Sales & Use Tax

Purpose

The sales and use tax (referred to herein as "sales tax") imposed on most taxable goods and services consists of a state sales and use tax, and a local sales and use tax. The state sales tax rate is 6.25% of the sale price of taxable goods and services, and this rate is uniformly applied to taxable retail transactions throughout the state. Local jurisdictions — including cities, counties, and some special districts — may also impose a local sales tax after voter approval, but the sum of all local sales taxes may not exceed 2% anywhere in the state. The maximum sales tax paid on a taxable item anywhere in Texas is 8.25%.

The imposition of a local sales tax must be approved by the voters residing in the jurisdiction in which the sales tax is to be imposed. Local sales tax revenues can be used for a variety of purposes — including general fund purposes, property tax relief, health care for the indigent, crime control, economic development, support of public libraries, emergency services, street maintenance, and support of public transit. 

Because of the variety in local sales tax options, not all Texans pay an 8.25% sales tax. Some might pay only a 6.75% rate; others might pay a 7.75% or 8.0% sales tax rate, depending on where they purchase a taxable item. This variation reflects the different types and levels of services approved by the voters to be funded by local sales taxes. Cities may levy a local sales tax of up to 2%; counties up to 2%; transit authorities up to 1%; and special districts up to 2%. State law governs the order in which these taxes take effect, so as not to exceed the 2% cap on the sum of all local sales taxes at any location in the state.

The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale. A portion of the sale may be exempt from the calculation of tax because sales tax laws usually contain a list of exemptions. Laws governing the tax may require it to be included in the price (tax-inclusive) or added to the price at the point of sale. Most sales taxes are collected from the buyer by the seller, who then remits the tax to the State of Texas.

Please reference the Texas Comptroller of Public Accounts for additional information on State Sales & Use Tax, as well as Local Sales and Use Tax. Telephone inquiries can also be made by dialing 1-800-252-5555.