The 2016 Texas State Sales Tax
What is the 2016 Texas Sales Tax Rate?
The Texas state sales tax rate is 6.25%, and the average TX sales tax after local surtaxes is 8.05%.
- Groceries, prescription drugs and non-prescription drugs are exempt from the Texas sales tax
- Counties and cities can charge an additional local sales tax of up to 2%, for a maximum possible combined sales tax of 8.25%
- Texas has 2176 special sales tax jurisdictions with local sales taxes in addition to the state sales tax
- Texas has a lower state sales tax than 76.9% of states
Counties and cities in Texas (as well as other jurisdictions such as transit authorities) are allowed to charge an additional local sales tax on top of the Texas state sales tax. All medicine and groceries are exempt from all sales taxes, and automobile and boat sales are only subject to state sales tax (not local or municipal sales taxes). Lodging and hotels are taxed at a special state rate of 6%, although local governments can add to this amount.
As a reward remitting sales tax payments on time, merchants are allowed to keep 1/2% of the sales tax they collect on behalf of Texas every quarter.
Texas has one sales tax holiday every year. A one-weekend-long "back to school" tax holiday in the beginning of August allows for the tax-free purchase of all school supplies and clothing articles under $100.
If you are a Texas business owner, you can learn more about how to collect and file your Texas sales tax return at the 2016 Texas Sales Tax Handbook .
Texas Sales Tax Exemptions
Texas doesn't collect sales tax on purchases of most non-prescription drugs, prescription drugs and groceries. In most states, necessities such as groceries, clothes, and drugs are exempted from the sales tax or charged at a lower sales tax rate.
Some items may not be eligible for these reduced sales tax rates, such as expensive clothing, unhealthy food or drinks like soda, and certain non-essential pharmaceuticals. Texas does not treat candy or soda as groceries, which means they are not subject to reduced grocery sales tax rates. Other items including gasoline, alcohol, and cigarettes are subject to various Texas excise taxes in addition to the sales tax.
Texas has six sales tax holidays, during which certain items can be purchased sales-tax free. For more details, see the Texas sales tax holiday calendar.
In some states, items like alcohol and prepared food (including restaurant meals and some premade supermarket items) are charged at a higher sales tax rate. The TX sales tax applicable to the sale of cars, boats, and real estate sales may also vary by jurisdiction. Texas's sales tax rates for commonly exempted items are as follows:
$100 Restaurant Dinner
$100 of groceries
$100 in clothes
$100 of consumer products
$6.25 sales tax
$0.00 sales tax
$6.25 sales tax
$6.25 sales tax
Texas Sales Tax Exemption Certificate
Unlike a Value Added Tax (VAT), the Texas sales tax only applies to end consumers of the product. Individuals and companies who are purchasing goods for resale, improvement, or as raw materials can use a Texas Sales Tax Exemption Form to buy these goods tax-free.
Companies or individuals who wish to make a qualifying purchase tax-free must have a Texas state sales tax exemption certificate, which can be obtained from the Texas Comptroller of Public Accounts . On making an exempt purchase, Exemption Certificate holders may submit a completed Texas Sales Tax Exemption Form to the vendor instead of paying sales tax.
Sales tax exemption forms (as well as business sales tax id applications, sales tax returns, and the full Texas sales tax code) can be downloaded from the Texas Comptroller of Public Accounts here .
Texas Sales Tax Calculator
Whenever you make a purchase at a licensed Texas retailer, your sales tax will be automatically calculated and added to your bill. To lookup the sales tax due on any purchase, use our Texas sales tax calculator.
Texas Use Tax
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If you buy goods and are not charged the Texas Sales Tax by the retailer, such as with online and out-of-state purchases, you are supposed to pay the 6.25% sales tax (less any foreign sales tax paid) for these items yourself as the Texas Use Tax.
Your are expected to voluntarily list your liable purchases on a Texas Use Tax Return, which should be attached with payment to your Texas Income Tax Return. Historically, compliance rates with with the Texas Use Tax have been low.
Texas Local Sales Taxes
Texas does not allow local jurisdictions like cities or counties to collect a local sales tax. The Texas state sales tax of 6.25% is applicable statewide. You can view the sales tax rates for various cities in Texas here.
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