Yes, Texas has a sales tax, and it applies to most goods you buy in stores
Texas charges a state sales tax of 6.25 percent on most retail purchases. This is the baseline rate set by the state. However, the total tax you pay at checkout is usually higher because cities and counties add their own local sales taxes on top of the state rate. Your final tax bill depends on where you make the purchase — the city and county matter as much as the state.
The combined rate ranges from 8.25 percent to 8.875 percent in most populated areas, though some rural counties charge lower totals. Texas does not have a state income tax, so sales tax is one of the main ways the state funds schools, roads, and local services. Understanding which items are taxed and which are not can help you predict what you will actually pay.
Key Takeaways
- Texas state sales tax is 6.25 percent, but your total rate includes local taxes added by your city and county, typically bringing it to 8.25 percent or higher.
- Groceries and prescription medications are not subject to sales tax in Texas, but prepared foods and over-the-counter drugs are taxed.
- The tax rate you pay depends on where the sale occurs, not where you live, so buying in a different city can change your total cost.
- Online purchases from out-of-state sellers are increasingly subject to Texas sales tax, though the rules depend on the seller's size and structure.
How local taxes stack on top of the state rate
The 6.25 percent state rate is just the starting point. Cities can add up to 2 percent, and counties can add up to 2 percent as well. Some special districts — for transit, economic development, or other purposes — can add fractional amounts. This means a purchase in Austin might be taxed at 8.25 percent (state 6.25 + city 1 + county 1.25), while a purchase in Houston could be 8.875 percent (state 6.25 + city 2 + county 0.625).
The location of the sale is what matters, not where you live. If you live in a low-tax county but drive to a neighboring county to shop, you pay that county's rate. This is why some Texans strategically shop across county lines for large purchases, though the difference is usually small enough that convenience matters more than savings.
What is and is not taxed in Texas
Unprepared food — groceries like raw meat, vegetables, bread, and milk — is not taxed in Texas. This is true at the state level and remains true even when local taxes are added. Prescription medications are also exempt. However, prepared foods (restaurant meals, deli items, hot foods from a grocery store) are fully taxed at your local rate.
Over-the-counter medications, vitamins, and health supplements are taxed, even though prescription drugs are not. Clothing and shoes are taxed. Services like haircuts, car repairs, and plumbing are generally taxed, though the rules vary by service type. Digital goods — software, apps, e-books, streaming subscriptions — are increasingly taxed, though this is still evolving across different states and Texas continues to clarify its rules.
One common point of confusion: if you buy a prepared sandwich at a grocery store deli, it is taxed. If you buy the same ingredients separately and make the sandwich at home, the ingredients are not taxed. The distinction is whether the food is ready to eat.
Online purchases and out-of-state sellers
For many years, online purchases from out-of-state sellers were not subject to Texas sales tax unless the seller had a physical presence in Texas. This changed after a 2018 Supreme Court decision. Now, large online retailers — including Amazon, Walmart, and most major sellers — must collect and send Texas sales tax on purchases shipped to Texas addresses, even if the company is based elsewhere.
The rule generally applies to sellers with more than $500,000 in annual sales nationwide, though some states use different thresholds. Small sellers and marketplaces may not yet be required to collect Texas tax, which means you might not see tax added at checkout. However, Texas law technically requires you to pay "use tax" on untaxed purchases, though this is rarely enforced for individual consumers.
If you buy from a small out-of-state seller and no tax is collected, you are not required to track and report it on your personal return. The burden falls on the seller to register and collect, not on you to calculate what you owe.
Sales tax on specific categories
Vehicles are taxed at the point of sale, and the rate is your local combined rate. However, you may be able to reduce the taxable amount if you trade in an old vehicle — the tax applies to the net price after the trade-in credit. Gasoline is taxed, but the tax is built into the pump price and listed separately on your receipt.
Alcohol is subject to sales tax in addition to state excise taxes. Beer and wine have lower excise taxes than spirits, so your total cost varies by type. Tobacco products are taxed at the sales tax rate plus a separate state tax. Lottery tickets are not subject to sales tax, though your winnings are subject to income tax (and Texas has no state income tax, so federal tax only).
Rental property — hotel rooms, car rentals, equipment rentals — is taxed at your local rate. Some cities add an additional hotel occupancy tax on top of sales tax, so a hotel room can carry a combined rate of 10 percent or higher depending on the city.
How to find your exact local rate
The Texas Comptroller of Public Accounts maintains a sales tax rate lookup tool on its website. You enter your address or ZIP code, and it shows you the exact combined rate for that location. This is useful if you are moving, opening a business, or straightforward want to know the precise number for budgeting.
Rates change occasionally when cities or counties adjust their local rates, so the tool is kept current. If you are a business owner, you need to know the rate for every location where you sell, since you are responsible for collecting the correct amount. For consumers, knowing your rate helps you estimate the final price of large purchases.
Frequently Asked Questions
Do I pay sales tax on groceries in Texas?
No, unprepared groceries like meat, produce, bread, and milk are not taxed. However, prepared foods — deli items, hot foods, restaurant meals — are taxed at your full local rate. The distinction is whether the food is ready to eat when you buy it.
What is the difference between sales tax and use tax?
Sales tax is collected by the seller at the point of purchase. Use tax is a tax on items you buy from out-of-state sellers who do not collect sales tax. Legally, you owe use tax on those purchases, but it is rarely enforced for individuals. Large online sellers now collect Texas sales tax, so use tax matters less than it once did.
Why does Texas not have income tax?
Texas chose to fund state services through sales tax, property tax, and business taxes instead of taxing individual income. This is a state policy choice, not a federal rule. Because there is no state income tax, sales tax is a larger part of the state's revenue.
Do I pay sales tax on services like haircuts or car repairs?
Most services are taxed in Texas, including haircuts, repairs, and labor. However, some services are exempt — for example, certain medical services and some professional services. The rule depends on the specific type of service, so it is worth asking the provider if you are unsure.
Can I get a sales tax refund if I move out of Texas?
No, sales tax is not refundable once paid. If you buy something in Texas and then move, you do not get the tax back. However, if you buy something for resale or for a tax-exempt purpose, you may be able to avoid paying tax at the time of purchase by providing a resale certificate or exemption form.