2024 Guide to Sales Tax in Austin, Texas

What is the Sales Tax in Austin?

Austin has a combined sales tax rate of 8.25%. In Texas, the sales tax rate can consist of three different sales tax rates:

• The Texas state sales tax rate: 6.25%
• A Travis County sales tax rate: 0%
• Any special sales tax rates – these are charged to fund district-wide initiatives: 1%

What is Travis County Sales Tax?

Travis County’s sales tax rate is 0.00%. Often, county sales tax rates are lower than the sales tax rate charged in cities within that county. This is because some cities might charge additional rates or be subject to a special tax rate that only applies to certain cities in that county.

In Travis County, the amount charged from one city to another can vary considerably due to some cities charging a higher rate.

Tax Rates in Austin, Texas

Wondering how much sales tax rates vary in Austin? Here’s a list of the top 10 zip codes in Austin and the sales tax rates they charge by zip code.

Other Tax Rates for Austin

We’ve now shared the main tax rates for Austin. Here are some other tax rates that you might have to charge in that city and state.

What Items are Taxable in Austin?

In Texas, not all items are taxable. For example, in many states, prescription drugs are exempt from sales tax. The best way to ensure you’re charging taxes on the right items is to add a Tax Information Code (TIC) to all the items you’re selling so that the correct tax is charged. A TIC is a number assigned to a category of goods or services.

Here is a list of some of the things that are taxable in Austin:

What Items are Exempt from Taxes in Austin?

In Texas, there are a number of items that are exempt from taxes. States typically make items tax exempt to encourage their purchase or because the items are essentials.

The easiest way to make sure you don’t accidentally charge sales tax on an item that’s exempt is to add a Tax Information Code (TIC) to all your items. A TIC is a number that groups similar goods or services into one category.

Here is a list of some of the things that are tax exempt in Austin:

Who Needs to Collect Sales Tax in Austin?

A business only needs to collect sales tax in Austin if they have either achieved physical nexus or economic sales tax nexus in Texas.

How do you do that? By making sales to residents of Travis County or another city in Texas either by having a physical presence in Texas or doing a certain amount in sales to residents of Texas in a year.

What is Physical Nexus in Texas?

Physical nexus in Texas essentially just means that your business has a physical presence of some kind in the state. This isn’t just something you qualify for if your headquarters are in the state – there are a lot of ways that out-of-state sellers can have a physical presence in Texas despite being based elsewhere.

What is Economic Nexus in Texas?

So, what if you don’t have any physical ties to the state? In Texas, you can have economic nexus in the state simply by making $500,000 worth of sales in the state in a year.

How you qualify for economic nexus in Texas (full details):

• You need to count all sales made by your business into Texas, including wholesale sales, towards your $500,000 economic nexus threshold.
• The only exception is that you don’t have to count sales you made through a qualifying marketplace where the marketplace facilitator is collecting taxes on your behalf.
• When you meet the threshold for economic nexus, you need to register for sales tax in Texas immediately and begin collecting and remitting sales taxes in Texas.

How to Get a Sales Tax Permit in Austin?

If you reach either physical or economic nexus, you’ll need to get a sales tax permit in Texas for all your sales across the state, including in Austin. Getting your sales tax permit is easy and free.

Here are the steps:

1. Go to the Texas Department of Tax and Fees website.
2. Answer a few questions about your business.
3. Allow the wizard to identify what permits you need and register you for them.
4. That’s it!

See the State of Texas’s Sales Tax website for more info.

How Do You Charge the Right Amount for Sales Tax in Austin?

Want to make sure you charge the right amount in sales tax in Austin? Since there are cities in Travis County that charge different rates, it can be complicated to ensure you always charge the right amount – especially on remote sales.

Here’s how to stay sales tax compliant:

1. Manually check and input rates: Managing your sales taxes yourself is possible since the state’s website will keep you updated on sales tax rates in cities across the state. However, there are a lot of cities in Travis County, let alone across the whole state. Sales tax rates also could change at various times in the year and charging the wrong amount could be a costly mistake. Checking monthly and updating your local, district and tax rates in your ecommerce platform is necessary to make sure you’re always charging the right amount in sales tax.
2. Use a sales tax compliant software solution: Doing things manually isn’t just time-consuming but it’s also no longer necessary. There is affordable sales tax compliance software like TaxCloud that automates everything for you. Why track and update sales tax rates in every tax jurisdiction you are required to collect taxes in when you can outsource that work?

How Do You File and Remit Sales Tax in Austin?

Wondering if you need to file sales tax returns in the city or county of Austin? Thankfully, the answer is no. If you have sales tax nexus in Texas, you can collect sales taxes from across the state and file just one state-wide return. When you remit the sales tax you collected to the State of Texas, they’ll then remit those funds to whatever city, district, or county where those taxes were collected.

Wish you didn’t have to spend so much time filing your Texas sales taxes? TaxCloud can help. We can automate your end-to-end sales tax management process from tracking your progress towards nexus in every state and registering for sales tax to filing your sales taxes. TaxCloud takes filing sales taxes off your plate so that you can focus on growing your business.

Find out how TaxCloud can help your business make sales taxes simple.