How to File and Pay Sales Tax in Texas in 2024

What is sales tax in Texas?

Texas charges both a state sales tax and local sales tax. However, the total Texas sales tax rate is capped at a maximum of 8.25% combined.

Here’s how the combined Texas sales tax rate breaks down:

• A base Texas state sales tax of 6.25%
• Local sales tax rates that range of up to 2%

However, Texas has a special rule for local sales taxes that applies only to remote sellers. Remote sellers can either charge the local use tax based on where an item is shipping or they can charge the Single Local Use Tax Rate, which is a use tax rate that Texas calculates at the beginning of the year that can be used by remote sellers state-wide. For 2024, that rate is 1.75%. That means you’ll always charge the same amount no matter where in Texas your buyers live.

Like many states, Texas has sales tax exemptions and lower rates for certain types of goods and services.

See the Texas Comptroller’s website for more information or use the Texas sales tax rate lookup schedule to find rates in specific localities.

What is the Texas food tax?

The food tax in Texas is a special sales tax exemption on the sale of most types of foods. However, there are some types of food that don’t qualify.

Examples of food that qualify for the Texas food tax exemption:

• Flour
• Dairy products
• Fruits and vegetables
• Meat, poultry, and fish
• Dairy products
• Breads and cereals
• Other foods (ex. Snack foods and non-alcoholic beverages)
• Food that needs to be reheated before eating
• Food that’s only been cut up, repackaged, or pasteurized (ex. Fruit or cheese trays)

Examples of food that doesn’t qualify for the Texas food tax exemption:

• Prepared food sold hot
• Hot drinks
• Ice and dry ice
• Any food sold with eating utensils
• Cold drinks sold with meals or with eating utensils
• Sandwiches (unless frozen)
• Food or drink from a vending machine
• Food or drink that can be eaten immediately sold by a restaurant or deli
• Food created at a store by combining two or more food ingredients

See the Texas food tax page for more information about what qualifies for the Texas food tax exemption and what doesn’t.

What is Texas’s restaurant sales tax rate?

Technically, Texas doesn’t currently have a lower or higher sales tax rate on restaurant food but  certain types of food sold by restaurants could be exempt from sales tax under the Texas food tax.

Restaurant purchases in Texas are typically taxed at the normal state sales tax rate of 6.25%. A local sales tax rate of up to 2% is added on top of this. However, because Texas has a sales tax exemption on grocery purchases, some types of food sold in restaurants qualify for this exemption.

Here are some examples of exemptions:

• Any meal purchased with a Lone Star card under the food stamp program is tax-free.
• Bakery items when sold without plates or eating utensils are tax exempt.

Learn more about the Texas restaurant tax here.

What is Texas’s clothing sales tax?

While the state doesn’t currently have a lower or higher Texas clothing sales tax, the state does have an annual sales tax holiday that allows residents to purchase clothing tax-free once a year during back to school time. Clothing and backpacks under $100 are tax free during Texas’ Annual Sales Tax Holiday every year.

Learn more about the Texas clothing tax during sales tax holidays here.

When do I need to collect sales tax in TX?

Remote or ecommerce sellers will be required to collect sales tax in Texas if and when their business achieves Texas sales tax nexus.

Here are the two ways you can achieve nexus in Texas:

Texas physical nexus

Texas nexus can be achieved through certain types of physical presence in the State of Texas. See below for more details around how Texas determines whether a business has physical nexus.

Texas economic nexus

Texas economic nexus is achieved when a business makes $500,000 in eligible sales in a calendar year in the state.

What is Texas’s physical nexus threshold?

Certain business activities create physical nexus in Texas. If you have physical nexus, you are required to collect and remit sales tax on all taxable sales that are shipped to Texas.

Examples of business activities that can create physical nexus in Texas include:

• A physical office or place of business
• An employee present in the state
• A place of distribution
• Warehouse or storage space
• Any place where business is conducted

Learn more about physical nexus in Texas.

What is the Texas economic nexus threshold?

Texas recognizes economic nexus for any vendor with $500,000 or more in gross revenue into the state in the previous 12 calendar months.

The dollar amount is based on gross revenue from sales of all taxable and nontaxable tangible personal property and services into Texas, including sales for resale and sales to exempt entities.

Any sales you make through a marketplace must also be included in the total.

Once you have economic nexus established, you will be obligated to collect sales tax from buyers in the state on the first day of the second month following the twelve-month period in which you met the threshold.

Learn more about economic nexus in Texas.

How does Texas work with marketplaces?

In Texas, marketplace facilitators are required to collect, report, and remit state and local sales tax on all sales through their marketplace if they’re doing more than $500,000 in sales in the state of Texas.

Individual sellers who make sales through a marketplace and also sell directly to consumers on other platforms must include all sales in their calculation towards their economic nexus status, including the sales made through the marketplaces.

See more about the requirements for marketplace sellers around Texas sales tax registration.

Selling online in Texas?

We help over 4,000 businesses remain sales tax compliant in Texas and other states. TaxCloud automatically collects sales tax at every transaction, files your sales tax returns automatically, and helps with audits so you don’t have to tackle them on your own.

Contact us to get started.

Are there any Texas sales tax holidays in 2024?

In 2024, there will be 4 Texas sales tax holidays.

1. Texas Emergency Preparation Supplies Sales Tax Holiday

• 2024 dates: April 27-29, 2024
• This Texas sales tax holiday allows residents to purchase certain emergency preparation supplies tax-free during the holiday.
• Examples of eligible items (full list):
  • Hurricane shutters and emergency ladders – $300 or less
  • Portable generators – $3,000 or less
  • Specified emergency preparation supplies – $75 or less

Learn more about the Texas Emergency Preparation Sales Tax Holiday here.

2. Texas Energy Star Sales Tax Holiday

• 2024 dates: May 25-27, 2024
• This Texas sales tax holiday allows residents to purchase certain ENERGY STAR products tax free.
• Examples of eligible items (full list):
  • Energy Star air conditioners – $6,000 or less
  • Energy Star refrigerators – $2,000 or less
  • Specified Energy Star products – any price

Learn more about the Texas Energy Star Sales Tax Holiday here.

3. Texas Water-Efficient Products Sales Tax Holiday

• 2024 dates: May 25-27, 2024
• This Texas sales tax holiday is meant to encourage consumers to buy water-efficient and water-conserving products.
• Examples of eligible items (full list):
  • Any WaterSense-labeled product – any price
  • Certain other water-conserving products – any price

Learn more about the Texas Water-Efficient Products Sales Tax Holiday here.

4. Texas Annual Sales Tax Holiday

• 2024 dates: August 9-11, 2024
• This Texas sales tax holiday encourages residents to buy clothing, footwear, school supplies, and backpacks.
• Examples of eligible items (full list):
  • Clothing and footwear – $100 or less
  • Specified school supplies – $100 or less
  • School backpacks – $100 or less

Learn more about the Texas Annual Sales Tax Holiday here.

Learn more: Sales Tax Holiday Master List (2024).

Is Texas a Streamlined Sales Tax (SST) member?

Currently, Texas is neither a full nor an associate member of the Streamlined Sales Tax (SST) project.

How do I register for a Texas sales tax permit?

Remote sellers who meet the requirements for Texas nexus must register online for a Texas sales tax permit. Here are the steps to do so:

• Read through Texas’ sales tax permit FAQ before you begin.
• Online registration: You can register for a Texas sales tax permit online here.
• Paper registration: If you would prefer to apply via mail, you can download a paper sales tax permit application and mail it to the Comptroller of Public Accounts/111 E. 17th St./ Austin, TX 78774-0100.

See the State of Texas’s Sales Tax info pages for more information on how to register for sales tax in Texas.