What’s the Sales Tax in Houston, Texas?
Get a clear breakdown of Houston's sales tax, from how the rate is calculated by different authorities to its impact on your purchases.
Purchasing goods and services in Houston involves a local sales tax that applies to many transactions. This tax is a combination of rates set by different government levels, which affects the final price consumers pay.
The Total Sales Tax Rate in Houston
The combined sales tax rate for purchases made within the city of Houston is 8.25%. This figure is the total tax on qualifying goods and services. This specific rate applies to addresses located within both the City of Houston’s jurisdiction and the boundaries of the Metropolitan Transit Authority (METRO).
While the 8.25% rate is standard for most of Houston, locations in the wider metropolitan area that fall outside of the city or METRO’s transit boundaries may have different local tax rates, resulting in a slightly different total sales tax. The maximum combined rate in Texas, however, cannot exceed 8.25%.
Components of the Sales Tax
The 8.25% sales tax rate in Houston is composed of three distinct parts levied by different governmental bodies. The largest portion is the state-level sales and use tax, which the Texas government sets at a rate of 6.25% for all sales across the state.
On top of the state tax, two local taxes are added for sales within Houston. The City of Houston itself levies a 1.00% sales tax. An additional 1.00% is added by the Metropolitan Transit Authority (METRO) to fund public transportation services. When combined, the 6.25% state tax, 1.00% city tax, and 1.00% transit tax equal the total 8.25% rate consumers pay.
What is Subject to Sales Tax
In Houston, the 8.25% sales tax is applied to the sale of most tangible personal property and a variety of services. This means that physical items such as furniture, electronics, and clothing are subject to the tax at the point of sale. The tax also extends to prepared foods, so meals purchased from restaurants or takeout establishments will include the sales tax.
There are several significant exemptions from the sales tax as mandated by state law. Most unprepared food items, commonly referred to as groceries, are not taxed. Additionally, prescription drugs, feminine hygiene products, and over-the-counter medicines labeled with a “Drug Facts” panel are exempt from sales tax.