Texas charges a base sales tax of 6.25 percent on most goods and services

Texas has no state income tax, so the state relies on sales tax to fund government services. When you buy something in Texas, you pay 6.25 percent in state sales tax on top of the price. Most cities and counties add their own local sales tax on top of that, which ranges from 0.125 percent to 2 percent depending on where you live. Your total sales tax rate — what you actually pay at checkout — is the combination of state plus local taxes.

The 6.25 percent state rate applies statewide. A city or county can choose to add local tax, so the total you pay varies by location. For example, in Austin the combined rate is 8.25 percent (6.25 state plus 2 local), while in some rural areas it may be only 6.25 percent if no local tax is added. You can find your exact local rate by entering your address on the Texas Comptroller of Public Accounts website or asking a local business.

Key Takeaways

  • Texas state sales tax is 6.25 percent on most purchases, with local taxes adding 0.125 to 2 percent on top depending on your city or county.
  • Groceries, prescription medications, and certain medical equipment are exempt from sales tax in Texas.
  • Services like haircuts, repairs, and professional fees are generally not taxed, though some services tied to goods (like installation) may be.
  • You pay sales tax at the point of sale for in-person purchases; online purchases are taxed based on the seller's location or your delivery address depending on the retailer's policy.
  • The tax is collected by the business and sent to the state and local governments, not paid separately by you.

What is and is not subject to sales tax in Texas

Not everything you buy is taxed. Texas exempts groceries — items you buy at a grocery store to cook at home — from sales tax. This includes bread, milk, vegetables, meat, and canned goods. Restaurant meals and prepared foods are taxed, even if you take them home. The difference is whether the food is ready to eat or raw ingredients.

Prescription medications are also exempt. Over-the-counter drugs like cold medicine or pain relievers are taxed, but prescription drugs filled by a pharmacist are not. Medical equipment prescribed by a doctor — such as wheelchairs, diabetic testing supplies, or hearing aids — is typically exempt as well, though you may need to provide a prescription or doctor's letter to the seller.

Services are generally not taxed in Texas. A haircut, car repair, plumbing work, or dental cleaning is not subject to sales tax. However, if you buy a service that includes a physical product — like installation of carpet or a new roof — the labor may be tax-free but the materials are taxed. Ask the business to break down the invoice if you are unsure which part is taxed.

How local sales tax rates are set and vary by location

Texas cities and counties can vote to add local sales tax on top of the state rate. A city might add 1 percent, a county might add 0.5 percent, and a transit authority might add another 0.125 percent. These are separate votes and separate taxes, so they stack. The total you pay depends on which city and county you are in when you make the purchase.

Local tax rates change when a city or county holds a new vote to raise or lower the rate. These changes are not frequent, but they do happen. If you move or shop in a different part of Texas, your rate will be different. The Texas Comptroller website has a tax rate lookup tool where you can enter a specific address and see the exact combined rate for that location.

Sales tax on online and mail orders

Online retailers are required to collect sales tax on orders shipped to Texas addresses. The rate applied is based on where the item is being delivered, not where the retailer is located. So if you order from a company in California and have it shipped to your home in Houston, you pay Houston's combined sales tax rate.

Some older online retailers may not collect Texas sales tax at checkout, though this is becoming less common. If tax is not collected at purchase, you may owe it when you file your Texas tax return, though most individual shoppers do not report this. The safest approach is to assume tax will be charged and budget for it.

Who collects sales tax and where the money goes

The business you buy from — the store, restaurant, or online retailer — collects the sales tax from you at the point of sale. They hold onto the tax and send it to the state and local governments on a regular schedule, usually monthly or quarterly depending on the business size. You do not send the tax directly to the government; the business handles that.

The state keeps the 6.25 percent state portion and distributes it to state agencies and programs. Local governments — cities, counties, transit authorities, and special districts — keep their portion and use it for schools, roads, police, and other local services. The split between state and local varies depending on what local taxes are in effect in your area.

Sales tax on vehicles and large purchases

When you buy a car in Texas, sales tax is calculated on the purchase price. The tax rate is the combined state and local rate for the county where you register the vehicle, not where you buy it. If you buy a car in one county and register it in another, you pay the tax rate of the registration county. You typically pay this tax at the time of registration with the Texas Department of Motor Vehicles, not at the dealership.

Trade-ins reduce the taxable amount. If you trade in a vehicle worth $5,000 and buy a car for $20,000, you pay sales tax only on the $15,000 difference. This is called the trade-in credit and applies to most vehicle purchases in Texas.

Frequently Asked Questions

Do I pay sales tax on used items bought from a private person?

No. Sales tax applies only to purchases from a business. If you buy a used car, furniture, or clothing from another individual, there is no sales tax. However, if you buy from a used goods store or pawn shop, sales tax applies because those are businesses.

What if a business charges me the wrong sales tax amount?

Keep your receipt and contact the business. Most errors are honest mistakes and the business will issue a refund or credit. If the business refuses, you can file a complaint with the Texas Comptroller of Public Accounts, though they handle business compliance rather than individual refunds.

Are there sales tax holidays in Texas?

Yes. Texas holds a back-to-school sales tax holiday in early August when clothing, shoes, and school supplies under certain price limits are not taxed. The state also offers a disaster relief sales tax holiday after declared emergencies. Check the Texas Comptroller website for exact dates and what items may have access to.

Do I owe sales tax if I buy something online from outside Texas?

If the retailer ships to your Texas address, they should collect Texas sales tax. If they do not, technically you owe it, but most individual shoppers do not report it. Large purchases or business buys are more likely to be audited for this.

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

No. The price on the shelf or online is before tax. Sales tax is added at checkout. This is why your total bill is higher than the marked price.