Texas has the most pro-consumer online sales tax cap in the nation — local taxes are capped at 2% maximum, so the state+local combined rate can never exceed 8.25%. Texas has no income tax and relies heavily on its 6.25% state sales tax + local revenues. Texas has one of the most generous back-to-school holidays nationally and multiple other tax holidays per year.

Texas sales tax overview

Component	2026 Rate
State sales tax	6.25%
Avg local add-on	1.95%
Avg combined	8.20%
Maximum combined	8.25%

Note: Texas caps local sales tax at 2% — combined max is 8.25%.

Texas sales tax by city

Combined state + local sales tax rates for major cities in Texas:

City	Combined Rate
Houston	8.25%
Dallas	8.25%
Austin	8.25%
San Antonio	8.25%

What's exempt in Texas

Groceries

Exempt from Texas state sales tax. Local jurisdictions may still tax.

Clothing & footwear

Taxed at standard rate.

Prescription drugs

Exempt from sales tax (typical across most states).

Texas sales tax holidays

During a sales tax holiday, qualifying items are exempt from Texas sales tax. Some local jurisdictions may opt out — check with retailers near you.

Back-to-School

1st Friday-Sunday of August

Clothing, footwear, backpacks, school supplies ≤$100/item

Energy Star

Memorial Day weekend

Energy Star products

Emergency Prep

Last weekend of April

Disaster prep supplies

How Texas sales tax is calculated

Sales tax in Texas is calculated by multiplying the pre-tax purchase price by the applicable combined rate. The formula is simple:

Sales Tax = Purchase Price × 8.20% (avg combined)

Total = Purchase Price + Sales Tax

The exact rate depends on where the purchase occurs — the state base rate (6.25%) plus any local city or county add-ons. Texas allows local jurisdictions to add their own taxes, so the rate varies by location.

Quick calculation examples at average rate 8.20%:

$100 item

$8.20 tax

$108.20 total

$250 item

$20.50 tax

$270.50 total

$500 item

$41.00 tax

$541.00 total

$1,000 item

$82.00 tax

$1082.00 total

Additional tax-free items in Texas

Beyond the standard exemptions, Texas also provides sales tax relief on these categories:

Groceries (unprepared food)

Prescription drugs

Agricultural equipment and farm supplies

Manufacturing equipment (Resale or manufacturing exemptions)

Medical devices and equipment

Electricity and natural gas for residential use

Exemptions may have conditions. Always verify with the Texas Department of Revenue for complete rules.

Texas sales tax in context: rates, history, and neighbors

Texas's 6.25% state sales tax (since 1990) plus a 2% local tax cap creates a maximum combined rate of 8.25% — Texas law strictly limits total local tax to 2%. Houston, Dallas, Austin, San Antonio, and Fort Worth all charge 8.25%. Smaller Texas cities and rural areas may have lower combined rates (6.25-7.5%). TX exempts groceries and prescription drugs. Texas has the most generous sales tax holiday calendar after Florida — back-to-school (early August), Energy Star (Memorial Day weekend), Emergency Preparedness (late April), Water-Saving Products (May). Compared to neighbors: Louisiana (~10.01%), Oklahoma (~8.97%), New Mexico (~7.6%), Arkansas (~9.44%) — Texas's 8.25% maximum is the lowest in the region. The 8.25% cap is consumer-friendly and rare among large states.

Online shopping & Texas sales tax

Texas enacted economic nexus — remote sellers with $500,000+ in Texas sales must collect Texas sales tax (higher threshold than the $100,000 standard). Texas also requires marketplace facilitators to collect on all third-party sales. Texas has its own nexus threshold calculation that considers total Texas revenue from all sales, making it slightly different from other states' rules.

Use Tax reminder: If you purchase taxable goods online from a seller who does NOT collect Texas sales tax, you technically owe Use Tax — the same rate as sales tax, reportable on your Texas state tax return. Use Tax enforcement on consumers is rare but the obligation exists for significant purchases.

How much Texas sales tax on common purchases?

Using Texas's average combined rate of 8.20%:

Purchase	Price	Sales Tax	Total
Grocery cart	$150	Exempt	$150.00
Clothing / shoes	$120	$9.84	$129.84
Prescription drug	$80	Exempt	$80.00
Smartphone	$999	$81.92	$1080.92
Laptop / tablet	$1,299	$106.52	$1405.52
New car ($35,000)	$35,000	$2870.00	$37870.00
Home appliance	$1,500	$123.00	$1623.00
Restaurant meal	$60	$4.92	$64.92

Based on Texas's average combined rate of 8.20%. Exact tax depends on city/county. Use our calculator above for specific locations and amounts.

Collecting sales tax in Texas: business guide

If you sell goods or taxable services to Texas customers, here's what you need to know:

Registration: Register for a Texas sales tax permit/license through the Texas Department of Revenue before making your first taxable sale. Most states process registrations online within a few days.
Economic nexus (online sellers): If you have $100,000+ in Texas annual sales or 200+ transactions, you must collect Texas sales tax even without a physical presence in the state — per South Dakota v. Wayfair (2018). You must collect both state (6.25%) and applicable local rates.
Destination vs origin sourcing: Texas uses destination-based sourcing for most sales — the tax rate where the buyer receives the goods applies. Always use the customer's delivery address to determine the rate.
Filing frequency: Frequency depends on your Texas sales volume — monthly for high-volume sellers, quarterly or annually for low-volume sellers. Check with the Texas Department of Revenue for your specific filing schedule.
Marketplace sales: If you sell through Amazon, Etsy, eBay, or similar platforms, the marketplace is required to collect and remit Texas sales tax on your behalf — you don't need to collect it separately on marketplace transactions.
Resale certificates: Businesses purchasing goods for resale can provide a Texas resale certificate to suppliers to avoid paying sales tax on wholesale purchases. Keep copies of all resale certificates for audits.

Streamlined Sales Tax (SST): Texas is not currently a member of the Streamlined Sales Tax (SST) Agreement — check Texas Department of Revenue for filing specifics.

Texas-specific business compliance details

Texas businesses register with the Texas Comptroller at comptroller.texas.gov for a Sales and Use Tax Permit (no fee). Filing frequency: monthly for $1,500+/month tax, quarterly for $500-$1,500, annually for under $500. Out-of-state sellers with $500,000+ in Texas sales must collect Texas tax (economic nexus, since October 2019 — Texas uses a higher threshold than most states' $100K). Marketplace facilitators collect Texas tax. Texas uses destination-based sourcing. The 2% local cap means businesses don't worry about runaway local rates. Texas franchise tax (separate from sales tax) applies to businesses with $2.47M+ revenue. Penalties: 5% of unpaid tax + interest.

Texas sales tax frequently asked questions

Why does Texas have a maximum 8.25% combined sales tax cap?

Texas law caps the total local sales tax at 2% — no city, county, transit authority, or special district combination can exceed 2% local tax. Combined with the 6.25% state rate, the maximum possible combined rate is 8.25% anywhere in Texas. This protects consumers and simplifies business compliance — you always know the maximum rate. Most Texas cities hit the 8.25% cap (Houston, Dallas, Austin, San Antonio all charge 8.25%).

Does Texas have a sales tax holiday for back-to-school shopping?

Yes — Texas's Back-to-School Sales Tax Holiday runs for three days (Friday-Sunday) in early August. Qualifying items: clothing and footwear under $100 per item (no limit on number of items), school supplies under $100 per item, and backpacks under $100 per item. Texas also has: an Energy Star appliance holiday (Memorial Day weekend), an Emergency Preparedness holiday (late April), and a Water-Saving Products holiday (May). These four holidays per year make Texas one of the most holiday-generous states.

How does Texas tax online purchases?

Texas requires online sellers with $500,000+ in Texas sales to collect Texas sales tax — a higher threshold than most states' $100,000. Texas uses destination-based sourcing, meaning the rate where the buyer receives the goods applies. For major online retailers (Amazon, Walmart, etc.), they automatically collect Texas tax at checkout. Texas's 8.25% maximum rate applies uniformly regardless of which Texas address the goods are shipped to.

Texas city paycheck calculators

If you live or work in a Texas city, see our city-specific paycheck calculators for take-home pay including any local income tax, plus local employer and cost-of-living context:

Dallas Paycheck

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