Texas Sales Tax Guide
Chapter 8: Understanding Texas sales tax rules for shipping & handling
Texas is known for being one of the largest states in the Union, but luckily for ecommerce sellers, its sales tax rules for shipping and delivery take up much less space. If you own a business in the Lone Star State, or have nexus there, here’s what you need to know about sales tax and shipping and delivery charges.
Is Shipping Taxable in Texas?
On the surface, Texas rules about charging sales tax on shipping and delivery are fairly straightforward. Texas Rule 3.303 states that if you charge a customer to deliver a taxable item, that charge is part of the taxable sale. For instance, the state’s site says that if you charge your customer $50 to deliver a $500 sofa, you should charge sales tax on the $550 total.
Delivery Methods Matter
The state defines transportation and shipping as “all other terms used by common or contract carriers to describe transportation, such as freight, shipping, delivery, or postage.” All of these methods of delivery are taxable.
But Texas makes an exception for postage. It does not require sellers to charge sales tax for postage if the charge is listed separately on the invoice and was incurred by the seller because the customer requested shipment to a third-party address designated by the customer.
In addition, Texas does not require third-party carriers to charge sales tax on deliveries, as long as they only deliver the product and not sell it.
What About Shipping Tax-Exempt Stuff?
According to a representative from the Texas Comptroller of Public Accounts, shipping and delivery charges on tax-exempt charges are not taxable.
But Texas asks sellers to deal with shipments containing both taxable and exempt items a little differently than many other states. “If a package contains items that are predominately taxable, sellers should charge sales tax for the entire package,” she says. “But if it contains mostly exempt products, they should not charge sales tax on the package.”
Look Out for Local Taxes
Texas’s state sales tax is 6.25 percent, and local municipalities can add up to 2 percent more. A state tax representative says that, “The rules are always the same for local municipalities as they are for the state.” In other words, there will never be an instance where an item is exempt at the state level and taxable at the local level.
She also said that since the sales tax rules in Texas are so simple, the best way sellers can ensure they stay in compliance is to stay up to date with the Texas Administrative Code.