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. When you buy something in a store or online, you pay that 6.25 percent on top of the price. But your total tax rate is usually higher because cities and counties add their own local taxes on top of the state rate.
The combined rate where you live can range from 6.25 percent to 8.25 percent, depending on which city and county you're in. A $100 purchase in one Texas city might cost $106.25 in tax, while the same purchase in another city costs $108.25. The difference comes from local add-ons that fund schools, transit, and other services in that area.
You pay sales tax on most goods — clothing, groceries, electronics, furniture. You do not pay it on certain items like prescription medications or medical equipment. Services like haircuts, car repairs, and plumbing are generally not taxed, though labor bundled with a product sometimes is.
Key Takeaways
- Texas state sales tax is 6.25 percent, but your actual rate includes local taxes added by your city and county, making the total between 6.25 and 8.25 percent.
- You pay sales tax at checkout on most goods, including groceries and clothing, but not on prescription drugs or most services.
- Online purchases from out-of-state sellers are subject to the same tax rate as in-store purchases if the seller has a physical presence in Texas.
- Businesses collect the tax at the register and send it to the state and local tax authorities each month.
- Your receipt shows the tax amount separately so you can see exactly what you paid in tax versus the item price.
How local taxes stack on top of the state rate
Texas cities and counties can each add their own sales tax on top of the 6.25 percent state rate. Most cities add between 1 and 2 percent. Most counties add a smaller amount. The combination of state, city, and county taxes creates your local rate.
Austin has a combined rate of 8.25 percent — the state 6.25 percent plus the city's 2 percent. Houston's rate is 8.25 percent as well, but the breakdown is different: the state 6.25 percent, the city's 1.25 percent, and the county's 0.75 percent. Dallas is 8.25 percent. San Antonio is 8.125 percent. Smaller towns may have lower combined rates.
When you buy something, the store's register automatically applies your local rate. You do not choose which rate applies — it is determined by the address where the transaction happens. If you buy something in Austin, you pay Austin's rate. If you drive to a neighboring county with a lower rate and buy the same item there, you pay that county's rate instead.
What items are taxed and what are not
Most physical goods are taxed: groceries, clothing, household items, electronics, furniture, and toys. The tax applies whether you buy in person or online from a seller that collects Texas tax.
Prescription medications are not taxed. Medical equipment prescribed by a doctor — like diabetic testing supplies or mobility aids — is also exempt. Certain foods sold for home consumption, like raw vegetables and meat, are not taxed, but prepared foods and restaurant meals are. Alcohol is taxed at the regular rate, though beer and wine also carry a separate excise tax.
Services are generally not taxed. A haircut, car repair, plumbing work, or dental cleaning does not have sales tax added. However, if you buy a service bundled with a product — like installation labor included in a furniture purchase — the taxable portion depends on how the business separates the charges on the receipt.
Online purchases and out-of-state sellers
If you buy from an online retailer that has a warehouse, office, or other physical location in Texas, that seller collects Texas sales tax on your order. Amazon, Walmart, Target, and most major retailers have Texas operations, so they charge you the tax rate for your delivery address.
If you buy from a small out-of-state seller with no Texas presence, they may not collect Texas tax at checkout. However, you are technically responsible for paying that tax yourself to the state — it is called "use tax" and works the same way as sales tax. In practice, most individuals do not report use tax on personal purchases, though the law allows the state to pursue it.
The safest approach is to assume any purchase will be taxed at your local rate. If a seller does not collect tax, you can ask them why, but do not count on a discount.
How businesses handle sales tax collection and payment
Retailers collect sales tax from you at the register and hold it temporarily. Each month, they add up all the tax they collected and send it to the Texas Comptroller of Public Accounts. The state then distributes the local portion to cities and counties.
Businesses need a sales tax permit from the state to collect tax legally. They also need to keep records of what they sold and how much tax they collected, in case the state audits them. If a business collects tax but does not send it to the state, they can face penalties and interest.
As a customer, you do not file anything or track sales tax yourself. The business handles all reporting. Your receipt shows the tax amount so you can see the breakdown, and that is your record if you need it for a return or dispute.
Sales tax rates by major Texas cities
| City | Combined Sales Tax Rate |
|---|---|
| Austin | 8.25% |
| Dallas | 8.25% |
| Houston | 8.25% |
| San Antonio | 8.125% |
| Fort Worth | 8.25% |
| Arlington | 8.25% |
| Corpus Christi | 8.25% |
| Plano | 8.25% |
These rates are current but can change if a city or county votes to adjust its local tax. Check the Texas Comptroller website or your city's tax office if you need the exact rate for a smaller town or if you are planning a purchase in a different area.
Why Texas has sales tax instead of income tax
Texas has no state income tax. Instead, the state funds schools, roads, and services through sales tax, property tax, and business taxes. This means your paycheck is not reduced by state income tax, but you pay tax every time you buy something.
The trade-off is that sales tax hits lower-income households harder because they spend a larger share of their income on taxable goods. Wealthier households spend less of their income on purchases and more on investments, which are not taxed the same way. This is why some people argue sales tax is less fair than income tax, but it is the system Texas uses.
If you move to Texas from a state with income tax, you will notice your paychecks are larger, but your total tax burden depends on how much you spend and what you buy.
Frequently Asked Questions
Do I pay sales tax on groceries in Texas?
Most groceries are not taxed — raw meat, produce, bread, and dairy are exempt. But prepared foods, restaurant meals, and items like candy and soda are taxed. Your receipt will show which items were taxed and which were not.
What is the difference between sales tax and use tax?
Sales tax is collected by the seller when you buy something. Use tax is what you owe if you buy something from out of state and the seller did not collect tax. Both rates are the same — your local combined rate — but use tax is your responsibility to report, not the seller's.
Can I get a refund on sales tax if I return something?
Yes. When you return an item, the store refunds both the price and the tax you paid. The refund appears on your receipt or credit card statement as a negative charge, reducing the tax the store owes to the state.
Do I pay sales tax on clothing in Texas?
Yes, all clothing is taxed at your local rate. There is no clothing exemption in Texas, unlike some other states. This includes shoes, accessories, and all apparel.
How do I find the exact sales tax rate for my city?
Visit the Texas Comptroller of Public Accounts website and use their sales tax rate lookup tool. Enter your city or zip code and it will show you the state, city, and county rates that explore to your address.