What Is the Tax Rate in Texas for 2025?
Texas is known for its business-friendly tax policies, including the absence of a state income tax. However, residents and businesses in Texas are still subject to other taxes, such as sales tax and property tax.
Texas Sales Tax Rate in 2025
The base state sales tax rate in Texas remains 6.25% in 2025. However, local jurisdictions, such as cities, counties, transit authorities, and special purpose districts, have the ability to impose additional sales taxes. These local taxes can add up to 2%, making the maximum possible sales tax rate 8.25%.
This means that when making purchases in Texas, the total sales tax rate will vary depending on the location. For example:
A city with no additional local tax will have a 6.25% sales tax rate.
A city that imposes the full 2% local tax will have an 8.25% total sales tax rate.
To determine the exact sales tax rate for a specific location, it is best to check with the Texas Comptroller of Public Accounts or use an online sales tax lookup tool.
Other Taxes in Texas
While Texas does not impose a personal income tax, the state collects revenue through various other taxes, including:
Property Taxes
Texas has some of the highest property tax rates in the U.S. Instead of a state-imposed property tax, local governments—including school districts, cities, and counties—set their own rates. The average effective property tax rate in Texas is around 1.60%, but it varies by location.
Franchise Tax (Business Tax)
Businesses in Texas are subject to the franchise tax, which is based on revenue rather than profit. In 2025, businesses with annual revenue below $2.47 million are exempt from this tax. The rate for most entities is 0.375% for retail and wholesale businesses and 0.75% for other businesses.
Gasoline Tax
Texas imposes a state gas tax of 20 cents per gallon on gasoline and diesel fuel. This tax helps fund road maintenance and transportation projects.
Conclusion
Texas continues to be a tax-friendly state due to its lack of a personal income tax. However, sales tax rates vary by location, with a maximum possible rate of 8.25%. To stay compliant, businesses and consumers should check their local tax rates regularly.