Sales tax is one of the easiest places for a small Texas business to get into trouble, mostly through late returns, not through bad intentions. Here are the basics every owner should know, and how to keep sales tax clean in your books.
By Kristina Weaver and John Morgan, Certified QuickBooks ProAdvisors · Updated October 2026
The rates
The Texas state sales tax rate is 6.25%. Cities, counties, transit authorities and special purpose districts can add up to 2% more, for a maximum combined rate of 8.25%. In much of North Texas, including Frisco and Plano, the combined rate is the full 8.25%, but always confirm the local rate for each location you sell from.
Do you need a sales tax permit?
If you sell, lease or rent taxable goods or taxable services in Texas, you need a Texas sales and use tax permit from the Comptroller before you start collecting tax. Don't assume that because you sell a service you're exempt: several kinds of services are taxable in Texas. If you're unsure, check with the Comptroller or ask us.
Out-of-state sellers have to collect Texas tax once their Texas revenue passes $500,000 in the previous twelve months.
How often you file, and when
After your permit is approved, the Comptroller tells you whether you file monthly, quarterly or yearly, based on how much tax you collect. Due dates:
- Monthly filers: the 20th of the following month.
- Quarterly filers: April 20, July 20, October 20 and January 20.
- Yearly filers: January 20 for the prior year.
- If the 20th falls on a weekend or legal holiday, the due date moves to the next business day.
You must file a return for every period, even if you had no sales and owe nothing. Missing a zero return still triggers a penalty.
Discounts for filing on time
Texas rewards prompt filers. You can keep a 0.5% timely filing discount on tax you report and pay on time, plus an extra 1.25% if you prepay. It's small, but over a year it adds up, and it disappears the moment you're late.
Penalties for filing late
- A $50 penalty for each return filed after the due date.
- 5% of the tax due if you pay 1–30 days late.
- 10% of the tax due if you pay more than 30 days late.
- Interest starts accruing 61 days after the due date.
Keeping sales tax clean in QuickBooks
- Set up the tax agency and rates correctly for every location you sell from, and mark products and services as taxable or non-taxable.
- Treat collected tax as a liability, not income. It's the state's money sitting in your account.
- Reconcile the sales tax liability to each return before you file, so what QuickBooks says you collected matches what you report.
- Record payments and discounts properly so the liability account clears to zero after each filing instead of drifting.
- Put the due dates on a calendar. Most sales tax problems we clean up started with one missed return.
Rules change and every business is different, so confirm specifics with the Texas Comptroller or your CPA. If you'd like sales tax handled as part of your monthly books, see our payroll and sales tax service or book a free books review.