TEXAS SALES TAX 101: AN INTRODUCTION

Home » Blog » TEXAS SALES TAX 101: AN INTRODUCTION

Tax calculatorThe Texas Limited Sales, Excise & Use Tax Act imposes a tax on sale, lease, or rental of personal property (touchable and movable) and on certain services. In general, Texas imposes the sales tax on the end user based on the sales price of each item of a taxable sale.

Most business owners understand sales tax law, but are unaware of the Texas Use Tax, which applies to the purchase of items out-of-state that are then brought into Texas. Since a non-Texas retailer made the sale, Texas sales tax would not be collected at the time of the sale. The use tax applies to “any taxpayer who purchases tangible personal property from any retailer for storage, use, or other consumption in Texas.”

In Texas, the tax law presumes that all retail sales or uses of tangible personal property are taxable. This means that unless you can find a specific exemption that specifies that a product is non-taxable (such as orthopedic products), then a product is taxable.

No such presumption for services exists. This means that unless the law states that a service is taxable, then your service is not taxable. (We will cover taxable services in a future blog article.) 

Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.