Sales Tax Rules
Texas imposes a state sales tax rate of 6.25%, with a maximum combined rate (state plus local) of 8.25% when local taxes are added. Economic nexus is triggered at $500,000 in sales — meaning out-of-state businesses that exceed this threshold must collect and remit Texas sales tax. SaaS and digital software products are taxable in Texas. Groceries are exempt from state sales tax.
SaaS Tax Details
Taxable as a data processing service; 20% of the charge is exempt.
Grocery Details
Most food for home consumption is exempt; excludes candy and soft drinks.
What is the sales tax rate in Texas?
Texas's state sales tax rate is 6.25%. When local taxes are added, the maximum combined rate can reach 8.25%. The actual rate you pay depends on the county and city where the purchase is made.
What is the economic nexus threshold in Texas?
Texas requires out-of-state businesses to collect sales tax once they exceed $500,000 in sales in a calendar year. Once nexus is established, the business must register, collect, and remit Texas sales tax.
Is SaaS taxable in Texas?
Yes. Texas considers SaaS (Software as a Service) taxable. Businesses selling SaaS products to Texas customers must collect sales tax. Taxable as a data processing service; 20% of the charge is exempt.
Are groceries taxed in Texas?
Groceries are generally exempt from sales tax in Texas. Most food for home consumption is exempt; excludes candy and soft drinks.
Are digital goods taxable in Texas?
Yes. Texas taxes digital goods including downloaded software, music, movies, and e-books. Businesses selling digital products to Texas customers should collect sales tax.
Are clothing items exempt from sales tax in Texas?
Clothing is subject to sales tax in Texas at the standard state rate.
How often do I need to file sales tax in Texas?
Texas requires sales tax filing on a Monthly, Quarterly, or Annual. Online filing is available through the official Department of Revenue portal.
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Official Source
Texas Department of Revenue
Last verified: 2026-03-25 · Always confirm current rates with your tax advisor before filing.