Texas Sales Tax Exemptions / Tax Free Items Texas: Sales Tax Handbook

Texas:

What purchases are exempt from the Texas sales tax?

While the Texas sales tax of 6.25% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Texas.

Sales Tax Exemptions in Texas

In Texas, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.

An example of an item which is exempt from Texas sales tax are items which were specifically purchased for resale.

Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Texas:


Clothing

  6.25%

Groceries

  EXEMPT

Prepared Food

  6.25%

Prescription Drugs

  EXEMPT

OTC Drugs

  EXEMPT

These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.

Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":


Is candy taxable in Texas? Candy is NOT considered a grocery in Texas
Is soda taxable in Texas? Soda is NOT considered a grocery in Texas

Are services, shipping, installation, etc taxable in Texas?

The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Texas sales tax see the Texas sales taxability FAQ page.


Other tax-exempt items in Texas

This table lists a number of additional categories of goods and services that are exempt from Texas' sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Texas.

Category Exemption Status
Food and Meals
Grocery Food EXEMPT
Leases and Rentals
Motor Vehicles EXEMPT *
Manufacturing and Machinery
Machinery EXEMPT
Raw Materials EXEMPT *
Utilities & Fuel EXEMPT *
Medical Goods and Services
Medical Devices EXEMPT *
Medical Services EXEMPT
Medicines EXEMPT
Newspapers and Magazines
Newspapers EXEMPT
Occasional Sales
General Occasional Sales EXEMPT
Motor Vehicles EXEMPT *
Optional Maintenance Contracts
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Services
Transportation Services EXEMPT
Trade-Ins
General Trade-Ins EXEMPT

* See notes in category taxability page for details


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Source: http://www.salestaxhandbook.com/texas/sales-tax-exemptions