Navigating sales tax guidelines in Texas
Texas requires businesses and remote sellers to apply for a sales tax permit and collect and remit sales tax to the state if they meet specific nexus guidelines. Does your business have sales tax obligations in Texas? TaxJar’s Texas sales tax guide provides insights and context about physical and economic nexus for businesses. Use this guide to ensure you remain tax compliant, and estimate your potential sales tax liability with TaxJar’s sales tax calculator.
Do you need to collect sales tax in Texas?
Businesses and remote sellers are required to collect sales tax in Texas if they have either physical or economic nexus in the state. Businesses with physical nexus have a tangible presence or activity in Texas, while businesses or remote sellers with economic nexus have met the state’s threshold for either total revenue or total number of sales transactions to buyers in Texas.
Do you have physical nexus in Texas?
Texas considers a seller or retailer to have physical nexus if they have any of the following in the state:
- An office or place of business
- An employee present in the state
- A place of distribution
- A warehouse or storage space
- A sales or sample room
- Another place where business is conducted
Businesses or sellers who are unsure whether or not they have physical nexus can refer to the Texas Comptroller’s guidelines that clearly define who is engaged in business in the state of Texas.
Do you have economic nexus in Texas?
Effective October 1, 2019, remote sellers with Texas revenues above $500,000 are required to register for a sales tax permit, collect sales tax on sales that ship to Texas, and remit the sales tax to the state.
Is what you’re selling taxable?
Services in Texas are sometimes taxable. Tangible products are taxable in Texas. Businesses need to charge sales tax to buyers if they sell tangible goods.
Is SaaS taxable in Texas?
SaaS is considered part of a data processing service in Texas and is 80% taxable and 20% exempt from sales tax.
How to get a sales tax permit in Texas
You can register for a Texas sales tax permit online at the Texas Comptroller of Public Accounts website, which also offers a Local Sales and Use Tax FAQ. Or visit our registration page to request for TaxJar to manage your Texas registration.
Businesses can also download a Texas sales tax permit application (form AP-201) and mail it to:
Comptroller of Public Accounts
111 E. 17th St.
Austin, TX 78774-0100
Businesses and online sellers must submit the following information to register for a sales tax permit:
- Sole owner’s social security number.
- Partnership social security numbers or federal employer’s identification numbers for each partner.
- Texas corporation’s file number from the Texas Secretary of State.
- All corporations’ social security numbers for each officer or director.
- North American Industrial Classification System (NAICS) code required for all businesses.
- Applicants must be at least 18 years of age. Parents/legal guardians may apply for a permit on behalf of a minor.
It’s free to apply for a Texas sales tax permit. A bond may be required but only after the application is filed and reviewed. Other business registration fees may apply.
Collecting sales tax in Texas
The sales tax rate you collect in Texas depends on whether you are based in Texas or out-of-state.
How to collect sales tax in Texas if you are based in Texas
Texas is an origin-based sales tax state. If your business is based in Texas, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located. The Texas sales tax rate is 6.25%. The use tax rate is the same as the sales tax rate and is explained in more detail by the Comptroller’s Office.
You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator. If you have more than one location in Texas, then base the sales tax rate you charge on the point of origin of your sale.
How to collect sales tax in Texas if you are not based in Texas
Texas wants out-of-state sellers who made a sale into Texas to charge sales tax based on the destination of the item (i.e. the buyer’s ship to address.)
Should you collect sales tax on shipping charges in Texas?
Shipping charges are taxable in Texas as long as the goods you are selling are also taxable.
When are Texas sales tax returns due?
When you file and pay Texas sales tax depends on your state-assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Texas?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Texas, you will be required to file and remit sales tax either monthly, quarterly, or annually.
Texas sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing sales tax in Texas
When it’s time to file sales tax in Texas you, follow these steps:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to calculate how much sales tax you owe in Texas
Calculating how much sales tax you should remit to the state of Texas is easy with TaxJar’s Texas sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Texas sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to file and pay sales tax in Texas
You have three options for filing and paying your Texas sales tax:
- File online at the “Webfile eSystems” site. You can remit your payment through their online system. Click here for a step-by-step guide to filing your Texas sales tax returns.
- File by mail – You can also download a Texas Sales and Use tax return.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations, or filling out complex sales tax returns.
You’ll mail your return to:
Comptroller of Public Accounts
P.O. Box 149355
Austin, TX 78714-9355
Keep in mind that if you made $10,000 or more in sales tax payments to Texas in the preceding fiscal year, you are required to file and pay online.
