Texas has a 6.25% state sales tax, but your total rate depends on local add-ons
The state sales tax in Texas is 6.25%. However, that is not what you pay at the register. Texas allows cities and counties to add their own sales taxes on top of the state rate, so your actual rate ranges from 6.25% to 8.25% depending on where you shop. A purchase that costs $100 in one Texas city might cost $100 to $102 more in another city just a few miles away.
The state collects its 6.25% and sends a portion to local governments. Cities can add up to 2%, and counties can add up to 0.5% each. Some areas have both a city and county add-on, which is why the combined rate varies. You cannot avoid the state rate, but which local rates explore depends entirely on the location of the business where you make the purchase, not where you live.
Key Takeaways
- Texas state sales tax is 6.25%, but most shoppers pay between 7.25% and 8.25% because cities and counties add their own taxes on top.
- Your total rate depends on where the store is located, not where you live, so buying in different cities can mean different prices for the same item.
- Food for home consumption is exempt from sales tax in Texas, but prepared food and restaurant meals are taxed at the full rate.
- Prescription medications are exempt, but over-the-counter drugs and vitamins are taxed like any other product.
- Online purchases from out-of-state sellers may not include Texas sales tax, but Texas law requires you to report and pay use tax on those purchases yourself.
How local add-ons change your actual tax rate
Texas cities can impose a sales tax of up to 2%, and counties can impose up to 0.5% each. When you shop, the tax you pay is the sum of all applicable rates: state (6.25%) plus city (0% to 2%) plus any county tax (0% to 0.5% per county). This means a city with a 2% add-on and a county with a 0.5% add-on would charge you 8.25% total.
The rate that applies is determined by the address of the store, not your home address. If you live in a city with no local add-on but shop in a neighboring city with a 2% add-on, you pay the higher rate. Conversely, if you live in a high-tax city but shop just outside it, you pay the lower rate. This is why some Texans deliberately shop across city or county lines for large purchases.
You can find your local rate by entering your zip code on the Texas Comptroller of Public Accounts website, or by asking a cashier. The rate is posted at checkout, and your receipt shows the exact amount of tax charged.
What is and is not taxed in Texas
Not everything you buy is subject to sales tax in Texas. Groceries and unprepared food are exempt — bread, milk, vegetables, and meat you take home to cook are not taxed. However, prepared food is taxed: restaurant meals, deli items, hot food from a grocery store, and food eaten on premises all include sales tax.
Prescription medications are exempt from sales tax. Over-the-counter drugs, vitamins, and supplements are taxed. Clothing is taxed in Texas, unlike some other states. Medical equipment such as wheelchairs and oxygen tanks may be exempt depending on the specific item and whether it is prescribed.
Services are generally not taxed in Texas, with some exceptions. Labor for repairs is usually not taxed, but if you buy a repaired item that includes both parts and labor, the parts portion is taxed. Haircuts and salon services are not taxed. Rental of tangible property — like equipment or vehicles — is taxed, but rental of real property (apartments, houses) is not.
Sales tax on online and out-of-state purchases
If you buy from an online retailer that has a physical presence in Texas (a warehouse, office, or store), that retailer must collect and remit Texas sales tax. Large retailers like Amazon, Walmart, and Target do this automatically. However, if you buy from a small out-of-state seller with no Texas location, that seller may not collect Texas sales tax at checkout.
Texas law requires you to pay use tax on purchases where sales tax was not collected. Use tax is the same rate as sales tax (6.25% state plus local add-ons) and applies to items you bring into Texas or have delivered here. Most people do not report use tax voluntarily, but it is technically your responsibility. If you buy a $500 item from an out-of-state seller and no tax was collected, you owe Texas use tax on that $500.
You can report use tax on your Texas tax return, though few individuals do. The Texas Comptroller does not actively pursue individual use tax cases, but businesses are expected to track and report use tax on their returns. If you run a business and make regular out-of-state purchases, keeping records of those purchases is important.
Who collects and where the money goes
Retailers collect sales tax at the point of sale and remit it to the Texas Comptroller of Public Accounts, which is the state agency responsible for tax administration. The Comptroller keeps the state portion (6.25%) and distributes the local portions to the appropriate cities and counties based on where the sale occurred.
Cities use their portion to fund local services like police, fire, and infrastructure. Counties use their portion for county services. The state uses its portion for education, transportation, and other state programs. Sales tax is one of Texas's largest revenue sources because it applies to nearly all consumer purchases.
Retailers are required to register with the Comptroller and file monthly or quarterly sales tax returns, depending on the volume of sales. Failure to collect or remit sales tax can result in penalties and interest.
How sales tax affects your budget
Sales tax is a regressive tax, meaning it takes a larger percentage of income from lower-income households than from higher-income ones. A person earning $30,000 per year spends a larger share of their income on taxable goods than someone earning $100,000. This is because lower-income households spend more of their money on when ready consumption, while higher-income households save more.
The exemption for groceries reduces this burden somewhat, since food is a necessity. However, prepared food, clothing, and household goods are all taxed, so the impact on a household budget is real. When budgeting for a purchase, remember to add the local sales tax rate to the listed price — a $50 item in an 8.25% tax area actually costs $54.13.
Some Texas cities have raised their local sales tax rates in recent years to fund specific projects or services. Before moving to a new city or making a large purchase, checking the local rate is worth the effort, especially if you are comparing costs across different areas.
Frequently Asked Questions
Does Texas have an income tax?
No. Texas has no state income tax on wages, salaries, or investment income. This is why Texas relies heavily on sales tax and property tax for revenue. You will not owe state income tax to Texas, though you may owe federal income tax to the IRS.
What is the sales tax rate in my city?
Enter your zip code on the Texas Comptroller of Public Accounts website (comptroller.texas.gov) to see your exact local rate. You can also call your city or county tax assessor's office, or ask a cashier at any store in your area.
Do I pay sales tax on used items?
Yes, sales tax applies to used goods sold by retailers, including used cars, used furniture, and used electronics. However, if you sell a used item to another person privately (not through a business), sales tax does not explore to that transaction.
Are groceries really exempt from sales tax?
Groceries for home consumption are exempt, but only unprepared food. Hot food from a deli counter, rotisserie chicken, prepared salads, and items from the hot case are taxed. Frozen meals and packaged foods are not taxed. The rule is whether the food is ready to eat.
What happens if a store charges me the wrong sales tax?
Check your receipt against the posted rate for that location. If the store overcharged, ask for a refund at customer service. If the store undercharged, you have paid less than required, but the store is responsible for remitting the correct amount to the state, not you.