Sales & Use Tax | The Greater Austin Chamber of Commerce

Home > Do Business > Taxes and Incentives > 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.

2008 Sales & Use Tax Rates in Selected Austin Metro Area Communities

City	County	State	County	City	Metro Transit Authority	Special Purpose District	Total
Austin	Travis	6.25%		1.00%	1.0%		8.25%
Austin	Williamson	6.25%		1.00%	1.0%		8.25%
Bastrop	Bastrop	6.25%	0.5%	1.50%			8.25%
Cedar Park	Williamson	6.25%		2.00%			8.25%
Elgin	Bastrop	6.25%	0.5%	1.50%			8.25%
Georgetown	Williamson	6.25%		2.00%			8.25%
Hutto	Williamson	6.25%		2.00%			8.25%
Kyle	Hays	6.25%		1.50%			8.25%
Leander	Williamson	6.25%		1.00%	1.0%		8.25%
Lockhart	Caldwell	6.25%	0.5%	1.50%			8.25%
Pflugerville	Travis	6.25%		1.50%		0.5%	8.25%
Round Rock	Williamson	6.25%		2.00%			8.25%
San Marcos	Hays	6.25%	0.5%	1.50%			8.25%
Taylor	Williamson	6.25%		2.00%			8.25%

Source: Texas Comptroller of Public Accounts, October 2008.