Reverse Sales Tax Calculator of Texas for 2024

How 2024 Sales Tax are calculated in Texas

The state general sales tax rate of Texas is 6.25%. In addition to the state-level sales tax, cities and municipalities in Texas have the authority to levy their own sales tax rates. These local rates can add up to 2%, resulting in a combined maximum sales tax rate of 8.25% in certain regions.

Every 2024 combined rates mentioned above are the results of Texas state rate (6.25%), the county rate (0% to 1.5%), the Texas cities rate (0% to 2%), and in some case, special rate (0% to 2%).

An Overview of Texas Sales and Use Tax

Texas sales and use taxes play a vital role in funding state and local services. This overview provides key insights into the history, application, and requirements of these taxes to help businesses and individuals stay informed and compliant.

History of Texas Sales and Use Tax

Texas first implemented a sales tax in 1961 as a way to generate revenue for state and local government services. Over the years, the tax system has evolved, including the introduction of the use tax, designed to complement the sales tax by addressing transactions that occur outside of traditional retail settings.

What Is Sales Tax?

Sales tax in Texas is applied to the retail sale, rental, or lease of most physical goods and certain taxable services. The statewide base rate is 6.25%, but local jurisdictions can impose additional rates of up to 2%, making the maximum combined rate 8.25%. Retailers are responsible for collecting sales tax at the point of sale and remitting it to the state.

What Is Use Tax?

Use tax applies to the use, storage, or consumption of taxable items purchased outside of Texas or online when no sales tax was collected at the time of purchase. For instance, if you buy office equipment from a vendor in another state without being charged sales tax, you are required to report and pay the equivalent use tax to Texas.

Difference Between Sales and Use Taxes

The key distinction lies in how and where the tax is collected. Sales tax is charged and collected by Texas retailers at the time of the transaction. Use tax, on the other hand, is self-reported by the buyer when taxable items are purchased from out-of-state sellers who do not collect Texas sales tax. Together, these taxes ensure that all taxable purchases are fairly taxed, regardless of where they occur.

When to Collect Sales and Use Taxes

Businesses must collect sales tax when they sell taxable goods or services within Texas or ship taxable items to Texas customers. If you operate out of state but have a business presence (or "nexus") in Texas, you are also required to collect Texas sales tax on transactions with Texas customers. Similarly, if you sell taxable items to Texas residents and do not collect sales tax, they may owe use tax.

Failure to Collect Sales Tax

Failure to collect and remit sales tax can result in severe penalties, including fines, interest on unpaid taxes, and even legal action. Texas businesses must accurately track taxable sales and report them to avoid audits and compliance issues. Proper documentation and timely tax filings are essential to maintaining good standing with the Texas Comptroller's Office.

By understanding these aspects of Texas sales and use tax, businesses and consumers can stay compliant and contribute to the state's economic infrastructure.

Texas' effective sales tax rates over time

For more details, please refer to the official Texas Comptroller of Public Accounts.

Texas state rate(s) for 2024

Lowest possible rate: 6.25% (e.g., , Texas)
Other common rates: 6.3% .6.5%, 6.75%, 7%, 7.25%, 7.5%, 7.75%, 8%, 8.125%,
Highest possible rate: 8.25% (, Texas)
Average combined rate across Texas: 7.861%

Rates changes

Changes have been made to Texas's county, city and/or special rates in 2024 compared to 2023.

List of Texas cities and their changes (up to 15)

Other 2024 sales tax Facts for Texas

Most Recent Sales Tax Rate Update

The latest update to the sales tax rates was made in January 2024.