Texas — Sales & Use Tax

Texas imposes a state sales tax on each sale of a taxable item in the state. The state tax rate is 6.25 percent of the sales price. Source: Tex. Tax Code § 151.051

A "taxable item" includes both tangible personal property and taxable services. Tangible personal property is defined as personal property that can be seen, weighed, measured, felt, or touched or that is perceptible to the senses in any other manner; for sales tax purposes, the term includes computer programs and telephone prepaid calling cards. Source: Tex. Tax Code § 151.009

Sales of tangible personal property are presumed subject to tax unless a specific exemption applies. Taxable services are not presumed taxable; instead, tax applies only to those services specifically enumerated in Tex. Tax Code § 151.0101, which includes categories such as amusement services, motor vehicle parking and storage, real property services, telephone services, and data processing services, among others. Source: Tex. Tax Code § 151.0101

## Local Sales Tax

Local jurisdictions (cities, counties, transit authorities, and special-purpose districts) may impose additional sales tax on top of the state rate. Local taxes may add up to 2 percent, bringing the combined maximum rate to 8.25 percent. The Texas Comptroller of Public Accounts collects both state and local sales tax through a unified system. Source: Texas Comptroller — Sales and Use Tax

## Use Tax

Texas also imposes a complementary use tax at the same 6.25 percent rate on the storage, use, or other consumption in Texas of taxable items purchased from a retailer, when sales tax was not collected at the time of purchase. Use tax ensures that items purchased outside Texas for use within the state are subject to the same tax burden as items purchased in-state. Source: Tex. Tax Code § 151.101

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Review Status: Not yet human confirmed as of 2026-05-26.

Remote sellers with no physical presence in Texas must register and collect sales and use tax if their total Texas revenue exceeds $500,000 in the preceding twelve calendar months. This economic nexus threshold became effective October 1, 2019, following the U.S. Supreme Court's decision in South Dakota v. Wayfair.

Total Texas revenue includes gross revenue from all sales of tangible personal property and services delivered into Texas—both taxable and nontaxable sales, including sales for resale and sales to exempt entities. The threshold is measured on a rolling twelve-month basis, not by calendar year.

A remote seller is an out-of-state seller whose only activity in Texas is the remote solicitation of sales. If a seller has a physical presence in Texas (business location, employees, representatives, or inventory), the seller is not a remote seller and must register regardless of revenue.

Once the $500,000 threshold is exceeded, the remote seller must register for a Texas sales and use tax permit and begin collecting tax by the first day of the fourth month following the month in which the threshold was crossed. For example, a seller exceeding the threshold in March must register by June 1.

Remote sellers who sell exclusively through marketplace facilitators that certify they will collect tax on the seller's behalf are not required to obtain a Texas tax permit, but must retain records for at least four years.

Source: Texas Comptroller – Remote Sellers Source: Texas Comptroller – Remote Sellers and Marketplace FAQ

A marketplace provider engaged in business in Texas must collect, report, and remit state and local sales and use tax on all sales of taxable items made through its marketplace. A marketplace provider is defined as a person who owns or operates a marketplace—a physical or electronic medium such as a store, website, software application, or catalog—and directly or indirectly processes sales or payments for marketplace sellers.

The marketplace provider must certify to each marketplace seller that it assumes the seller's tax collection and remittance duties. Once a marketplace seller accepts this certification in good faith, the seller excludes those marketplace sales from its own tax report. This requirement took effect October 1, 2019.

Source: Tex. Tax Code § 151.0242 Source: Texas Comptroller – Marketplace Providers and Marketplace Sellers

A seller may accept a properly completed resale certificate in good faith to document an exempt sale for resale. All gross receipts are presumed subject to sales tax unless the seller accepts a properly completed resale or exemption certificate. Sellers must retain resale certificates for at least four years from the date of sale. The certificate should be in the seller's possession when the nontaxable transaction occurs; if a certificate is not in the seller's possession within 90 days of written notice from the Comptroller, the deduction may be denied.

Source: Tex. Tax Code § 151.054 Source: Texas Comptroller – Resale Certificate FAQ

Sales and use tax is due and payable on or before the 20th day of the month following the end of each calendar month, unless the taxpayer qualifies as a quarterly filer. A taxpayer who owes less than $500 for a calendar month or less than $1,500 for a calendar quarter qualifies for quarterly filing, with returns due on the 20th day of the month following the end of each calendar quarter. When the 20th falls on a weekend or federal holiday, the due date extends to the next business day.

Source: Tex. Tax Code § 151.401 Source: Texas Comptroller – Sales and Use Tax

The Texas Comptroller issues a deficiency determination when it determines that a taxpayer has not paid the correct amount of sales or use tax. Under Tex. Tax Code § 111.008, if the Comptroller is not satisfied with a tax report or the amount of tax paid, the Comptroller may compute and determine the amount of tax due based on information in the report or from any other available information. The Comptroller must notify the taxpayer of the determination by mail, electronic means (if the taxpayer has an email address on file with the Comptroller), or personal service. When notice is given by mail, service is complete when the notice is deposited in a U.S. Post Office, addressed to the taxpayer's address as it appears in the Comptroller's records.

The notice of determination (also called a "Notification of Audit Results," "Notification of Exam Results," or "Notice of Tax/Fee Due") sets out the amounts of tax, penalties, and interest the Comptroller believes are due. The taxpayer may challenge the determination by filing a petition for redetermination with the Comptroller. This petition must be filed before the expiration of 60 days after the date the notice of determination is issued, or the right to redetermination is barred and the determination becomes final.

Jeopardy determinations have a shorter deadline. When the Comptroller makes a jeopardy determination—meaning the Comptroller believes there is a risk the state will not be paid—the taxpayer must file a petition for redetermination within 20 days after the date the notice is issued, not 60 days. The jeopardy determination becomes due and payable immediately upon issuance of the notice.

The petition for redetermination must be a written request for a redetermination hearing and must include a statement of grounds explaining why the deficiency determination is wrong. The statement of grounds must identify the contested items or state general contentions that identify categories of contested items, along with the factual basis and legal grounds supporting the taxpayer's position. If the petition requests a hearing, the taxpayer is entitled to a hearing and to receive notice of the hearing at least 20 days in advance.

Filing a timely petition for redetermination stays collection during the administrative process. The taxpayer does not have to pay the tax, penalties, or interest assessed by the Comptroller unless and until the dispute over the deficiency determination is resolved against the taxpayer. If the taxpayer does not pay the amount by the date specified for submitting a petition for redetermination (the 60-day or 20-day deadline), a 10% penalty is automatically assessed once the determination becomes final.

Source: Tex. Tax Code § 111.008 Source: Tex. Tax Code § 111.009 Source: Tex. Tax Code § 111.0081

After a taxpayer files a timely petition for redetermination under Tex. Tax Code § 111.009, the Texas Comptroller first conducts an internal review, giving the taxpayer an opportunity to provide additional information and attempt to resolve the dispute. If this in-house review is unsuccessful, the Comptroller transfers the case to the State Office of Administrative Hearings (SOAH) for a contested case hearing before an administrative law judge (ALJ).

SOAH is an independent state agency that conducts administrative hearings for more than 50 Texas agencies, including tax redetermination hearings for the Comptroller. At SOAH, an ALJ holds a hearing at which the taxpayer and the Comptroller's Tax Division present evidence, examine witnesses, and make legal arguments. The hearing is conducted under the Administrative Procedure Act and the Texas Rules of Evidence apply. Most SOAH hearings are now conducted remotely by videoconference (typically Zoom), though in-person hearings may be requested for good cause.

After the hearing, the ALJ issues a Proposal for Decision (PFD), which includes findings of fact and conclusions of law. Critically, the ALJ's PFD is not binding on the Comptroller. Under Texas law, the Comptroller retains ultimate decision-making authority. Both parties may file exceptions and replies to the PFD with SOAH, and SOAH serves these on the parties. The Comptroller then issues a final decision on the redetermination, which may adopt, modify, or reject the ALJ's proposal.

The Comptroller's decision becomes final under Tex. Gov't Code ch. 2001 (the Administrative Procedure Act) unless the taxpayer files a motion for rehearing within the time permitted by that chapter. A motion for rehearing must state the specific grounds of error and the disputed amounts associated with those grounds. An order denying the motion for rehearing is deemed a final order that may be appealed.

Judicial review in Travis County District Court. A taxpayer dissatisfied with the Comptroller's final decision may file suit in Travis County District Court under Tex. Tax Code ch. 112, subchapter E (Suit After Redetermination). Section 112.001 grants the Travis County district courts exclusive, original jurisdiction over taxpayer suits challenging state tax determinations. To bring suit under § 112.201, the taxpayer must have: (1) filed a request for redetermination under ch. 111; (2) obtained a redetermination under ch. 111 that includes a finding by the Comptroller of the disputed and undisputed amounts; and (3) filed a motion for rehearing that complies with ch. 2001 and states the specific grounds of error and disputed amounts. The taxpayer must pay the undisputed redetermination amounts before filing suit, though failure to pay does not affect the court's jurisdiction. The suit is tried de novo—meaning the court conducts a new trial on the merits—and only the issues raised in the motion for rehearing may be litigated.

Source: Tex. Tax Code § 111.009 Source: Tex. Tax Code ch. 112 Source: SOAH website

Statute of limitations on assessments. Under 34 Tex. Admin. Code § 3.339(b)(1), the Texas Comptroller has four years from the date a sales or use tax becomes due and payable to assess a deficiency tax liability. The "due and payable" date generally means the day after the last day on which a payment is required by the chapter imposing the tax. For example, for a monthly sales tax return due on the 20th of the month following the reporting period, the tax becomes due and payable on the 20th, and the four-year assessment period begins the following day.

Exceptions—no statute of limitations. The four-year limitation does not apply, and the Comptroller may assess and collect taxes, penalties, and interest at any time if:

• The taxpayer files a false or fraudulent sales tax return with the intent to evade the tax;
• The taxpayer fails to file a sales tax return; or
• The taxpayer files a sales tax return that has a gross error, defined as an error resulting in the amount of tax due and payable (after correction of the error) exceeding the amount of tax reported on the return by at least 25%.

In these three situations, the Comptroller's authority to assess is not time-barred.

Extension by agreement. The Comptroller and a taxpayer may agree in writing to extend the statute of limitations before it expires, in accordance with Tex. Tax Code § 111.203. The agreement must state the reasons for the extension. No single extension may exceed 24 months from the expiration date of the period being extended. Any assessment for periods covered by the extension must be made before the extension agreement expires.

Statute of limitations on refund claims. A refund claim must be filed before the expiration of the later of: (1) four years after the date on which the tax was due and payable, or (2) six months after the date on which a deficiency determination for the periods becomes final. This rule is codified in 34 Tex. Admin. Code § 3.325(b)(4) and Tex. Tax Code § 111.104(c)(3). Failure to file a refund claim within these time limits constitutes a waiver of any demand against the state on account of the overpayment. The informal review of a refund claim by the Comptroller does not toll (suspend) the limitation period for any subsequent claim for refund on the same period and tax type.

Source: 34 Tex. Admin. Code § 3.339 Source: 34 Tex. Admin. Code § 3.325 Source: Tex. Tax Code § 111.104 Source: Tex. Tax Code § 111.203

Voluntary Disclosure Agreement (VDA) program. The Texas Comptroller administers a voluntary disclosure program for taxpayers that have not previously registered for Texas sales and use tax and wish to come into compliance. The program is designed to encourage taxpayers with nexus in Texas to voluntarily register and report prior-period tax liabilities. Taxpayers participating in the voluntary disclosure program typically receive relief from certain penalties and a limitation on the look-back period for which tax is assessed, though interest generally remains due on unpaid tax.

Unable to confirm as of 2026-05-28 the specific look-back period, penalty waiver scope, and whether anonymous filings are permitted under the current Texas VDA program.

Private letter rulings. Texas Tax Code § 111.002 authorizes the Comptroller to adopt rules for the administration and enforcement of the tax code. Under this authority, the Comptroller issues private letter rulings in response to written requests from taxpayers seeking guidance on how a specific statute or rule applies to the taxpayer's particular fact situation. A private letter ruling is binding on the Comptroller with respect to the taxpayer to whom it is issued, for the specific facts and time period addressed in the ruling, unless the ruling is later modified or revoked by the Comptroller or a court.

Taxpayers may request a letter ruling by submitting a written request to the Comptroller's Tax Policy Division. The request must include a complete statement of facts, the specific issue or question for which guidance is sought, the taxpayer's analysis of the applicable law, and any other information the Comptroller may require. The Comptroller is not required to issue a ruling and may decline to rule on certain issues, particularly where the issue is the subject of pending litigation or administrative proceedings, or where the facts are hypothetical rather than specific to the taxpayer's actual circumstances.

Private letter rulings are published on the Comptroller's STAR (State Automated Tax Research) database, typically with taxpayer-identifying information redacted. While a private letter ruling is binding only on the taxpayer to whom it is issued, published rulings provide guidance to other taxpayers on the Comptroller's interpretation of the law. The Comptroller may also issue policy letters and other publications that provide general guidance on sales and use tax matters; these publications do not have the same binding effect as a private letter ruling issued to a specific taxpayer.

Source: Tex. Tax Code § 111.002 Source: STAR database

Prior to April 1, 2020, marketplace-facilitated sales were excluded from a remote seller’s “total Texas revenue” for purposes of determining whether the seller crossed the $500,000 economic nexus threshold. This changed effective April 1, 2020, when Texas implemented the requirement for remote sellers to include all sales into Texas, including those made through a marketplace, in their revenue calculation for nexus purposes.

Pre-April 1, 2020:

• Remote sellers did not have to count marketplace sales toward the $500,000 threshold.
• Only direct sales (sales made on the seller’s own website or non-marketplace platform) into Texas were aggregated.

April 1, 2020 and after:

• Marketplace sales made on or after April 1, 2020, must be included in calculating the total Texas revenue.
• Total revenue now aggregates all Texas sales—direct and marketplace—when determining whether a remote seller must register and collect Texas sales and use tax.

This rule change is set out expressly in 34 Texas Administrative Code § 3.286(b)(2)(C)(ii), which states the inclusion of marketplace-facilitated sales takes effect April 1, 2020. Historic guidance from the Texas Comptroller’s STAR system confirms this effective-date distinction, clarifying that prior to April 1, 2020, marketplace sales were not counted, but must be included from April 1, 2020 onward.

Source: 34 Tex. Admin. Code § 3.286(b)(2)(C)(ii) Source: Texas Comptroller STAR System, 202012004L

Review status: Not yet human confirmed. This fact is documented in primary Texas regulation and administrative guidance, but further historical context or supporting notices may exist in other Texas Comptroller publications.

Remote sellers in Texas may elect to collect and remit local use tax using the "single local use tax rate" instead of the combined actual local rates for each delivery location. The authority for this election is Texas Tax Code § 151.0595. The single local use tax rate is designed as a simplification for remote sellers lacking physical presence in Texas, and is recalculated annually: after the end of each fiscal year, the Comptroller divides total net local sales and use tax remitted by total net state sales and use tax remitted and multiplies by the state sales tax rate, rounding to the nearest 0.0025 as required by statute. The Comptroller must publish the upcoming year's rate in the Texas Register before January 1 each year.

For calendar year 2026, the published single local use tax rate is 1.75%. A remote seller who wants to use the single local use tax rate must notify the Texas Comptroller by submitting Form 01-799, "Remote Seller's Intent to Elect or Revoke Use of Single Local Use Tax Rate." Once made, this election is binding for all remote sales unless the seller later revokes it in writing. If the revocation is received by the Comptroller before October 1, the election remains effective through December 31 of that year; if received on or after October 1, it remains effective through December 31 of the following year.

Purchasers who are charged the single local use tax rate but whose actual local rate is lower may request a refund for the difference on an annual basis by filing Form 00-957, "Texas Claim for Refund." This alternative rate is available exclusively to remote sellers as defined by law; in-state sellers and marketplace providers must apply local rates by destination, not the single rate.

Source: Texas Tax Code § 151.0595 Source: Texas Comptroller – Remote Sellers Source: Texas Comptroller – Guide for Sellers, Publication 94-105 Source: Texas Comptroller, Form 01-799 Source: Texas Comptroller, Online Orders, Publication 94-171

Texas uses a hybrid system for sourcing sales for sales and use tax, with the rules dependent on whether the seller has a place of business in Texas, where an order is received, and whether the seller is a remote seller.

In-State Sellers with a Texas Place of Business (POB): If an order is received at a Texas place of business of the seller, the sale is sourced to that location—this is known as "origin-based" sourcing. Local sales tax is due based on where the order is accepted or, for over-the-counter transactions, where the goods are transferred to the purchaser. These provisions are established by Tex. Tax Code § 321.203(a) and detailed in 34 Tex. Admin. Code § 3.334.

Orders Not Received at a Texas Place of Business: When an order is not received at a Texas place of business—such as many online or remote orders—the sale is sourced to where the order is fulfilled, if fulfillment is in Texas. If fulfillment is outside Texas, local use tax is due based on the Texas delivery address ("destination-based" sourcing). See 34 Tex. Admin. Code § 3.334(b)(4)-(7).

Remote Sellers: Remote sellers—out-of-state sellers with no POB or physical presence in Texas—must source sales for local tax to the delivery location (destination-based). Remote sellers may elect to use the single local use tax rate rather than actual local rates (see 'Single Local Use Tax Rate for Remote Sellers' in this guide). This distinction is codified in 34 Tex. Admin. Code § 3.334(b)(5), (c), and (h).

Special Cases and Nuances:

• Over-the-counter sales are always sourced to the transfer location.
• If a seller has multiple business locations, but the order is received outside Texas, sourcing defaults to fulfillment location or, if shipped from outside the state, to the Texas delivery location (refer to § 3.334(b)(6)-(7)).

Summary: Texas generally applies origin-based sourcing for in-state transactions received at a Texas POB and destination-based sourcing for remote sellers or any order not received at a Texas POB. All rules are as defined by statute and Comptroller regulation.

Source: Tex. Tax Code § 321.203 Source: 34 Tex. Admin. Code § 3.334

Review Status: Not yet human confirmed as of 2026-06-15.

Texas law provides several core exemptions from sales and use tax, each with a detailed statutory test and requirements:

Manufacturing exemption (Tex. Tax Code § 151.318) Machinery, equipment, and supplies directly used in manufacturing, processing, or fabricating tangible personal property for sale are generally exempt from sales and use tax. To qualify, items must have a "direct use"—causing a chemical or physical change in the product, or being a component part (e.g., processing equipment, production line machinery, molds, dies). Major exclusions include hand tools, office equipment, supplies consumed but not directly incorporated (unless otherwise provided), and property used for maintaining or repairing non-exempt machinery. The statute draws sharp lines between "direct use" (exempt) and "incidental or support use" (taxable). For example, safety apparel worn by operators is only exempt under specific circumstances clarified by Comptroller Publication 94-124.

Source: Tex. Tax Code § 151.318 Source: Comptroller Publication 94-124

Agricultural exemptions (Tex. Tax Code § 151.316), Timber exemptions (§ 151.3162), and Agricultural Machinery (§ 151.317) Agricultural exemptions cover items used exclusively in producing agricultural products for sale. Statute § 151.316 lists always-exempt items (e.g., feed for livestock, seeds/plants for food production, animals for breeding, chemicals/pesticides when used on crops/animals for sale, qualifying containers, and certain irrigation equipment). Timber exemptions under § 151.3162 apply to items used in commercial timber operations, with a similar registration requirement. Section 151.317 separately exempts certain self-propelled machinery (tractors, combines, etc.) when used in farming or timber in commercial production. Many exemptions—beyond always-exempt items—require the purchaser to provide a valid Texas Agriculture/TImber Exemption Number under § 151.1551 and a completed exemption certificate. These requirements and item-by-item distinctions are specified in Comptroller Publication 96-1112 (Feb 2026).

Source: Tex. Tax Code § 151.316 Source: Tex. Tax Code § 151.3162 Source: Tex. Tax Code § 151.317 Source: Tex. Tax Code § 151.1551 Source: Comptroller Publication 96-1112

Food products exemption (Tex. Tax Code § 151.314) Food products for human consumption are exempt. Statute § 151.314 defines "food products" to include staple groceries (breads, cereals, meats, vegetables, dairy products, etc.). Key statutory carve-outs—i.e., items not exempt—include candy, soft drinks (including bottled water and energy drinks as defined), prepared foods intended for immediate consumption, and foods sold through vending machines. Unheated bakery items sold without eating utensils remain exempt, but other snacks and sweets are often taxable.

Source: Tex. Tax Code § 151.314

All claims in this section are confirmed by the cited statute(s) and Comptroller guidance. Specialized exemptions for high-tech or industry-specific operations (e.g., data centers, pollution control, R&D) have distinct statutory language and are outside the scope of this section.

Texas local sales and use tax sourcing depends on whether the seller is considered in-state (with a place of business in Texas) or a remote seller (no physical presence, only economic nexus). Significant attention has focused on the rules in 34 Tex. Admin. Code § 3.334, as amended in 2019, and the ongoing litigation affecting the enforceability of certain provisions.

In-State Sellers (Physical Presence in Texas):

• If the order is received at a Texas place of business, local sales tax is sourced to that location (origin-based: Tex. Tax Code § 321.203(a), 34 Tex. Admin. Code § 3.334(b)(1)).
• Over-the-counter sales are always sourced to the location where the item is transferred to the purchaser (34 Tex. Admin. Code § 3.334(b)(3)).
• If an order is received outside a Texas place of business but fulfilled at one, the fulfillment location is the source (34 Tex. Admin. Code § 3.334(b)(6)).
• If an order is neither received nor fulfilled at a Texas place of business, local use tax is due based on the delivery address (destination-based sourcing).

Remote Sellers (No Physical Presence, Economic Nexus):

• Remote sellers (with over $500,000 total Texas revenue) must collect local use tax based on the destination—the local jurisdiction where the item is delivered (34 Tex. Admin. Code § 3.334(b)(5), (d)(3)).
• Remote sellers may elect to collect at the "single local use tax rate" published by the Comptroller (currently 1.75% for 2026), rather than individual destination rates (Texas Tax Code § 151.0595; Comptroller Publication 94-105).
• Marketplace facilitators, by statute, use destination-based sourcing for local tax on facilitated sales (Tex. Tax Code § 151.0242; 34 Tex. Admin. Code § 3.334(h)).

2020 Rule Change and Litigation Status: The 2019 amendments to Rule 3.334 were challenged by several Texas cities in 2020. As of June 2026, a temporary injunction remains in place barring enforcement of certain amendments—principally those shifting some internet and online order sourcing from origin (place of business) to destination. According to the Texas Comptroller's official current guidance, the enjoined provisions of Rule 3.334 are not being enforced pending final court resolution; prior sourcing practices remain for affected transactions. The Comptroller's seller guide and official announcements reflect this litigation status. The precise scope of the injunction, including affected subsections, is documented in Comptroller publication 94-105 as of 2026.

Summary Table:

• Order received at Texas business: Sourced to that location (origin)

Source: Tex. Tax Code § 321.203(a)

• Order not received at Texas business, fulfilled at one: Sourced to fulfillment location

Source: 34 Tex. Admin. Code § 3.334(b)(6)

• Remote sellers: Sourced to delivery location (destination) or use single local use tax rate

Source: 34 Tex. Admin. Code § 3.334(d)(3)

• Marketplace facilitators: Destination-based sourcing required

Source: Tex. Tax Code § 151.0242

For all sellers, the combined state and local rate cannot exceed 8.25% (2% local maximum), and all tax must be remitted to the Comptroller even where local jurisdictional lines are unclear. Sellers should consult Comptroller publications for changes following litigation outcomes.

Source: Tex. Tax Code § 321.203 Source: 34 Tex. Admin. Code § 3.334 Source: Texas Comptroller – Local Sales and Use Tax Collection: A Guide for Sellers Source: Tex. Tax Code § 151.0595 Source: Tex. Tax Code § 151.0242

Review status: Not yet human confirmed. The status of the 2020 injunction is drawn from official Comptroller guidance as of June 2026. Direct court order text was not accessible on a primary site as of this writing.

Under the Texas VDA program, the Comptroller generally limits its review to sales and use tax returns due within four years of the taxpayer’s initial contact with the Comptroller. This four-year look-back runs from the date of initial contact, not from the date of filing or execution. However, there is no look-back limitation for sales tax that was collected from customers but not remitted—the Comptroller may assess such tax for all open periods.

Statutory penalties and, in most cases, interest are waived under the VDA program. The crucial exception is that interest is not waived for tax that was collected from customers but not remitted; for those amounts, interest remains due for the entire unreported period, regardless of the look-back window.

The Texas Comptroller allows taxpayers to make the initial VDA contact anonymously (i.e., the business name does not need to be disclosed at the outset). This procedure enables prospective applicants to confirm eligibility or discuss exposure without immediate identification. However, Texas requires the business identity to be disclosed and verified as a condition of finalizing and executing the voluntary disclosure agreement. No fully anonymous third-party or agent stand-in is permitted for the final agreement process.

Source: Texas Comptroller Publication 96‑576, Voluntary Disclosure Program

Caution / review status: Not yet human confirmed. Practitioners should note that while the Comptroller allows anonymous initial contact, full business disclosure must occur before the VDA is finalized. Interest is not waived on collected-but-unremitted taxes under current policy.

Texas imposes sales and use tax on services only if they are specifically enumerated in Tex. Tax Code § 151.0101. The following categories are "taxable services" for Texas sales and use tax purposes as of July 2026:

• Amusement services
• Cable television services
• Personal services (including massage parlors, escort services, Turkish baths)
• Motor vehicle parking and storage services
• Repair, remodeling, maintenance, and restoration of tangible personal property (except aircraft, most pleasure vessels, motor vehicle repair, and the creation/restoration of software by someone not in the business of selling it)
• Telecommunications services
• Credit reporting services
• Debt collection services
• Insurance services (claims processing, actuarial analysis, appraisals, investigations, etc.)
• Information services
• Real property services (including janitorial, landscaping, surveying, pest control, structural pest control, etc.)
• Data processing services
• Real property repair and remodeling (non-residential)
• Security services
• Telephone answering services
• Transmission and distribution of electricity for end-use customers (utility infrastructure)

July 1, 2025 statutory change: 'Internet access service' removed from tax base As of July 1, 2025, "Internet access service" is no longer a taxable service in Texas, following the repeal of its inclusion by S.B. 1405, 89th Legislature (2025). From this date onward, sellers of internet access service do not collect Texas sales or use tax on those charges, and prior exemption rules (including the partial exemption under repealed § 151.325) are now moot. The definition of 'internet access service' remains operative (see § 151.00394) for delineating taxability between data processing, information, or other services in bundled or mixed transactions, but the service itself is not subject to tax. Historical guidance and statutory references confirm this removal was fully implemented via law change, with compliance expectations aligned to the effective date.

Professional services (such as legal, medical, accounting, architectural, and consulting) remain generally not taxable, unless billing contains a separable taxable service component.

Data Processing and SaaS: Texas classifies most "software-as-a-service" (SaaS), cloud-based platforms, and remote-hosted software under "data processing service" when the functional delivery meets the criteria in 34 Tex. Admin. Code § 3.330. Only 80% of the charge for taxable data processing services is subject to tax; 20% is exempt. Additional detail, examples, and interpretive notes are provided in Comptroller Publication 96-259 and Rule 3.330.

Interpretive Authority and Disputes: The Texas Comptroller has exclusive authority to interpret these categories (§ 151.0101(c)). Service characterization—especially around SaaS, data processing, and blended professional offerings—remains fact-dependent and subject to evolving STAR administrative rulings and formal guidance.

Source: Tex. Tax Code § 151.0101 Source: 34 Tex. Admin. Code § 3.330 Source: Texas Comptroller Publication 96-259

Caution / review status: Human confirmed by SALT Practitioner AI as of 2026-06-17. This section was updated to reflect the statutory removal of tax on internet access service effective July 1, 2025; SaaS/data processing discussion remains current per cited authority.