Texas charges sales tax at the point of sale, and the rate depends on where you buy

Texas has a state sales tax of 6.25 percent, but what you actually pay is almost always higher. Cities and counties add their own local sales taxes on top of the state rate. The total you see at checkout is the combination of all three layers — state, county, and city — stacked together. In some Texas cities, the combined rate reaches 8.25 percent or higher.

Sales tax in Texas applies to most goods you buy in a store or online, though some items are exempt. The tax is collected by the business at the register and sent to the state and local tax authorities. You do not file anything yourself as a buyer — the seller handles it all.

Key Takeaways

  • Texas state sales tax is 6.25 percent, but your actual rate includes city and county taxes added on top, ranging from 7.25 percent to 8.25 percent or higher depending on location.
  • Groceries, prescription medications, and medical devices are exempt from sales tax in Texas, but prepared foods and over-the-counter drugs are taxed.
  • Online purchases from out-of-state sellers are subject to Texas sales tax if the seller has a physical presence in Texas or meets federal economic nexus thresholds.
  • The business collects and remits sales tax to the state; you do not file a separate form as a buyer.

How local rates are built on top of the state rate

The 6.25 percent state rate is the floor. On top of that, your county adds a tax (usually 0.5 to 2 percent), and your city may add another (usually 0.5 to 1.5 percent). A few special districts — transit authorities, hospital districts — can add fractional amounts as well. The result is that your total rate depends entirely on your address.

For example, Austin's combined rate is 8.25 percent: 6.25 percent state, 1 percent county, and 1 percent city. Houston's rate is 8.25 percent as well, but the breakdown is different. A small town outside Dallas might be 7.25 percent. You can find your exact local rate by entering your address on the Texas Comptroller of Public Accounts website, or by asking a cashier.

If you buy something in one city and use it in another, you pay the tax rate of the city where you buy it, not where you live. This matters most for large purchases like furniture or appliances.

What is and is not taxed in Texas

Groceries — unprepared food you cook at home — are not taxed in Texas. This includes raw meat, vegetables, bread, milk, and canned goods. The rule is straightforward: if it is meant to be eaten at home, it is usually exempt.

Prepared foods are taxed. A sandwich from a deli counter, a rotisserie chicken, food from a restaurant, and hot items from a grocery store hot bar are all subject to sales tax. The distinction is whether the food is ready to eat.

Prescription medications are exempt, but over-the-counter drugs like cold medicine and pain relievers are taxed. Medical devices prescribed by a doctor — such as diabetic supplies or mobility aids — are exempt if you have a prescription, but general wellness items are taxed.

Clothing and shoes are taxed in Texas, with no exemption for children's clothing. Services like haircuts, repairs, and labor are generally not subject to sales tax, though some specific services (like pest control) may be taxed depending on how they are classified.

Sales tax on online and out-of-state purchases

If you order from an online retailer that has a warehouse, office, or other physical location in Texas, that seller must collect and remit Texas sales tax. Amazon, Walmart, Target, and most large retailers have Texas operations, so they charge you sales tax on Texas orders.

If you order from a small out-of-state seller with no presence in Texas, the seller may not charge you sales tax at checkout. However, Texas law requires you to pay use tax on those purchases — it is the same rate as sales tax, just collected differently. In practice, most individual buyers do not file use tax returns; it is primarily enforced against businesses. If you are curious whether a specific seller collects Texas tax, check their website or contact them directly.

The federal rule that triggers tax collection is called economic nexus. If an out-of-state seller ships enough orders to Texas customers in a year (the threshold is $500,000 in sales), they must register with Texas and collect tax. Most online sellers you recognize have already crossed that threshold.

Who collects and where the money goes

The business you buy from — the retailer, restaurant, or service provider — is responsible for collecting sales tax and sending it to the state. You do not receive a bill or file a form. The tax is built into the price you see at checkout.

The money collected goes to the Texas Comptroller of Public Accounts, which distributes it to the state general fund and to local governments. Cities and counties depend on sales tax revenue to fund schools, roads, police, and other services. The state uses its portion for education, healthcare, and infrastructure.

Businesses file sales tax returns monthly, quarterly, or annually depending on how much tax they collect. Large retailers file monthly; small businesses may file quarterly or annually. The Comptroller's office audits returns and can penalize businesses that do not pay what they owe.

Tax-free shopping days and exemptions

Texas holds a sales tax holiday each August, usually the first full weekend of the month. During this period, most clothing, shoes, and school supplies under $100 per item are sold without sales tax. The exact dates change each year, so check the Comptroller's website in July if you plan to shop.

Certain groups can get permanent exemptions. Nonprofits, schools, and government agencies can register for a resale certificate or exemption certificate, which allows them to buy goods without paying sales tax. Religious organizations may also may have access to. These are not available to individual shoppers.

If you are a business owner buying inventory to resell, you can provide a resale certificate to your supplier and avoid paying sales tax on the wholesale purchase. You then collect tax when you sell to the customer. This prevents double taxation.

What happens if a business does not collect or remit sales tax

If a business fails to collect sales tax from customers, the Comptroller can audit the business and demand payment of back taxes plus penalties and interest. Penalties range from 5 to 25 percent of the unpaid tax, depending on whether the failure was negligent or intentional. Interest accrues monthly.

If a business collects tax but does not send it to the state, that is considered theft of public funds in Texas and can result in criminal charges in addition to civil penalties. The Comptroller's office investigates these cases actively.

As a customer, you are not liable if a business fails to collect tax. Your only obligation is to pay use tax on out-of-state purchases, which is rarely enforced against individuals. If you suspect a business is not collecting tax, you can report it to the Comptroller's office online.

Frequently Asked Questions

Why is my receipt total higher than the price on the shelf?

The shelf price does not include sales tax. Texas law allows retailers to display prices before tax, so the final amount at checkout includes the state, county, and city sales taxes combined. The exact rate depends on your location.

Do I have to pay sales tax if I buy something out of state and bring it home?

No. If you buy something in another state and physically transport it to Texas, you do not owe Texas sales tax. However, if you order it online from an out-of-state seller and have it shipped to Texas, you may owe use tax — though this is rarely enforced for individual purchases.

Are there any items that are never taxed in Texas?

Yes. Unprepared groceries, prescription medications, and certain medical devices are always exempt. Some services like haircuts and repairs are also exempt. The Comptroller's website lists all exempt items, or you can ask a retailer about a specific product.

What is the difference between sales tax and use tax?

Sales tax is collected by the seller at the point of sale. Use tax is a backup tax you owe on purchases where sales tax was not collected — typically out-of-state online orders. Both are the same rate, but use tax is your responsibility to report, not the seller's.

Can I get a refund of sales tax I already paid?

No. Sales tax is final once the transaction is complete. If you return an item, the store refunds the full amount including tax. If you believe a business overcharged you, contact the business first; if they do not resolve it, you can file a complaint with the Comptroller's office.