Data Notice: The sales tax information in “Sales Tax in Texas: Complete Guide 2026” reflects 2026 published rates. Municipal and county surcharges may apply beyond statewide figures shown here. Check your specific jurisdiction’s current rate schedule for accuracy. [sales-tax-texas-2026]

Sales Tax in Texas: Complete Guide 2026

Tax information in this article on sales tax in texas: complete guide 2026 is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change, and individual circumstances vary. Consult a qualified tax professional or CPA for guidance specific to your situation.

Texas relies heavily on sales tax revenue as one of its primary funding mechanisms, given the absence of a state income tax. The state’s 6.25% base rate is the joint-highest statewide rate in the country, and combined rates reach up to 8.25% in most major cities. Understanding what Texas taxes — and what it exempts — is critical for both residents and businesses.

Texas Sales Tax Rates (2026)

Component	Rate
State base rate	6.25%
Maximum local add-on	2.00%
Average combined (state + local)	~8.20%
Maximum combined rate	8.25%

Combined Rates by Major City

City	Combined Rate
Houston	8.25%
San Antonio	8.25%
Dallas	8.25%
Austin	8.25%
Fort Worth	8.25%
El Paso	8.25%
Plano	8.25%
Rural areas (no city tax)	6.25% — 8.25%

Most major Texas cities have adopted the maximum 2% local sales tax, bringing the combined rate to the 8.25% cap. The local component is split among the city, county, transit authority, and special purpose districts, subject to the combined 2% cap.

How Texas Sales Tax Works

Local Tax Structure

The 2% maximum local tax is typically composed of:

Entity	Typical Rate
City	1.00% — 1.50%
Transit authority (e.g., METRO, DART)	0.50% — 1.00%
County	0.00% — 0.50%
Special purpose district	0.00% — 0.50%
Total local (capped)	2.00%

Because the local rate is capped at 2%, areas inside a transit authority district with a 1% transit tax may have less room for city or special district rates.

Online and Remote Sales

Texas requires remote sellers with Texas sales of $500,000 or more in the preceding 12 months to collect and remit Texas sales tax. Marketplace facilitators (Amazon, eBay, Etsy, etc.) are also required to collect on behalf of third-party sellers.

What Is Taxable and What Is Exempt

Exempt from Sales Tax

Groceries: Most food for home preparation (bread, meat, produce, dairy, canned goods)
Prescription medications
Over-the-counter medications (Texas exempts OTC drugs, unlike many states)
Water and water service
Internet access
Certain agricultural supplies (with a valid ag exemption certificate)
Manufacturing equipment (with a valid exemption certificate)

Taxable

Prepared food and restaurant meals (taxed at the full combined rate)
Carbonated beverages, candy, and snack foods (some nuances apply)
Clothing and footwear (taxable, except during designated tax-free weekends)
Electronics, furniture, vehicles, and general merchandise
Digital goods: Texas generally taxes digital products including software, streaming services, and downloaded content as “data processing services” at a reduced rate or under specific rules.

Sales Tax Holidays

Texas holds an annual Sales Tax Holiday (typically the second weekend in August) where clothing and footwear priced under $100, school supplies under $100, and backpacks under $300 are exempt from sales tax. A separate Energy Star Sales Tax Holiday (typically in late May) exempts qualifying energy-efficient appliances.

Comparison to National Average

Metric	Texas	National Average
State base rate	6.25%	~5.09%
Average combined rate	~8.20%	~6.60%
Maximum combined rate	8.25%	Varies
Grocery exemption	Yes	~32 states
Clothing exemption	No (except holiday)	~8 states
OTC medicine exemption	Yes	~28 states

Texas’ combined rate is approximately 24% above the national average. The grocery and OTC medicine exemptions provide significant relief on everyday essentials, partially offsetting the high rate on discretionary purchases.

Tips for Minimizing Texas Sales Tax Impact

Take full advantage of sales tax holidays. Stock up on school supplies, clothing, and shoes during the August tax-free weekend. At 8.25%, a $500 back-to-school shopping trip saves over $40.
Buy groceries, not prepared food. The grocery exemption is broad — even bakery items are exempt if purchased for home consumption. However, meals eaten at a restaurant or deli are fully taxable.
Deduct sales tax on your federal return. Since Texas has no state income tax, you can elect to deduct state and local sales taxes instead of income taxes on your federal Schedule A. The IRS provides optional tables based on income and location, or you can track actual spending.
Use ag or manufacturing exemptions if eligible. Farmers, ranchers, and manufacturers can obtain exemption certificates that exempt qualifying purchases from sales tax.
Understand vehicle sales tax. Vehicle sales are taxed at 6.25% of the purchase price (with no local add-on). Private-party sales are taxed at the higher of the sale price or 80% of the standard presumptive value (SPV).
Shop in unincorporated areas for large purchases. If you live near an area without a city sales tax, purchasing big-ticket items there can save 1%—2% on the transaction.

Key Takeaways

Texas’ 6.25% state rate plus up to 2% in local taxes produces combined rates up to 8.25% in most major cities
Groceries, prescription medications, and OTC drugs are exempt, providing substantial relief on daily essentials
Annual sales tax holidays offer savings on clothing, school supplies, and energy-efficient appliances
The federal sales tax deduction is especially valuable for Texans, since they cannot deduct state income tax
Remote sellers and marketplace facilitators are required to collect Texas sales tax
Vehicle sales tax is 6.25% with no local add-on, but private sales use the standard presumptive value system

Next Steps

See the full Texas tax picture at Taxes in Texas: State Tax Guide 2026
Compare all states at State Income Tax Rates Comparison 2026
Calculate your federal bracket with the Tax Bracket Calculator 2026
Explore deductions at Tax Deductions You’re Probably Missing
Get local help: Find a CPA Near You