A common question from Texans who purchase and sell things online is, "Do I owe Texas tax?" Texas purchasers and sellers may think they can save money by not paying tax when buying or selling on the internet, but those transactions are subject to Texas sales and use tax.
Online buyers must pay sales and use tax on taxable items delivered or brought into Texas.
When a Texas purchaser buys a taxable item online from a seller that does not charge Texas sales tax, the purchaser owes use tax. Use tax is complementary to sales tax. Use tax is due on taxable items purchased online and shipped or delivered into Texas, and any shipping and handling charges are part of the sales price. The use tax due is based on the location where you first receive, store or use the item. You can verify the tax rate for a specific address using our Sales Tax Rate Locator.
If a seller does not collect Texas tax, you can report it directly to our office. If you do not have a sales tax permit, you can file a use tax return (PDF). If you have a sales tax permit, the use tax is reported under “taxable purchases” (Item 3) on your sales tax return. Remitting use tax protects in-state Texas retailers against unfair competition from out-of-state sellers that may not collect Texas tax.
If you purchased an item and brought it into Texas, then you must pay use tax. You can take a credit toward the Texas use tax owed if you paid sales tax to another state.
Purchases made online from remote sellers with no physical presence in Texas are taxable. Many remote sellers must collect, report and remit the appropriate use tax on taxable items delivered to customers in Texas. The sales price includes all shipping and handling charges. "Taxable items" include all tangible personal property as well as taxable services.
Purchasers should know that remote sellers can choose to collect tax based on either
Purchasers who pay use tax to remote sellers using the single local use tax rate owe no additional tax.
If the single local use tax rate is higher than the local tax rate at the purchaser’s location, a purchaser may apply for a refund for the difference between the single local use tax rate paid to the remote seller and the local tax rate they would have paid at their location. Please use Form 00-957 – Texas Claim for Refund (PDF) to submit a claim.
If sales tax is not collected by the remote seller, the purchaser owes use tax on the price of the taxable item. Purchasers can report any uncollected use tax on Form 01-156 – Texas Use Tax Return (PDF).
For more information on remote sellers, please visit our Remote Sellers webpage.
If you are in Texas and sell taxable items, you must have a Texas sales tax permit – unless your sales qualify as occasional sales.
You can apply for a sales tax permit
Texas sellers must collect sales tax on taxable items, including shipping and delivery charges, sold online in Texas. Texas sellers are engaged in business if they have a physical Texas location or make online sales in Texas.
If you sell taxable items online to customers in Texas from your place of business, then you must collect state and local taxes based on your location. If the sales tax rate at your business location is lower than the rate at the purchaser’s location, then you must also collect any additional local use tax due where the item is shipped or delivered. For additional information about local sales tax collection, please see Publication 94-105, Local Sales Tax Collection – A Guide for Sellers.
The state sales and use tax rate is 6.25 percent and the local sales and use tax cannot be more than 2 percent. You can verify the tax rate for an address using our Sales Tax Rate Locator.
Texas sellers do not need to collect Texas sales tax on items shipped and delivered to out-of-state locations. To document these sales, your records must include proof of delivery, such as a bill of lading, a shipping invoice or a postal receipt.
Depending on your business activities, Texas sellers may need to collect tax in another state. Sellers should contact that state’s taxing agency or authority directly for their tax responsibilities.
For more information about Texas businesses’ collection responsibilities for other states, see these websites:
Disclaimer: Each website listed is responsible for its own information. Our office does not maintain these websites and is not responsible for the information they provide.
A marketplace is a physical or electronic store, internet website, software application, or catalog that marketplace sellers use to make sales.
A marketplace provider is an entity that owns or operates a marketplace and processes sales or payments for marketplace sellers. Examples include Amazon, eBay, Walmart Marketplace, StubHub and Etsy. Marketplace providers that are engaged in business in Texas must collect and remit tax on all sales by marketplace sellers. The local tax rate is based on the shipping destination. Marketplace providers must certify in writing to their marketplace sellers that they will be collecting, reporting and paying the tax to our office.
A marketplace seller is an individual who sells through a marketplace provider. Marketplace sellers are not responsible for collecting and remitting sales and use tax on their sales through the marketplace if the marketplace provider has certified they are assuming these responsibilities. If the marketplace provider does not issue any type of certification that it is collecting sales and use tax on the seller’s behalf, then the seller should collect sales and use tax until they receive a certification.
Texas sellers that sell through a marketplace are still responsible for having a Texas tax permit and filing their sales and use tax returns timely, even if their only sales are through a marketplace provider.
For more information on sales through marketplaces, please visit our Marketplace Providers and Marketplace Sellers webpage.
When a purchaser buys items intended to be resold in the regular course of business, they can give the supplier a properly completed Texas Resale Certificate (PDF) instead of paying Texas sales tax. Purchasers can buy these items tax free since they will be collecting sales tax from their customers.
Texas sales tax is also not due when a purchaser buys an item in Texas and has the seller ship it to another country, or has the seller send it directly to a freight forwarder for export. The seller must maintain documentation to show why tax was not collected on these sales. A purchaser may not use a resale certificate to claim tax exemption for items shipped outside the U.S., except for taxable items shipped to Mexico. For more information, see Rule 3.323, Imports and Exports.