Texas sales tax for online sellers: nexus, permit and filing

What is the Texas sales tax rate?

The state rate is 6.25%. Cities, counties, transit authorities and special districts can add up to 2%, for a maximum combined rate of 8.25%. Remote sellers collect local use tax based on the delivery address, or can elect the single local use tax rate, currently 1.75%, which makes a flat 8% on every Texas sale.

When does an online seller have to collect in Texas?

You must register and collect if you are engaged in business in Texas, for example through an office, staff or inventory there, or if you are a remote seller with $500,000 or more of total Texas revenue in the previous 12 calendar months. That figure counts gross revenue from taxable and nontaxable sales, sales for resale, sales to exempt buyers and separately stated shipping and handling, and it includes sales through marketplaces. A remote seller that crosses the threshold must hold a permit and start collecting by the first day of the fourth month after the month it crossed.

How nexus works in general is covered in physical vs economic nexus and economic nexus explained.

What if you sell on Amazon, eBay or Etsy?

Texas requires marketplace facilitators to collect and remit sales tax on the sales they facilitate, so you do not collect on those orders. Your own website and other direct channels remain your responsibility. See marketplace facilitator laws.

How do you register?

Apply online with the Texas Comptroller for a sales and use tax permit. There is no fee. New remote sellers can elect the single local use tax rate on the application; existing remote sellers elect it on Form 01-799. Remote sellers located outside the United States can email or fax the application.

What are the steps once you have nexus?

1. Confirm nexus

   Check your presence and your sales into Texas against its threshold.

2. Register before collecting

   With the Texas tax agency, as set out above.

3. Set up your store

   Charge the correct combined rate for each delivery address and product.

4. File and pay

   On the schedule Texas assigns, including zero returns where required.

How are returns filed?

The Comptroller assigns monthly, quarterly or yearly filing based on the tax you collect, and returns are filed through its online WebFile system. Include marketplace sales in Total Texas Sales but not in Taxable Sales, because the marketplace has already collected the tax on them.

See how to file a sales tax return.

What if your business is based in Texas?

Sellers located in Texas are not remote sellers. They need a Texas tax permit even if every sale goes through a marketplace, cannot use the single local use tax rate, and generally collect local tax based on their place of business. See sales tax for Amazon FBA sellers.

Can you stop collecting if sales fall?

Yes. A remote seller can end its collection duty after 12 consecutive months in which its Texas revenue for the preceding 12 months stayed under $500,000, by notifying the Comptroller.

What else should sellers know?

• Sellers outside the US: the same rules apply wherever the business is based. See selling on Amazon US as a non-resident.
• Late registration: tax you should have collected becomes your own debt. See voluntary disclosure agreements and collected but not remitted.
• Records: keep sales by delivery address, tax collected and any certificates. See exemption certificates and sales tax audits.
• Stopping: returns stay due until the account is closed. See filing frequency and cancelling a sales tax permit.
• Store settings: switch on collection only once you are registered. See Shopify sales tax setup.

This guide is general information. It is not tax or legal advice for your situation.