescription medications, and certain medical equipment are exempt from sales tax in Texas.
  • Online sellers must collect Texas sales tax if they have a physical presence in the state or meet federal sales thresholds, even if they are based elsewhere.
  • The tax applies to most tangible goods and an expanding list of services, including repairs, labor, and digital subscriptions in some cases.

What is and is not taxed in Texas

Sales tax in Texas applies to tangible personal property — anything physical you can touch and take home. Clothing, furniture, electronics, tools, and vehicles all get taxed. The tax also applies to labor and services in many cases: if you hire someone to repair your car, install flooring, or cut your hair, that service is taxable.

Several categories are exempt from sales tax. Groceries and food for home consumption are not taxed. Prescription medications are exempt. Medical equipment like wheelchairs, walkers, and oxygen equipment used by people with disabilities are not taxed. Certain agricultural items and equipment used directly in farming are also exempt. If you are buying items for resale — you own a store and are buying inventory — you can provide a resale certificate to avoid paying tax upfront, though you will collect it from your customers instead.

Services that are not taxed include most professional services like accounting, legal advice, and medical care. However, the line between taxable and non-taxable services has been shifting. Some digital services, including certain software subscriptions and streaming services, may be subject to tax depending on how they are classified.

Local sales taxes by county and city

Texas allows counties and cities to add their own sales taxes on top of the state rate. A county can add up to 2 percent. Cities can add up to 2 percent more. Some special districts — like public transportation authorities or hospital districts — can add another 0.5 percent. This means the total local addition can reach 4.5 percent in theory, though most areas fall between 2 and 2.625 percent.

The combined rate you pay depends entirely on your location. If you live in Houston, Harris County adds 1 percent and the city of Houston adds 1 percent, bringing the total to 8.25 percent. If you live in Austin, Travis County adds 1 percent and the city adds 2 percent, for a total of 9.25 percent. Rural areas with no local additions will have a rate of 6.25 percent. You can find your exact local rate through the Texas Comptroller's website or by asking a local business.

How sales tax is collected and reported

Sellers are responsible for collecting sales tax at the point of sale and sending it to the Texas Comptroller of Public Accounts. Most retailers collect the tax when you pay, and it appears as a separate line on your receipt. The seller then files a sales tax return, usually monthly or quarterly, reporting what they collected and sending the money to the state.

If you buy something in person at a store, the tax is calculated and collected immediately. If you order online from a Texas-based business or from an out-of-state seller that has a physical presence in Texas, the seller must collect and remit the tax. As of 2021, federal law also requires out-of-state sellers to collect Texas sales tax if they exceed certain sales thresholds — currently $500,000 in annual sales to Texas customers — even if they have no physical location here.

Tax on vehicles and other high-value items

Vehicle sales are taxed at the same 6.25 percent state rate plus local taxes. When you buy a car from a dealer, the tax is calculated on the purchase price and collected before you leave the lot. If you buy a used car from a private seller, you still owe sales tax — you pay it to the Texas Department of Motor Vehicles when you register the vehicle. The tax applies to the sale price, not the vehicle's book value.

Trade-ins reduce the taxable amount. If you buy a car for $20,000 and trade in your old car worth $5,000, you pay tax only on the $15,000 difference. This applies to other high-value items as well: if you trade in furniture or equipment toward a new purchase, the trade-in value reduces what you are taxed on.

What happens if you do not pay sales tax

If a seller fails to collect sales tax, the responsibility can fall on you as the buyer. The Texas Comptroller can pursue both the seller and the buyer for unpaid tax, though enforcement against individual consumers is rare. More commonly, if a business is audited and found to have not collected tax, the state will pursue the business for back taxes, penalties, and interest.

If you knowingly buy something without paying required sales tax — for example, buying from an unlicensed seller to avoid tax — you are technically liable. In practice, the state focuses enforcement on businesses rather than individual shoppers. However, if you are a business owner or reseller, keeping records of your purchases and tax payments is essential, as audits can result in significant penalties.

Frequently Asked Questions

Do I pay sales tax on groceries in Texas?

No. Food for home consumption, including meat, produce, dairy, and packaged groceries, is exempt from sales tax in Texas. However, prepared foods — restaurant meals, hot deli items, and food eaten on premises — are taxed. If you buy a sandwich from a deli counter to eat there, you pay tax. If you buy the same sandwich to take home, you do not.

What is the sales tax on clothes and shoes?

Clothing and shoes are subject to the full sales tax rate in Texas — 6.25 percent state tax plus your local taxes. There is no special exemption for clothing, unlike some other states. This applies to all clothing items, from underwear to coats to work uniforms.

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

Technically, yes — Texas law requires you to pay what is called a "use tax" on items you buy out of state and use in Texas. However, enforcement is minimal for individual consumers. The use tax rate matches your local sales tax rate. Businesses are more likely to be audited for unpaid use tax on equipment and inventory.

Are prescription drugs taxed in Texas?

No. Prescription medications are exempt from sales tax in Texas. Over-the-counter medications like aspirin and cold medicine are taxed as regular goods. If you present a valid prescription, the medication is not taxed, even if you buy it at a pharmacy that also sells taxable items.

How do I find the exact sales tax rate for my city?

The Texas Comptroller of Public Accounts maintains a sales tax rate lookup tool on its website where you can enter your address or zip code and see your exact combined state and local rate. You can also call your city or county tax assessor's office, or ask a local business what rate they charge.