Texas Sales Tax Guide (2026): Rates, Nexus, Registration & Filing

Is SaaS taxable?

Yes — 80% of the charge is taxable.

What is the sales tax rate in Texas?

The Texas state sales tax rate is 6.25%. On top of that, cities, counties, special-purpose districts, and transit authorities can add local sales tax of up to 2%, so the maximum combined rate any buyer pays is 8.25%.

Because local rates vary by exact address (and jurisdiction boundaries don’t follow ZIP codes), look up the precise rate for any delivery location using the Comptroller’s Sales Tax Rate Locator rather than assuming the state rate.

Do you have sales tax nexus in Texas?

Nexus is the connection that obligates your business to collect and remit Texas sales tax. You can establish it two ways — physically or economically. Either one is enough.

Physical nexus

You have physical nexus if you have a tangible presence in Texas, such as:

• An office, store, warehouse, or distribution center
• Employees, agents, or sales representatives working in the state
• Independent salespeople making direct sales of taxable goods
• Inventory stored in Texas (including third-party-logistics or marketplace fulfillment stock)
• Tangible personal property you lease or rent that is located in Texas
• A franchisee or licensee operating under your trade name in the state

Economic nexus

Remote sellers with no physical presence have economic nexus once their total Texas revenue exceeds $500,000 in the preceding 12 calendar months. A few specifics worth knowing:

• There is no transaction-count threshold — only the $500,000 revenue figure matters.
• The $500,000 includes all Texas sales, including exempt sales and sales made through a marketplace.
• Once you cross it, you must obtain a permit and begin collecting by the first day of the fourth month after the month you exceeded the threshold.
• If you sell only through a marketplace such as Amazon or Etsy, the marketplace generally collects and remits the tax on those sales for you — but those sales still count toward your $500,000 threshold.

What is taxable in Texas?

Most tangible personal property is taxable in Texas, so if you sell physical goods you generally must charge sales tax. Items bought for resale (with a valid resale certificate) and many items used directly in manufacturing are exempt. Texas taxes only specifically enumerated services, but several common ones are taxable.

Is SaaS taxable in Texas?

Yes. Texas classifies Software as a Service (SaaS) as a data processing service, and data processing is taxable on 80% of the charge — the remaining 20% is exempt. So a $1,000 SaaS subscription is taxed on $800. This treatment comes from Comptroller Rule 3.330, which the Comptroller updated effective April 2, 2025 to clarify definitions and the treatment of bundled services.

Note the contrast with downloaded or “canned” software: Texas treats that as tangible personal property, so it is 100% taxable. SaaS is the more favorable 80% treatment.

How is food taxed in Texas?

Grocery-type food sold for home consumption is not taxable, and bakery items sold without eating utensils are exempt. Prepared food sold by restaurants and caterers is taxable.

How to register for a Texas sales tax permit

You must hold a Texas sales tax permit before you collect any tax. Registration is free (though a security bond may be required depending on your circumstances). Taxually can handle the entire registration for you — or you can do it yourself:

• Online: Apply through the Comptroller’s Online Tax Registration Application.
• By mail: Complete Form AP-201 and send it to Comptroller of Public Accounts, 111 E. 17th St., Austin, TX 78774-0100.

Have this information ready: the sole owner’s Social Security number; SSNs or FEINs for each partner; your Texas Secretary of State file number (for corporations); SSNs for each officer or director; and your NAICS business activity code.

How to collect sales tax in Texas

Texas uses a mixed sourcing approach, so how you calculate the rate depends on where you’re based:

• Texas-based sellers (origin-based): Collect tax at the combined rate in effect at your business location.
• Out-of-state sellers (destination-based): Calculate tax using the rate at the buyer’s shipping address. Remote sellers may also elect to use a single local use tax rate to simplify compliance.

Filing and paying Texas sales tax

The Comptroller assigns your filing frequency — monthly, quarterly, or annually — based on how much tax you collect, with higher-volume filers reporting monthly. Returns are due on the 20th of the month following the reporting period; if the 20th falls on a weekend or holiday, the deadline moves to the next business day. You must file even for periods with no taxable sales (a “zero return”). Taxually’s software automates the full filing and payment process, or you can file yourself:

• File and pay online through Webfile via eSystems.
• By mail (if eligible): send the return and payment to Comptroller of Public Accounts, P.O. Box 149355, Austin, TX 78714-9355.

Electronic filing rules scale with your volume: businesses that paid $10,000 or more in the prior fiscal year are generally required to file and pay electronically; certain taxes must be filed electronically above $50,000; and taxpayers paying $500,000 or more in a tax category must pay through TEXNET.

A bonus for paying on time: Texas gives a 0.5% timely-filing discount on the tax due, plus an additional 1.25% discount if you prepay — a small but real reward for staying current.

Penalties for late or non-compliant filing

Filing or paying late triggers escalating penalties:

• $50 late-filing penalty on every return filed after the due date (the minimum penalty is $50 or 10% of the tax due, whichever is greater) — this applies even to zero-tax returns.
• 5% penalty if tax is paid 1–30 days late.
• 10% penalty if tax is paid more than 30 days late.
• An additional 10% once a Notice of Tax/Fee Due becomes final (up to 20% total).
• An extra 5% penalty for failing to meet mandatory electronic reporting or payment requirements.
• Interest begins accruing on the 61st day after the due date, at the annual prime rate plus 1%.