Sales Tax 101 Shipping States TX

Is Shipping Taxable in Texas?

by Mark Faggiano

Shipping Taxability Texas
Last updated July 14, 2017

Sales tax is a tricky subject and it gets even more confusing when all of the different state governments set their own rules for how it is applied and when. It becomes an even foggier subject when you get to small subjects like whether or not sales tax is applicable to shipping charges. Let’s see how the Lone Star State solves this for sellers.

Is Shipping Taxable in Texas?

The Texas Comptroller has this to say on the matter:

Delivery charges taxable Texas

This is simple enough. If you sell an item and charge shipping or delivery charges, then you should also charge sales tax on those shipping/delivery charges.

So, in conclusion:

You will most likely charge sales tax on shipping and handling in Texas.

If you are selling an item that is taxable and you ship it, the shipping and handling is taxable. The only way it ISN’T taxable is if your customer gives you:

  1. A properly completed Resale Certificate.
  2. An Exemption Certificate.

Other than that, you are going to have to charge your buyer sales tax on shipping and handling.

Still have questions? Ask us in the comments.

  • nononsense57

    I am a casual seller on eBay (not a company, just use it like a garage sale for my extra stuff). I was checking the rules online for Texas and it talks about applying for a sales tax permit if you are a “business”,,but I am not a business. I know I can’t legally charge sales tax without a state permit which is fine with me. I am wondering at what point my hobby would be considered a business. Is this a question for a legal pro or can you help me out?

    Nevermind – I called the Tx State Comptroller’s Office and was told YES I am expected to collect taxes on items shipped to Texas customers.

  • This is something we’ve seen a lot. What you consider a hobby and what the IRS or State Department of Revenue consider a hobby can be quite a different thing!

  • ThatSafetyChick

    I have a direct sales business. I pay Texas sales tax when I purchase from my home office in Idaho. I then sell those products to Texas customers and charge a sales tax to those customers. I don’t think I need any kind of state permit to do this, or do any kind of reporting, as I believe Texas makes an exception for direct sellers. Am I wrong?

  • Hi there, Since this is a question specific to your business, I would definitely consult a CPA. Here’s a list of sales tax experts we’ve vetted: http://www.taxjar.com/sales-tax-accountant-directory/

  • Shane

    Ok, I am running a small business out of my home. Using Paypal to create invoices. I am located in Texas but may ship items as far as Australia. On my invoice it asks for the sales tax and I enter 6.25%. It then proceeds to my shipping amount and asks for the tax percentage on my shipping. Do I apply the 6.25% again or only 2% since I cannot exceed 8.25%?

  • First of all, you only need to charge sales tax to states where you have sales tax nexus. For example, if you only run your business out of your home and don’t have sales people, warehouses, employees, etc. in other states, then you may only have to charge sales tax to your Texas buyers.

    So, whether or not you would charge sales tax on shipping depends on the individual state’s sales tax requirements. Texas requires that sellers charge sales tax on shipping, so you would charge the same amount of sales tax you are charging on the purchase on the shipping charge. Does that make sense?

    For example, you sell something for $10 plus $5 shipping. You would charge the sales tax rate on the entire purchase. Or, if PayPal requires you to create a separate line item, you would still charge the same sales tax rate.

    This is confusing, butI hope we helped a little. For more on sales tax, please check out our Sales Tax 101 Guide: http://offers.taxjar.com/sales-tax-101-whitepaper

    • Roshanda Byrd

      Excellent explanation!

      • Thanks, Roshanda! Happy to help!

  • Nontaxable

    What if you sell a non taxable item like produce online? Is the shipping taxable?

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  • Rball80

    What about buying a car from out of state dealer if I arrange and pay for the shipping into Texas myself as a separate transaction? ( i.e. not arranged for or billed by the auto dealer (seller).)

    • This is definitely not our area of expertise bcs cars seem seem to have their own rules. (Something I’ll investigate for a future blog post.) I recommend contacting the state department of revenue. Also, I’ve read that you may be asked to pay sales tax when you go to register the vehicle.

      Here are the phone numbers for the state departments of revenue. I hope this helps: http://taxjar.wpengine.com/state-sales-tax-phone-numbers/

  • ExhibitGrl

    Hi there, if we are shipping a pallet clients inventory out of state, we would not normally charge sales tax on the outbound shipping. My question is: Would we charge sales tax for the return of the pallet to our warehouse in TX ?

  • Doris2015

    I have a question… I am in Texas and in this state, the S&H of Taxable items is also taxable…. An online company is selling Vitamines / Supplements (Non-Taxable) & Skin products (Taxable) I placed a combined order, (Taxable and Non-taxable items).. What is the equation that the companies use to find out the percent of S&H that is taxable? Please… HELP!!!

    • Hi Doris,

      Great question! Companies either use price or weight. For example, say 50% of the price or weight of the package is non-taxable supplements and 50% is taxable skin products. You’d charge sales tax on half the amount of shipping charges.

      Some states even provide guidance to sellers to do it either one of these two ways. I hope this helps!

  • This is a new one on me. Sales tax is generally charged at the point of sale, which for online transactions is the ship-to address. In that reasoning, you would charge since you have sales tax nexus in Texas. That said, I recommend consulting either with the Texas DOR or a CPA. Here’s more about Texas: http://www.taxjar.com/states/texas-sales-tax-online/

    And here’s a list of vetted CPAs: http://www.taxjar.com/sales-tax-accountant-directory/

  • vera

    I have a business in Texas and do charge shipping and Handling cost to out of state customers. When I fill up my form for Texas sales and use tax return, do I include the S&H cost to the total sales? Is S& H considered a sale?

  • Cara

    I am planning to include shipping in the price of my taxable items and offer ‘free shipping’. My question is; By charging sales tax on the total cost am I in the guidelines since the shipping and taxable item are both included? I am TERRIFIED of taxes and fear I will be imprisoned because I misunderstood what I am supposed to do. 🙂

    • Hi Cara,

      In my understanding, you are within guidelines by simply charging sales tax on the entire price. You can always call the Texas Comptroller just to make sure. Here’s their number: https://blog.taxjar.com/state-sales-tax-phone-numbers/ And don’t worry – you likely won’t go to jail over sales tax unless you do something extremely egregious like telling people you’re collecting sales tax but really keeping it in you pocket!

      (Also, to answer your other question, we do moderate all comments because we get a TON of spam on this blog.)

  • Cara

    HI again, I asked a question and it is now missing from the page and unanswered. Was in not appropriate for the blog? Is it being reviewed? Just curious if I need to take my question elsewhere.

  • S Searcy

    If you think this is complicated you should search for answers on everything else on any Texas government website. It’s ridiculous. I was even struggling to find the login for TWC. How ’bout that?

  • Ken Pursell

    In my scenario, I am being shipped a warrantied item. Since the item is under warranty, there is no cost for it. The ONLY fee they are charging me is the shipping, then they are taxing it. There are no taxes for the goods they are sending me because they are free under warranty. Would taxing the shipping cost still apply?

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