Sales and Use Tax in Texas FAQ
1. What is the sales tax rate in Texas?
Texas has a state sales tax rate of 6.25%. However, local jurisdictions (cities, counties, transit authorities) can add an additional local sales tax, bringing the total combined rate to a maximum of 8.25%.
2. What types of goods and services are subject to sales tax in Texas?
Most tangible personal property and some services are subject to sales tax in Texas.
3. Are there any exemptions to sales tax in Texas?
Yes, there are exemptions for certain items like groceries, prescription drugs, and some essential services like educational instruction. A complete list can be found on the Texas Comptroller’s website.
4. What about online purchases? Do I need to pay sales tax in Texas?
Generally, yes. Texas requires online retailers with an economic nexus in the state to collect and remit sales tax on taxable purchases made by Texas residents.
5. What is a "sales tax holiday" in Texas?
Texas offers periodic sales tax holidays where certain items, like school supplies or energy-efficient appliances, are temporarily exempt from sales tax.
6. What is the difference between sales tax and use tax in Texas?
Sales tax is collected at the point of purchase, while use tax applies to taxable items purchased out-of-state for use in Texas. You are responsible for reporting and paying use tax on these items.
7. How do I report and pay use tax in Texas?
You can report and pay use tax when you file your Texas tax return.
8. What happens if I don't pay sales or use tax that I owe in Texas?
Penalties and interest may be applied to unpaid sales or use tax.
9. Where can I find a list of current sales tax rates in different Texas localities?
The Texas Comptroller’s website provides a searchable database of local sales tax rates by zip code: https://comptroller.texas.gov/taxes/sales/
10. I'm a business owner. Do I need to collect sales tax in Texas?
If your business is located in Texas or has an economic nexus in the state (e.g., selling to Texas residents online), you are generally required to register for a sales tax permit and collect sales tax on taxable sales.
11. How do I register for a sales tax permit in Texas?
You can register for a sales tax permit online through the Texas Comptroller’s website.
12. How often do I need to file sales tax returns in Texas?
The frequency of sales tax return filing depends on your business’s sales volume. The Texas Comptroller website provides more information on filing requirements.
13. I'm not sure if a specific good or service is taxable in Texas. Where can I find out?
The Texas Comptroller website offers guidance on taxable items and exemptions: https://comptroller.texas.gov/taxes/sales/
14. Are there any resources available to help me understand the sales and use tax laws in Texas?
The Texas Comptroller’s website provides a wealth of information on sales and use tax, including publications, FAQs, and online tutorials.
15. Can I get help from a tax professional regarding sales and use tax in Texas?
Yes, a tax professional can help you understand your specific tax obligations and ensure compliance with Texas sales and use tax laws.
16. What are the penalties for not collecting or remitting sales tax that I'm required to collect in Texas?
Penalties and interest can be imposed by the state for failure to collect or remit sales tax. Additionally, you may be liable for the unpaid tax itself.
17. I'm moving to Texas from another state. Do I need to worry about sales and use tax on my belongings?
Generally, no. Sales or use tax typically doesn’t apply to the transportation of your personal belongings to your new residence in Texas.
18. I'm buying a car from a private seller in Texas. Do I need to pay sales tax?
Yes, you are typically responsible for paying sales tax on the purchase price of a vehicle in Texas.
19. I'm a non-resident visiting Texas. Do I need to pay sales tax on purchases I make while here?
Yes, you are responsible for paying sales tax on taxable purchases you make while visiting Texas.
20. What are some common sales tax mistakes businesses make in Texas?
- Not registering for a sales tax permit when required
- Collecting sales tax on exempt items
- Failing to file sales tax returns or pay taxes on time
- Not properly claiming sales tax deductions