Still paying your Texas sales tax in cash? Here’s how rounding works now.

If your business still pays Texas sales tax bills in cash, this matters. With U.S. penny production ending, Texas clarified when and how cash payments and cash transactions can be rounded.

Alex_Lamachenka_TaxCloud

Written by Alex Lamachenka

Head of DemandGen

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Key points

  • Sales tax is still calculated to the penny, even if pennies are unavailable.
  • Cash payments may be rounded only within narrow limits.
  • Rounding errors beyond those limits can still trigger additional tax.

What’s changing

The U.S. has ended penny production after more than 230 years. As pennies become harder to obtain, the Texas Comptroller clarified how sellers should handle rounding for cash transactions and cash tax payments when exact change is not available.

Why this matters

Cash-based sellers face more compliance risk as pennies disappear from circulation. Texas is signaling that rounding the amount collected is acceptable in limited cases, but the underlying tax calculation must remain exact. Poor rounding controls could still create audit issues.

What Texas is saying

  • Sales tax must always be calculated on the full sales price before rounding
  • The full calculated tax amount must be remitted to the Comptroller
  • If exact change cannot be collected, the total amount paid in cash may be rounded
  • Rounding that changes the total by $0.04 or less will not be adjusted
  • Rounding by more than $0.04 can result in additional tax due
  • These rules apply only to cash transactions, not electronic or check payments

Cash payments to the Comptroller

  • Pennies are still accepted while they remain legal tender
  • If pennies are unavailable, cash tax payments may be rounded down to the nearest nickel
  • Rounding is applied to the total amount due, not individual tax periods
  • Electronic and check payments are still processed to the penny

Who this affects

  • Texas retailers that still accept cash
  • Businesses that pay Texas sales tax bills in cash
  • Sellers with manual cash-handling or in-store POS processes
  • Businesses with audit exposure tied to rounding practices

Next steps for sellers

  • Review how your business handles cash rounding at checkout
  • Confirm staff are not rounding the tax calculation itself
  • Document rounding policies for audit defense
  • Consider electronic tax payments to avoid rounding edge cases