The basics
| Rate | 6.25% state plus up to 2% local, 8.25% at most. Most in-state sellers charge the rate where their business is. Rate locator |
| Permit | Free. Needed if you sell taxable goods or services in Texas. Remote sellers once Texas revenue passes $500,000 a year. |
| Goods | Taxable unless exempt |
| Services | Taxable only if on the list of 16 below |
The 16 taxable services
Amusement. Cable TV. Certain personal services. Parking and storage. Repair and maintenance of tangible property. Telecommunications. Credit reporting. Debt collection. Insurance services. Information services (80%). Real property services. Data processing (80%). Commercial building repair and remodeling. Security. Telephone answering. Electricity delivery.
Tax Code 151.0101, Publication 96-259
Where businesses get it wrong
- Labor set to non-taxable. Repair labor, trip charges and freight are taxable when the job is taxable. 34 TAC 3.292, 3.303
- No certificate on file. Every untaxed sale needs a resale or exemption certificate, or it is presumed taxable. 34 TAC 3.285, 3.287
- Commercial vs home work. Commercial repair and remodeling is taxable, home work is not. 34 TAC 3.357
- Use tax skipped. Owed on taxable items bought without Texas tax and on inventory you use yourself. 34 TAC 3.346
Which certificate
| Customer | Get |
|---|---|
| Reseller | Form 01-339 front, with their 11-digit Texas permit number |
| Manufacturer, other exempt use | Form 01-339 back |
| Farm or ranch | Form 01-924 with a current Ag/Timber Number (all expire Dec 31, 2027) |
| Nonprofit | Form 01-339, only if Comptroller-approved |
| Government | Exempt automatically, keep the purchase order |
| Out of state | Proof of delivery outside Texas |
Take it at the time of sale. In an audit you get 90 days to produce missing ones. Keep them four years after the last sale. 34 TAC 3.285, 3.287, 3.281
Filing and paying
| Due | The 20th of the next month |
| How often | Monthly. Quarterly under $1,500 a quarter. Yearly under $1,000 a year, with approval. |
| Discounts | 0.5% for filing on time, plus 1.25% for prepaying a good estimate by the 15th |
| Basis | Cash or accrual, used consistently |
| Payment | WebEFT bank debit is free. Cards cost 2.25% plus 25 cents. |
Tax Code 151.401, 151.423 to 151.425, 34 TAC 3.286, 3.302, card fees
If something went wrong
| Late return | $50 |
| Late payment | 5% (1 to 30 days), 10% after 30 days, another 10% after a notice |
| Interest | Starts 60 days after the due date, 7.75% in 2026 |
| Audits | Usually four years back |
| Voluntary disclosure | Before the Comptroller contacts you. Four-year lookback, penalties and interest waived, except on tax collected but never sent in. |
Penalties, Interest, Voluntary Disclosure
Selling a business
A sale of all the operating assets is exempt. Before closing, request a Certificate of No Tax Due (Form 86-114), or the buyer can inherit the seller's unpaid sales tax. Tax Code 151.304, Publication 98-117
General information as of the review date, not advice for your facts. Rules have exceptions not shown here. Check the source or ask a CPA before acting.
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