Texas has a statewide sales tax of 6.25 percent, but your total rate depends on local taxes

The state sales tax in Texas is 6.25 percent. However, most Texas cities and counties add their own local sales tax on top of that. Your actual rate at checkout ranges from 6.25 percent (state only, in rare unincorporated areas) to as high as 8.25 percent in some cities. The rate you pay depends on where you make the purchase, not where you live.

When you buy something in a store or online, the merchant charges you the combined rate for that location. If you buy the same item in Houston versus San Antonio, you will pay different total amounts because each city has different local tax rates. The state collects the 6.25 percent and sends a portion to cities and counties based on where the sale happened.

Key Takeaways

  • Texas state sales tax is 6.25 percent, but cities and counties add local taxes that raise the total to between 6.25 and 8.25 percent depending on location.
  • The rate you pay is determined by where you make the purchase, not by where you live or where the business is headquartered.
  • Most Texas cities charge between 1 and 2 percent in local sales tax on top of the state rate.
  • Groceries, prescription medications, and some medical equipment are exempt from sales tax in Texas.

How local sales taxes work in Texas cities and counties

Texas allows cities and counties to set their own local sales tax rates within limits set by state law. A city can impose up to 2 percent in local sales tax, and a county can impose up to 2 percent. When both a city and county tax apply to the same purchase, they stack on top of each other and the state rate.

For example, if you buy something in Austin, you pay 6.25 percent state tax plus 2 percent city tax plus 0.125 percent county tax, for a total of 8.375 percent. In Dallas, the rate is 8.25 percent (6.25 state plus 2 city). In some smaller towns with no local tax, you pay only the 6.25 percent state rate. You can find your exact local rate by entering your address on the Texas Comptroller's website or by asking a business in your area.

What is and is not taxed in Texas

Most items you buy in stores are subject to sales tax. Clothing, electronics, furniture, and restaurant meals all have sales tax added at checkout. However, Texas law exempts certain items from sales tax entirely.

Groceries and food for home consumption are not taxed. This includes bread, milk, vegetables, meat, and canned goods you buy to cook at home. Restaurant meals and prepared foods are taxed. Prescription medications are also exempt. Over-the-counter medicines like cold medicine or pain relievers are taxed, but medications you get with a prescription are not. Medical equipment prescribed by a doctor, such as wheelchairs or diabetic supplies, is exempt. Diapers and feminine hygiene products became exempt starting January 1, 2024.

Sales tax on online purchases and out-of-state orders

Online retailers must collect and send Texas sales tax on orders shipped to a Texas address. This applies whether the retailer is based in Texas or elsewhere. If you order from an out-of-state website and it ships to your Texas home, you pay the sales tax rate for your location in Texas.

The only exception is if the retailer has no physical presence in Texas and does not meet certain sales thresholds. Most major online retailers now collect Texas sales tax. If a retailer did not collect tax on your purchase, you are technically required to report it on your Texas tax return, though this is rarely enforced for individual purchases.

How to find your specific sales tax rate

Your sales tax rate depends on your exact address, including your city and county. The Texas Comptroller of Public Accounts maintains a sales tax rate lookup tool on its website. You can enter your street address and see the combined state, city, and county rate that applies there.

You can also call a local business in your area or visit your city or county tax assessor's office. Many businesses post their local sales tax rate on receipts or on their websites. If you are moving to a new city in Texas or shopping in a different area, checking the rate beforehand can help you understand what you will pay.

Sales tax on vehicles and major purchases

When you buy a car in Texas, sales tax is calculated on the purchase price and collected by the Texas Department of Motor Vehicles when you register the vehicle. The rate is the combined state and local rate for the county where you register the vehicle, not where you bought it. If you buy a car in one county and register it in another, you pay the tax rate of the registration county.

Trade-in value reduces the taxable amount. If you buy a car for $20,000 and trade in a vehicle worth $5,000, you pay sales tax only on the $15,000 difference. This applies to vehicle purchases but not to most other large purchases like furniture or appliances, which are taxed on the full price.

Frequently Asked Questions

What is the highest sales tax rate in Texas?

The highest combined sales tax rate in Texas is 8.25 percent, found in some cities and counties that impose the maximum local taxes allowed. Some areas reach 8.375 percent when both city and county taxes apply. You can check your specific rate using the Texas Comptroller's lookup tool.

Do I pay sales tax on groceries in Texas?

No. Groceries and food for home consumption are exempt from sales tax in Texas. This includes produce, meat, dairy, bread, and canned goods. Restaurant meals and prepared foods are taxed, but items you buy to cook at home are not.

Is sales tax the same everywhere in Texas?

No. The state rate is 6.25 percent everywhere, but cities and counties add different amounts. Your total rate depends on your exact location. Two cities just a few miles apart can have different rates.

Do I have to pay sales tax on online orders from out of state?

Yes, if the order ships to a Texas address. Most major online retailers collect Texas sales tax on orders shipped to Texas, regardless of where the retailer is located. The rate charged is based on your delivery address in Texas.

What happens if a store doesn't charge me sales tax?

The store is required by law to collect sales tax. If it does not, you can report it to the Texas Comptroller. As a customer, you are not responsible for the store's failure to collect tax, though Texas law technically requires you to report untaxed purchases on your state return.