How Texas Sales Tax Works
Texas sales tax is built from a statewide base plus local components, with a hard cap on combined rates:
- 6.25% State General Fund — Set by Texas state law
- Up to 2% Local Tax — From cities, counties, transit authorities, and special purpose districts
- 8.25% Maximum Combined Rate — Texas state law caps the combined rate
Because of the 2% local cap, most populated areas in Texas charge the maximum 8.25% combined rate. Houston, Dallas, Austin, San Antonio, Fort Worth — all major Texas metros — charge exactly 8.25%. Only smaller towns or unincorporated areas have lower rates.
Texas Cities with 8.25% Combined Sales Tax
Almost every populated Texas city charges the maximum 8.25%. Here are the major ones:
| City | County | Combined Rate |
|---|---|---|
| Houston | Harris | 8.25% |
| Dallas | Dallas | 8.25% |
| Austin | Travis | 8.25% |
| San Antonio | Bexar | 8.25% |
| Fort Worth | Tarrant | 8.25% |
| El Paso | El Paso | 8.25% |
| Arlington | Tarrant | 8.25% |
| Corpus Christi | Nueces | 8.25% |
| Plano | Collin | 8.25% |
| Lubbock | Lubbock | 8.25% |
| Frisco | Collin/Denton | 8.25% |
| McKinney | Collin | 8.25% |
| Round Rock | Williamson | 8.25% |
What's Taxable vs Exempt in Texas
Generally Taxable
- Most tangible personal property (electronics, furniture, clothing)
- Restaurant meals and prepared food
- Hot foods and bakery items sold for immediate consumption
- Soft drinks, candy, and dietary supplements
- Vehicles (subject to 6.25% motor vehicle sales tax)
- Some services (telecommunications, data processing, amusement)
Generally Exempt
- Most unprepared groceries (bread, milk, fresh produce, eggs)
- Prescription medications
- Most over-the-counter medications
- Many baby products (diapers, wipes, formula)
- Most personal hygiene products
- Most newspapers and magazines
- Most professional services (legal, medical, accounting, financial)
Texas Tax-Free Weekends
Texas offers several annual sales tax holidays where qualifying items are exempt:
- August Back-to-School: Clothing, footwear, school supplies under $100/item (typically first weekend of August)
- April Emergency Preparation: Generators, batteries, hurricane shutters, fuel containers
- May Energy Star: Energy-efficient appliances under qualifying price thresholds
- May Water-Efficient Products: Water-saving products like rain barrels, mulch
Why Texas Sales Tax Funds Are So Important
Because Texas has no state personal income tax, sales tax (along with property tax) funds the bulk of state government operations. Sales tax revenue accounts for approximately 60% of Texas state tax revenue, compared to about 30% in income-tax states.
This is why Texas sales tax has remained relatively stable at 6.25% state + 2% local cap for decades — raising it would face significant political opposition since it's the primary state revenue source.
Frequently Asked Questions
Texas has a statewide sales tax rate of 6.25% in 2026. Cities, counties, transit authorities, and special purpose districts can add up to 2% additional local sales tax, bringing the maximum combined rate to 8.25%. Most major Texas cities (Houston, Dallas, Austin, San Antonio, Fort Worth) are at the maximum 8.25% combined rate.
Texas state law caps the combined local sales tax (city, county, transit, special districts) at 2%. Most populated areas have multiple overlapping jurisdictions that fully use this 2% cap, resulting in the same 8.25% combined rate across cities like Houston, Dallas, and Austin. Only smaller, less-developed areas have rates below 8.25%.
Most unprepared food groceries (bread, milk, fresh produce, eggs) are exempt from Texas sales tax. Prepared foods, restaurant meals, hot foods, candy, soft drinks, and dietary supplements are generally taxable. Texas exempts most basic medications, baby products, and many personal hygiene items.
Texas taxes some services but not most. Taxable services include: amusement, cable TV, credit reporting, data processing, debt collection, information services, insurance services, internet access (above $25/month), motor vehicle parking, repair/restoration of tangible property, security services, and telecommunications. Most professional services (legal, medical, accounting) are NOT taxable.
Sources & Methodology
- Texas Comptroller of Public Accounts — Official sales and use tax rates
- Texas Tax Code Chapter 151 — Limited Sales, Excise, and Use Tax
- Texas Tax Code Chapter 321-323 — Local sales tax authority
- TX Comptroller Publication 96-280 — Sales Tax Rates by City
Calculator methodology and city rates reviewed by Benjamin Thomas, CPA, MST. Rates verified against Texas Comptroller publications dated January 2026.