Taxes & Incentives
- Overview
- Corporate Franchise Tax
- Property Tax
- Sales & Use Tax
- Unemployment Insurance & Workers’ Compensation
- Texas Enterprise Zone Program
- Tax Exemptions & Credits
- Training Programs
-
Financing Programs
- Texas Enterprise Fund
- Chapter 380/381 Financing
- Economic Development Sales Tax Corporations
- Certified Capital Companies
- Texas Semiconductor Innovation Fund
- Cancer Prevention & Research Institute of Texas Grants
- Texas Product Development & Small Business Incubator Fund
- Tax Increment Financing
- Industrial Revenue Bonds
- Texas Moving Image Industry Incentive Program
- Foreign Trade Zone 183 of Central Texas
- Other Assistance
- Local Incentives Summary
Sales & Use Tax
The state levies a sales and use tax of 6.25% on sales of tangible personal property and certain services. Cities, counties, and transit authorities may add to the sales tax rate up to a maximum combined state and local rate of 8.25%.
Texas grants sales and use tax exemptions on machinery and equipment utilized in the manufacturing process. Purchases of machinery and equipment, replacement parts, and accessories that have a useful life of more than six months, and that are used or consumed in the manufacturing, processing, fabricating, or repairing of tangible personal property for ultimate sale, are exempt from state and local sales and use tax.
Natural gas and electricity are exempt from sales taxes when sold to commercial businesses that are "predominantly" manufacturing.
Groceries and over-the-counter drugs and medicines, as well as prescription drugs, are exempt from sales tax.
Sales & use tax rates in selected metro area communities
| CITY | COUNTY | STATE | COUNTY | CITY | METRO TRANSIT AUTHORITY | SPECIAL PURPOSE DISTRICT | TOTAL |
|---|---|---|---|---|---|---|---|
| Austin | Travis | 6.25% | 1.00% | 1.00% | 8.25% | ||
| Austin | Williamson | 6.25 | 1.00 | 1.00 | 8.25 | ||
| Bastrop | Bastrop | 6.25 | 0.50% | 1.50 | 8.25 | ||
| Buda | Hays | 6.25 | 0.50 | 1.50 | 8.25 | ||
| Cedar Park | Williamson | 6.25 | 2.00 | 8.25 | |||
| Dripping Springs | Hays | 6.25 | 0.50 | 1.25 | 0.25% | 8.25 | |
| Elgin | Bastrop | 6.25 | 0.50 | 1.50 | 8.25 | ||
| Georgetown | Williamson | 6.25 | 2.00 | 8.25 | |||
| Hutto | Williamson | 6.25 | 2.00 | 8.25 | |||
| Jarrell | Williamson | 6.25 | 2.00 | 8.25 | |||
| Kyle | Hays | 6.25 | 0.50 | 1.50 | 8.25 | ||
| Lago Vista | Travis | 6.25 | 1.00 | 1.00 | 8.25 | ||
| Leander | Williamson | 6.25 | 1.00 | 1.00 | 8.25 | ||
| Liberty Hill | Williamson | 6.25 | 1.75 | 0.25 | 8.25 | ||
| Lockhart | Caldwell | 6.25 | 0.50 | 1.50 | 8.25 | ||
| Luling | Caldwell | 6.25 | 0.50 | 1.50 | 8.25 | ||
| Pflugerville | Travis | 6.25 | 1.50 | 0.50 | 8.25 | ||
| Rollingwood | Travis | 6.25 | 1.50 | 0.50 | 8.25 | ||
| Round Rock | Williamson | 6.25 | 2.00 | 8.25 | |||
| San Marcos | Hays | 6.25 | 0.50 | 1.50 | 8.25 | ||
| Smithville | Bastrop | 6.25 | 0.50 | 1.50 | 8.25 | ||
| Sunset Valley | Travis | 6.25 | 1.875 | 8.125 | |||
| Taylor | Williamson | 6.25 | 2.00 | 8.25 | |||
| West Lake Hills | Travis | 6.25 | 1.50 | 0.50 | 8.25 |
Source: Texas Comptroller of Public Accounts.