What Is Not Taxable With the Texas Sales Tax?
Prior to 1961, Texas imposed sales tax on a limited basis, taxing such items as cigarettes and gasoline. Effective in 1961, the Limited Sales and Use Tax became the first general sales tax in the state. Items not specifically excluded were taxed at the rate of 2 percent; by 1990, periodic increases resulted in a 6.25 percent state sales tax, which is the rate as of January 2011. In addition, cities and counties may impose a local sales tax or a mass transit tax that may add an additional 2 percent maximum in sales taxes. Texas does not impose a tax on all goods and services, however.
Food sold for immediate consumption is taxable, but food the purchaser must prepare or eat at home is not. If the vendor provides eating utensils or plates, the item is taxable. As an example, if a store sells a pastry on a plate and includes a fork, the purchase is taxable. However, if the same store sells a box of 12 pastries without plates or forks, the purchase is not taxable. Soft drinks, candy, ready-to-eat sandwiches, ice cream novelties and food sold in vending machines are taxable. Plain water, milk, and juices that contain a minimum of 50 percent real fruit or vegetable juice are not taxable. Taxable foods such as candy or ready-to-eat meals are exempt if sold as a fund-raising project by a nonprofit organization. Since sales tax does not apply for products subject to another tax, sales tax is not charged on alcoholic beverages.
Prescription drugs for both humans and animals are not taxable. Over-the-counter medications for humans are not taxable if labeled with a Food and Drug Administration panel printed with the drug facts. Non-prescription medications for animals are taxable. Wound care dressings, dietary supplements, medical devices and equipment, diabetic test strips, hypodermics and supplies for ileostomy and colostomy appliances are not taxable. Contact lenses, corrective eyeglasses, hearing aids, prosthetics and dental appliances are not taxable.
Newspapers are not taxable if printed on newsprint and if the 30-day average price does not exceed $1.50 per day. Magazine subscriptions of six months or longer are not taxable, but individual sales are taxable. Periodicals that are published by a nonprofit organization are not taxable. Audio recordings and Braille items are not taxable if they are recorded and furnished by a scientific, historical, philanthropic or charitable organization to the visually impaired.
Texas excludes certain services from taxation. These include professional services, such as those offered by physicians, attorneys, accountants, barbers and hairdressers, interior designers, and automobile repair services.
Products purchased for resale are not taxable if the buyer can provide a proper exemption certificate. Items that a manufacturer uses to produce or package his items are not taxable. This includes items that are essential to the production but that do not become part of the finished product.
Items used in agriculture are typically exempt from Texas sales tax. This includes equine work animals, livestock normally used as food, feed for the animals, plants and seeds to grow food items, and chemicals, equipment and machinery used for building water tanks or roads on a ranch or farm. It also includes seedlings, equipment and machinery for timber production.