Texas Sales Tax Guide for SaaS and E‑Commerce Businesses

2025‑07‑28

Texas imposes a 6.25% state sales tax plus up to 2% local tax, reaching a maximum combined rate of 8.25%. Here's what SaaS and e-commerce businesses need to know about Texas sales tax obligations, registration requirements, and compliance.

Quick Reference

Item	Details
State Tax Rate	6.25%
Local Tax Range	0% - 2%
Combined Rate Range	6.25% - 8.25%
Economic Nexus	$500,000 in preceding 12 months
Physical Nexus	Any presence in Texas
SaaS Taxable	Yes (as data processing service)
Registration Portal	Texas Comptroller eSystems

Nexus: When Texas Rules Apply

Economic Nexus

Starting October 1, 2019, remote sellers and marketplace providers must register for Texas sales tax when their gross revenue into Texas exceeds $500,000 in the preceding 12 calendar months. This includes all sales types: taxable, non‑taxable, and exempt transactions, including marketplace‑driven sales. Once you hit the threshold, start collecting tax the following quarter.

Physical Nexus

You establish physical nexus if you have any presence in Texas: an office, warehouse, inventory stored in a Texas facility, or agents operating in the state.

Registration and Compliance

Sales Tax Permit

Register for a Texas Sales and Use Tax Permit through the Texas Comptroller's eSystems portal. You'll need your business entity information, FEIN, and estimated annual Texas sales.

Filing Frequency & Tax Rates

Texas charges 6.25% state tax plus up to 2% local tax (maximum 8.25% total).

File monthly if your tax liability exceeds $500
File quarterly if between $100–$500/month
File annually if under $100/month

Returns are due by the 20th day of the month following each reporting period.

Single Local Use Tax Rate Option

Remote sellers can elect a simplified 1.75% single local use tax rate instead of destination‑based local rates. Notify the Comptroller using Form 01‑799 to make this election.

Taxability of Goods and Services

Tangible Personal Property

Physical goods shipped to Texas are taxable at the full state plus local rate.

Digital Goods and SaaS

Texas treats SaaS as a taxable data processing service. This includes web hosting, data storage, reporting, conversion, and website maintenance services.

Partial Data Processing Exemption

Texas provides a 20% exemption on data processing service charges. So a $1,000 SaaS subscription is taxable on $800 at the state plus local rate.

Bundling Rules & Recent Updates

The Comptroller is updating Administrative Rule §3.330 to clarify that SEO, lead generation, and web design services may be taxable if they involve computerized data manipulation or storage. Services without standalone value or purely ancillary to nontaxable services remain exempt.

E‑Commerce Businesses: Tangible vs. Digital Products

Tangible Goods

Physical goods shipped into Texas are taxable unless you're under the $500K economic nexus threshold. Marketplace sales count toward your nexus calculation even if the facilitator collects tax.

Digital Downloads

Electronically delivered software, media, games, or apps are treated as tangible personal property and taxed accordingly.

Marketplace Facilitators

Marketplace facilitators (Amazon, Shopify, etc.) with nexus must collect and remit sales tax for all platform transactions. Sellers using certified facilitators may avoid needing their own permit, but must keep the facilitator's certification to avoid audit risk.

Exemptions & Special Cases

Nonprofit organizations and government purchasers may be exempt; keep valid exemption certificates on file.
Resale certificates apply when reselling SaaS or products; maintain proper documentation.
Bundled services must clearly separate non‑taxable internet access to avoid taxation on that portion.
Ancillary services without separate value remain non‑taxable under updated data processing rules.

Glossary of Key Terms

Term	Definition
Economic Nexus	Tax obligation based on $500K+ gross Texas revenue (all sales types)
Physical Nexus	Triggered by physical presence: inventory, offices, agents, events
Data Processing Service	Taxable service category in Texas, includes SaaS and hosting
SaaS	Software‑as‑a‑Service, delivered online
Partial Exemption	20% exemption on charges for data processing services
Marketplace Facilitator	Platform that handles sales for third‑party sellers
Single Local Use Tax Rate	Option to charge flat ~1.75% local tax statewide instead of actual local rates