taxes

Mixed Beverage Taxes Frequently Asked Questions

Overview of Mixed Beverage Taxes

What is a mixed beverage?

A mixed beverage is any alcoholic beverage (beer, wine, ale and distilled spirits), or part of an alcoholic beverage, that a permittee sells or serves to be consumed on the permittee's premises. An alcoholic beverage is any beverage containing more than 1/2 of 1 percent of alcohol by volume.

What is a permittee?

A permittee is the holder of one or more of the following permits:

  • mixed beverage permit;
  • private club registration permit;
  • private club exemption certificate permit;
  • mixed beverage or private club late hours permit;
  • daily temporary mixed beverage or private club permit;
  • mixed beverage or private club registration permit holding a food and beverage certificate;
  • caterer's permit; or
  • distiller's and rectifier's permit

The Texas Alcoholic Beverage Commission (TABC) issues these permits, and permit holders are subject to mixed beverage taxes (see Obtaining an Alcohol Permit section below).

What are mixed beverage taxes?

There are two mixed beverage taxes, both based on the sale, preparation or service of alcoholic beverages and mixers. The permittee (seller) pays the mixed beverage gross receipts tax to the state, and the customer pays the seller the mixed beverage sales tax, which is then remitted to the state.

What is taxable for mixed beverage gross receipts tax?

A permittee pays the mixed beverage gross receipts tax based on the total amount received from:

  • the sale, preparation or service of mixed beverages, and
  • ice and nonalcoholic beverages that are sold, prepared or served to be mixed with an alcoholic beverage and consumed on the permittee's premises.
What is taxable for mixed beverage sales tax?

A customer pays the mixed beverage sales tax on:

  • each mixed beverage a permittee sells, prepares or serves, and
  • ice and each nonalcoholic beverage a permittee sells, prepares or serves that is mixed with an alcoholic beverage and consumes on the permittee's premises.
What are the tax rates?

The mixed beverage gross receipts tax rate is 6.7 percent, and the mixed beverage sales tax rate is 8.25 percent. The two tax rates became effective on Jan. 1, 2014.

For reporting periods before January 2014, the mixed beverage gross receipts tax rate was 14 percent. Mixed beverage sales tax did not exist before Jan. 1, 2014.

Does the type of TABC permit or license I hold determine whether my sales of beer, wine and ale are subject to sales tax or mixed beverage taxes?

Yes. For example, a mixed beverage permittee's sales of beer, ale or wine are subject to both mixed beverage taxes. But sales of beer, ale or wine by a wine and beer retailer's permittee, which is not listed in the definition of a permittee, are subject to sales and use tax.

I have a caterer's permit. Do I charge mixed beverage sales tax on sales of beer and wine?

Yes. A caterer's permit is one of the permits subject to mixed beverage taxes, so your sales of beer and wine are subject to both mixed beverage gross receipts tax and mixed beverage sales tax.

Our restaurant has a wine and beer retailer's permit. Do I charge mixed beverage sales tax on sales of wine, beer and ale?

No. A wine and beer retailer's permit is not one of the permits subject to mixed beverage taxes. Your sales are subject to sales and use tax.

Our restaurant has a mixed beverage permit and got a temporary wine and beer retailer's permit to cater a wedding at a private ranch. Do I collect sales tax on the beer and wine we serve?

No. The primary permit the restaurant holds is a mixed beverage permit, which is one of the permits subject to mixed beverage taxes. This is true even when the restaurant has a subordinate temporary wine and beer retailer's permit to serve only beer and wine.

We are a VFW post with a private club exemption certificate and have a retail dealer's on-premises license to sell beer to nonmembers in our community hall. Do we charge mixed beverage sales tax on sales of beer in the community hall?

No, beer sales made under the VFW's retail dealer's on-premises license at the community hall are subject to sales tax.

On the other hand, beer sales made on the premises of the VFW's private club are subject to mixed beverage taxes.

For audit purposes, a permittee must maintain records that distinguish between purchases of beer for the retail dealer's on-premises license and the private club exemption certificate. The Texas Alcoholic Beverage Commission (TABC) regulates whether or not a separate inventory of beer is required.

Are bartender or server fees subject to mixed beverage taxes?

Yes, when a mixed beverage or private club permittee provides bartenders and/or wait staff who prepare or serve alcoholic beverages (even when the customer provides the alcohol), the related fees are taxed.

These fees are subject to both mixed beverage gross receipts tax and mixed beverage sales tax.

If I sell a nonalcoholic beverage (such as coffee) to someone, are mixed beverage taxes due on that sale?

No, the sale of just a nonalcoholic beverage is not subject to mixed beverage taxes, but may be subject to sales tax. Sales tax is due on sales of soft drinks, energy drinks and most mixers, but not on fruit or vegetable juice.

But a nonalcoholic beverage that is sold or served to be mixed with alcohol and consumed at the establishment is subject to mixed beverage taxes.

We are a brewpub and sell beer and ale that we brew at our pub. We also have a mixed beverage permit so we can sell liquor. Are the sales of our beer and ale subject to sales tax? Are the sales of liquor subject to the mixed beverage taxes?

Because you have a mixed beverage permit, mixed beverage taxes apply when you sell, prepare or serve any alcoholic beverage for on-premises consumption.

You also have a brewpub license, which allows you to sell beer and ale produced at the brewpub for both on-premises and off-premises consumption. Mixed beverage taxes do not apply to sales of alcoholic beverages for off-premises consumption. Sales tax is due on sales of beer and ale for off-premises consumption.

We are thinking of charging a tasting fee at our vodka distillery. The fee also includes 10 percent off any commemorative bottle of vodka purchased to take home. Is tax due on the tasting fee and the commemorative bottle? And, if so, what kind of tax?

Mixed beverage taxes are due on the tasting fee and sales tax is due on the discounted sales price of the commemorative bottle of vodka.

A distillery is required to have a distiller's and rectifier's permit, which is one of the permits listed in the definition of a permittee for mixed beverage taxes. Because the tasting fee is a charge to consume distilled spirits at the distillery, mixed beverage gross receipts tax and mixed beverage sales tax are due on the tasting fee.

Commemorative bottles can only be sold for off-premises consumption. Since mixed beverage taxes do not apply to sales of alcoholic beverages for off-premises consumption, sales tax is due on the sales of commemorative bottles of vodka.

Obtaining an Alcohol Permit

How do I apply for a mixed beverage permit?
  • Print and complete the Texas Alcoholic Beverage Commission (TABC) On-Premises Prequalification Packet.
  • You will need a Texas Sales and Use Tax Permit to pay sales or use tax on taxable items that you purchased tax free and then used in a taxable manner. Take the packet to a Comptroller's field office to be certified for sales and use tax.
    • EXAMPLE: A permittee owes sales or use tax on the cost of taxable ingredients in a complimentary beverage, and on any napkins and straws served with the complimentary beverage. You will owe use tax on items (such as glasses, corkscrews, receipts or registers) purchased from a vendor that did not charge Texas tax.
  • Both TABC and the Comptroller's office require security bonds. The Comptroller's office collects one security bond for mixed beverage gross receipts tax and one for mixed beverage sales tax to ensure against defaults on payments of the mixed beverage taxes:
    • For those permitted before Jan. 1, 2014, and who had a good payment history, we waived the mixed beverage sales tax bond.
    • For those with permits issued on or after Jan. 1, 2014, the minimum bond amounts are:
      • Mixed Beverage Permit – $3,750 each for the mixed beverage gross receipts tax bond and the mixed beverage sales tax bond;
      • Private Club Registration Permit – $2,250 each for the mixed beverage gross receipts tax bond and the mixed beverage sales tax bond; and
      • Private Club Exemption Certificate – $1,500 each for the mixed beverage gross receipts tax bond and the mixed beverage sales tax bond.

Filing and Paying

NOTE: Both the mixed beverage sales tax and the mixed beverage gross receipts tax can be filed and paid using Webfile: our convenient, online filing system.

Do I include my mixed beverage sales tax on my sales tax report?

No, you will file a separate mixed beverage sales tax report.

How often do I file my mixed beverage tax reports?

Mixed beverage gross receipts tax reports are filed monthly.

Mixed beverage sales tax are filed monthly unless you collect less than $500 or less than $1,500 per quarter. In that case, you can ask to file quarterly. Most mixed beverage taxpayers prefer to file mixed beverage sales tax reports monthly to cover the same reporting period as their mixed beverage gross receipts tax, and all permittees have that option.

Reports for mixed beverage taxes are due on or before the 20th day of the month following each reporting period, even if there are no mixed beverage sales to report. If the due date falls on a Saturday, Sunday or legal holiday, the next business day will be the due date.

Are there local mixed beverage taxes like there are for sales tax?

No, but each fiscal quarter counties and cities receive a rebate of at least 10.7143 percent of the mixed beverage gross receipts tax and mixed beverage sales tax revenue received from establishments within that county or city.

For additional information on local allocation of mixed beverage taxes, see the mixed beverage taxes Allocation Historical Summary, Allocation Comparison Summary and Allocation Payment Distribution Schedule.
Are there timely filing and prepayment discounts for mixed beverage taxes like there are for sales tax?

No. The law does not provide timely filing or prepayment discounts for mixed beverage gross receipts tax, and the law excludes timely filing and prepayment discounts for mixed beverage sales tax.

If I cannot file my report on time, can I request an extension?

Yes, you can request an extension and may receive up to 45 days to file tax reports. You must send a written request by the filing date with the reason the extension is needed, and pay at least 90 percent of the tax you estimate to be due. Extension requests are granted on a case-by-case basis.

If your business is affected by a declared disaster, you may, upon request, have 90 days to file your tax reports. You must request the extension before the 90-day extension period expires.

What if I file a late tax report or make a late tax payment?

If a tax report or tax payment is made late, the permittee is liable for penalty and interest on the tax due:

  • if 1-30 days late, a penalty of 5 percent (0.05)
  • if more than 30 days late, a penalty of 10 percent (0.10)
  • on the 61st day after the due date, interest begins to accrue

The law also imposes a $50 late filing penalty on every report filed late, even if the report was eventually filed or if no tax was due for the period covered by the late report.

What if I don't file a report?

We will estimate your tax due and issue a Notice of Tax/Fee Due. If you do not file the report or pay the tax within 20 days, we will assess an additional 10 percent penalty on the tax owed.

Tax-Included Sales

Should mixed beverage taxes be added to the sales price of alcoholic beverages or should they be included in the sales price of alcoholic beverages?

For mixed beverage sales tax, you can collect the 8.25 percent tax from the customer by either adding the tax to the price of the alcoholic beverage or by including mixed beverage sales tax in the sales price of the alcoholic beverage. However, you must choose one method and cannot alternate between the two methods.

The 6.7 percent mixed beverage gross receipts tax cannot be added to or deducted from the sales price of alcoholic beverages. Before you calculate your mixed beverage gross receipts tax, do not include mixed beverage sales tax in the amount you received.

How do I report mixed beverage sales tax if I add it to the sales price of alcoholic beverages?

EXAMPLE: A permittee had $1,000 in taxable mixed beverage sales and/or services during a reporting period and added mixed beverage sales tax to the sales price of alcoholic beverages.

For mixed beverage sales tax:

  • Report $1,000 in total mixed beverage taxable sales (Item 6 on Form 67-103, Texas Mixed Beverage Sales Tax Report (PDF)).
  • Multiply $1,000 by the 8.25 percent (0.0825) mixed beverage sales tax rate: $1,000 • 8.25 percent = $82.50.
  • Report $82.50 as the total mixed beverage sales tax due (Item 8 on Form 67-103).

For mixed beverage gross receipts tax:*

  • Report $1,000 as the total gross taxable amount (Item 11 on Form 67-100, Texas Mixed Beverage Gross Receipts Tax Report (PDF)).
  • Multiply $1,000 by the 6.7 percent (0.067) mixed beverage gross receipts tax rate: $1,000 • 6.7 percent = $67.
  • Report $67 as the total amount due for mixed beverage gross receipts tax (Item 12 on Form 67-100).
How do I report if I include mixed beverage sales tax in the sales price of alcoholic beverages?

EXAMPLE. A permittee had $1,000 in taxable mixed beverage sales and/or services during a reporting period and included mixed beverage sales tax in the sales price of alcoholic beverages.

For mixed beverage sales tax, the permittee would:

  • Back out the 8.25 percent (0.0825) mixed beverage sales tax by dividing $1,000 by 1.0825: $1,000 ÷ 1.0825 = $924 (rounded up).
  • Report $924 in Total Mixed Beverage Taxable Sales (Item 6 on Form 67-103, Texas Mixed Beverage Sales Tax Report (PDF)).
  • Multiply $924 by the 8.25 percent (0.0825) mixed beverage sales tax rate: $924 • 8.25 percent = $76.23.
  • Report $76.23 as the total mixed beverage sales tax due (Item 8 on Form 67-103).

For mixed beverage gross receipts tax:*

  • The permittee subtracts the $76.23 in mixed beverage sales tax from the $1,000 in mixed beverage sales: $1,000 - $76.23 = $924 (rounded up).
  • Report $924 as the total gross taxable amount (Item 11 on Form 67-100, Texas Mixed Beverage Gross Receipts Tax Report (PDF)).
  • Multiply $924 by the 6.7 percent (0.067) mixed beverage gross receipts tax rate: $924 • 6.7 percent = $61.91.
  • Report $61.91 as the total amount due for mixed beverage gross receipts tax (Item 12 on Form Form 67-100).

*For mixed beverage gross receipts tax, the gross sales of liquor, beer and wine are reported separately for each location.

Gratuities

Are mixed beverage taxes due on a mandatory gratuity charge of 20 percent?

A mandatory gratuity charge is not taxable if the charge is:

  • a "reasonable mandatory gratuity charge," meaning the charge does not exceed 20 percent of the sales price of alcoholic beverages;
  • separately identified as a tip, gratuity, service charge or by other reasonable means; and
  • disbursed to qualified employees.

"Qualified employees" are the employees who customarily and regularly provide the service upon which a gratuity is based. These include, but are not limited to, servers, busboys, service bartenders, wine stewards and maîtres d'hôtel.

Not included are janitorial help, chefs, cashiers, dishwashers or owners. Any portion of a reasonable mandatory gratuity charge that is disbursed to nonqualified employees, or retained by the owner, is taxable.

The policy on gratuities for mixed beverage taxes is the same as the policy for sales and use tax.

How do I calculate mixed beverage gross receipts tax and mixed beverage sales tax when 6 percent of an 18 percent gratuity is disbursed to nonqualified employees on the following receipt?
ItemAmount
Food135.91
Alcohol32.00
Gratuity30.22
Subtotal198.13

To calculate the amount of sales tax and mixed beverage sales tax to charge on the above example (assuming one-third of the gratuity, or 6 percent, is disbursed to nonqualified employees):

1. Determine the amount of the $30.22 gratuity charge that is attributable to food:

$135.91 • 18 percent = $24.46

Determine the amount of the $24.46 gratuity charge that is attributable to food but not disbursed to qualified employees to determine the taxable gratuity charge attributable to food:

$24.46 • 6 percent = $1.47

Add the $1.47 taxable gratuity charge attributable to food to the food charge, and then multiply by the sales tax rate:

$135.91 + $1.47 = $137.38 • 8.25 percent = $11.33

Report $11.33 on your next sales and use tax report.

2. Determine the amount of the $30.22 gratuity charge that is attributable to alcohol:

$32.00 • 18 percent = $5.76

Determine the amount of the $5.76 gratuity charge that is attributable to alcohol but not disbursed to qualified employees to determine the taxable gratuity charge attributable to alcohol:

$5.76 • 6 percent = $0.35

Add the $0.35 taxable gratuity charge attributable to alcohol to the alcohol charge, and then multiply by the mixed beverage sales tax 8.25 percent = $2.67

Report $2.67 on your next mixed beverage sales tax report.

To report the $0.35 taxable gratuity on the mixed beverage gross receipts tax report, allocate the charge to the beverages, based on the percentage of the type of alcoholic beverages served, or include with cover charges. Document whichever method is used on the daily summary.

Here's how the receipt would appear with the sales tax and mixed beverage sales tax separately identified:

ItemAmount
Food135.91
Alcohol32.00
Gratuity30.22
Subtotal198.13
Sales tax11.33
MB sales tax2.67
Total212.81
For a mandatory gratuity charge of more than 20 percent, are mixed beverage taxes due on only the amount that exceeds 20 percent?

No, for a mandatory gratuity charge that is more than 20 percent, the entire gratuity charge is taxable no matter how it is disbursed.

Exemptions

Are there exemptions on the mixed beverage sales tax?

Yes. Because the mixed beverage sales tax is administered, collected and enforced the same way as sales and use tax, the same exemptions apply.

Government entities

A government entity that qualifies under Texas Tax Code Section (TTC) 151.309 is exempt from paying tax on the purchase of any item otherwise taxable under TTC Chapter 151.

A government entity can claim exemption from paying mixed beverage sales tax on the purchase of mixed beverages otherwise taxable under TTC Chapter 183.

These government entities include:

  • the U.S. federal government and its agencies and departments (including branches of the military); and
  • Texas state and local government agencies, cities, counties, public schools, school districts and state institutions of higher education.

This exemption does not apply to personal purchases an agency employee makes, even if the employee is traveling on official business and the employee will be reimbursed.

Foreign diplomatic and consular personnel: Foreign diplomatic and consular personnel, who present a Personal or Mission Tax Exemption Card issued by the U.S. Department of State, are exempt from paying mixed beverage sales tax, unless the exemption card specifically excludes purchasing alcoholic beverages. Diplomatic tax exemption cards may have different levels of tax exemption that are described on each card.

The Office of Foreign Missions administers the foreign diplomatic program, including how vendors can verify tax exemption cards.

Sales tax Rule 3.322(j) has additional information on diplomatic tax exemptions, including procedures for retailers.

Nonprofit organizations

A nonprofit organization that qualifies for exemption under TTC 151.310 or 151.321 is exempt from paying tax on the purchase of any item otherwise taxable under TTC Chapter 151 when the item purchased relates to the organization's purpose.

The purchase of alcohol does not normally relate to the purpose of an exempt organization, so these nonprofit organizations are not exempt from mixed beverage sales tax.

These nonprofit organizations include:

  • nonprofit charitable, educational and religious organizations;
  • 501(c)(3), (4), (8), (10) or (19) organizations;
  • nonprofit youth athletic organizations;
  • volunteer fire and medical service departments;
  • chambers of commerce and convention and tourism promotional agencies; and
  • qualified university and student organizations

The sale of alcoholic beverages by these organizations, however, is exempt when it occurs during a qualifying tax-free fundraising sale or auction authorized under TTC 151.310(c) and 151.321.

To sell alcoholic beverages, the exempt organization must have the appropriate permit from the Texas Alcoholic Beverage Commission. Again, there are no exemptions from mixed beverage gross receipts tax.

Is there a mixed beverage sales tax exemption certificate?

No. A government entity or its authorized agent should issue a completed Form 01-339 (back), Texas Sales and Use Tax Exemption Certificate (PDF), or a purchase voucher to claim the tax exemption.

An exemption certificate a government agency issues can be signed by anyone the agency authorizes to make purchases on its behalf. This exemption does not apply to personal purchases an employee of a government agency makes, even if the employee is traveling on official business and will be reimbursed.

Is there a list of exempt organizations?

Our Texas Tax-Exempt Entity Search lists entities that have been issued a letter of exemption from franchise, limited sales and use and hotel occupancy taxes. The list may not include governmental entities not required to apply for exemption under Texas law.

An exempt verification letter printed from this search is not a substitute for a completed exemption certificate.

Can a university or its employees claim exemption from mixed beverage sales tax?

As a Texas state agency, a state university or college qualifies for exemption from mixed beverage sales tax under TTC 151.309. The university or its authorized agent must issue a properly completed Texas Sales and Use Tax Exemption Certificate to claim the exemption. Alternatively, the university can issue a purchase voucher as proof of exemption. An exemption certificate must be issued to claim a mixed beverage sales tax exemption when a university's credit card or state-issued travel procurement card is used to purchase alcoholic beverages.

This exemption does not apply to personal purchases an employee of the university makes, even if the employee is traveling on official business and will be reimbursed.