If you’re an out-of-state or foreign seller doing more than $500,000 in Texas gross revenue over the preceding 12 calendar months, or you store inventory in a Texas warehouse (including Amazon FBA), you must register for a Texas Sales and Use Tax Permit, collect tax from Texas customers, and file returns with the Texas Comptroller. That’s the rule. The rest of this guide tells you exactly how it works, where the traps are, and how to fix it if you’re already behind.
Texas is the second-largest state economy in the United States. If you sell physical product into the U.S. at any meaningful scale, Texas is almost certainly one of the states where you owe tax. And if you’re an Amazon FBA seller, Texas is among the most aggressive states in the country at asserting nexus the moment your inventory touches one of the state’s many fulfillment centers.
This article walks you through the rules a remote or foreign seller actually needs to know in 2026 — the $500K threshold, what counts toward it, how to register without a U.S. SSN, the Single Local Use Tax Rate election, filing frequencies, taxability quirks (yes, SaaS is taxable; no, not quite at the full rate), and what to do if you’ve been over the threshold for years and never registered.
If you’d rather skip the entire learning curve, Sales Tax Compliance USA handles Texas — and the other 45 states with a sales tax — end-to-end for a single flat fee. No software for you to learn. No 50 logins. We register, file, remit, and answer the Comptroller’s letters. Book a free consultation or read about our service.
The Short Answer: Do You Owe Texas Sales Tax as an Out-of-State Seller?
Yes, if any of the following are true. The Texas Comptroller of Public Accounts requires you to register and collect Texas sales/use tax if you have either physical or economic nexus with Texas.
The $500,000 economic nexus rule in plain English
Texas’s economic nexus threshold is $500,000 in gross Texas revenue measured over the preceding 12 calendar months, with no transaction-count alternative. If your business — sitting anywhere in the world — sold more than $500K worth of goods or taxable services to Texas customers in the trailing 12 months, you are required to register for a Texas Sales and Use Tax Permit and begin collecting Texas tax.
The $500K is gross revenue, not net, not taxable-only. It includes exempt sales. It includes wholesale sales. It includes marketplace-facilitated sales. More on that trap below.
Texas codified its economic nexus rule following Wayfair, with operative dates and statutory citations that have evolved through subsequent guidance. If you need the precise statute or effective date for a nexus analysis, contact us for a current review.
Physical nexus triggers you might not realize you have
You also have nexus — independent of any dollar threshold — if you have any physical presence in Texas. The most common trigger we see for foreign and out-of-state e-commerce sellers:
- Inventory stored in a Texas warehouse — including Amazon FBA inventory at AUS2, AUS3, DAL2, DAL3, DFW6, DFW7, DFW8, DFW9, AWF1, FTW1, HOU2, HOU3, SAT1, etc.
- An employee, contractor, or agent based in Texas
- A leased office, store, or storage facility in Texas
- A trade-show booth or other temporary physical presence (in some cases)
The Texas Comptroller’s position on FBA inventory is unambiguous. Marketplace sellers can have independent Texas nexus even when selling through a marketplace — most commonly when inventory is stored in Texas fulfillment centers such as Amazon FBA — which can trigger a separate Texas sales and use tax permit obligation. If you have FBA inventory in Texas, contact us for a current review.
Translation: if you’re an Amazon FBA seller and any of your inventory is sitting in a Texas warehouse, you must register in Texas — even if Amazon collects and remits 100% of the tax on your behalf as a marketplace facilitator. This is the single biggest blind spot we see in foreign FBA sellers’ compliance posture.
What happens if you’re already over the threshold
If you’ve been over $500K in Texas revenue (or you’ve had FBA inventory in Texas) for months or years and never registered, you have back-tax exposure. The Comptroller’s standard look-back is four years. We unpack your options — register forward, do a Voluntary Disclosure Agreement (VDA), or something in between — in the section on back taxes below.
If you’d rather not figure this out alone: we register your business in Texas, set up the right filing frequency, file every return on time, remit the tax, and handle any Comptroller correspondence. One flat fee. Book a 30-minute consult.
Texas Economic Nexus: The $500,000 Threshold Explained
The $500K threshold sounds simple. It isn’t — and the parts most guides skip are exactly the parts that get foreign sellers in trouble.
What counts toward the $500K (and what doesn’t)
The threshold is calculated on total Texas revenue from the sale, lease, or rental of tangible personal property and the sale of taxable services, gross. Specifically, it includes:
- ✅ Direct retail sales to Texas consumers
- ✅ Wholesale and B2B sales delivered into Texas
- ✅ Exempt sales (yes — exempt sales count toward the threshold even though they don’t generate tax)
- ✅ Sales through marketplaces like Amazon, Walmart, eBay, Etsy
- ❌ Sales of intangible property unrelated to taxable services
- ❌ Sales delivered outside Texas
This is where wholesalers and B2B sellers get blindsided. You can have $0 in actual taxable revenue (because everything goes to resellers with valid resale certificates) and still cross the $500K threshold and trigger a registration requirement.
The 12-month measurement period — rolling, not calendar
The threshold is measured over the preceding twelve calendar months — a rolling window, not a calendar-year reset. You should be checking your trailing-twelve-month Texas revenue every month, not waiting until year-end.
When you must register after crossing the threshold
Under Texas Comptroller Rule 34 TAC §3.286, a remote seller that crosses the economic nexus threshold must obtain a Texas use tax permit and begin collecting tax. Don’t wait. Each month of unregistered sales is back-tax exposure plus penalties and interest.
Do marketplace sales count? (Yes — and here’s why that matters)
This is the single most misunderstood point in Texas. Yes, your Amazon, Walmart, and eBay sales count toward your $500,000 threshold, even though those marketplaces collect and remit the sales tax for you under the marketplace facilitator law.
Worked example. Suppose you’re a New Zealand-based seller of skincare:
- $300,000 in direct Shopify sales to Texas customers in the past 12 months
- $250,000 in Amazon FBA sales to Texas customers in the past 12 months
Your Texas gross revenue: $550,000. You are over the $500K threshold. You must register. Amazon will continue collecting tax on the FBA sales (as MF), but you are now responsible for collecting tax on your Shopify sales and filing Texas returns.
And remember — if any of your FBA inventory has ever sat in a Texas warehouse, you have physical nexus and the $500K threshold doesn’t even matter. Register regardless.
How Texas Sales Tax Rates Work for Remote Sellers
The Texas state rate is 6.25%, and local jurisdictions can add up to 2.00% on top — for a maximum combined rate of 8.25%. Texas has more than 1,700 local jurisdictions (cities, counties, transit authorities, special districts), all centrally administered by the Comptroller.
The 6.25% state rate + up to 2% local
For an in-state retailer, Texas is origin-based — the rate is the rate at the seller’s place of business. For remote sellers (you), the default is destination-based — the rate is the rate at the buyer’s delivery address. That means in theory you’d need to track which combined rate applies in every Texas zip code you ship to.
In practice, most sellers either (a) use a tax engine that does this lookup, or (b) elect the Single Local Use Tax Rate.
The Single Local Use Tax Rate election (1.75%)
To simplify life for remote sellers, Texas offers an election under Texas Tax Code §151.0595, the Single Local Use Tax Rate. Instead of charging the actual local rate at each customer’s address, you charge a flat 1.75% single local rate on every Texas sale.
| Approach | State rate | Local rate | Total to customer |
|---|---|---|---|
| Default destination-based | 6.25% | 0% – 2.00% (varies) | 6.25% – 8.25% |
| Single Local Use Tax Rate | 6.25% | 1.75% (flat) | 8.00% on every Texas sale |
When the single rate saves you money vs. destination-based
The single-rate election is a trade-off:
- Pro: drastically simpler. One rate. No address-by-address lookup. One reporting line on the return.
- Pro: if most of your Texas customers are in 2.00% local jurisdictions (Houston, Dallas, San Antonio metros mostly are), the single rate (1.75%) is less than what you’d otherwise charge — making your pricing slightly more competitive and you absorb nothing.
- Con: if your customers are concentrated in low-local-rate or zero-local-rate jurisdictions, you’re charging them more than required and may lose price competitiveness.
- Con: the election is prospective only and is made annually.
For most foreign Shopify and Amazon sellers with broadly distributed Texas customers, the Single Local Use Tax Rate election is the right call. It removes a giant operational headache.
How to make (or revoke) the election
The election is made by filing the appropriate election form with the Comptroller. It takes effect on the date specified in the election (no earlier than the date received), and once made, applies to all Texas use tax until you revoke it. We make this election for clients who want the simplification — it’s a one-time setup task that saves hundreds of hours of operational pain over the years.
Registering for a Texas Sales and Use Tax Permit
Registration is free, but the mechanics are different for foreign sellers. Specifically, if no owner, partner, officer, or director of your business has a U.S. Social Security Number, you cannot use the online application — you must use the paper Form AP-201.
Sales tax permit vs. use tax permit — which do you need?
Texas issues a single permit — the Texas Sales and Use Tax Permit — that covers both sales tax (collected on sales by Texas-based retailers) and use tax (collected on sales by remote sellers shipping into Texas). As a remote or foreign seller, you’re registering for the use tax side, but the permit document and registration process is the same.
Webfile registration walkthrough
For sellers with at least one U.S.-resident owner/officer with an SSN:
- Go to the Comptroller’s eSystems portal at comptroller.texas.gov/programs/systems/esystems.php.
- Create an eSystems user profile.
- Select “Apply for Sales and Use Tax Permit.”
- Provide business legal name, FEIN, NAICS code, ownership structure, projected monthly Texas sales, and bank account info (for ACH remittance — though this can be set up later).
- Submit. There is no fee to register for a Texas Sales and Use Tax Permit.
What foreign sellers without an SSN, EIN, or US bank account need to know
This is where the Comptroller’s published guidance is explicit and unfortunately strict. Per the Comptroller permit page: you cannot use the online application if you are a sole owner, partner, officer or director and do not have a Social Security Number — you must apply using paper Form AP-201.
Practical implications for foreign sellers:
- No SSN? Use paper Form AP-201. Email it to
sales.applications@cpa.texas.govor fax to 512-936-0010. Processing typically takes 2–3 weeks. - No EIN? You’ll need to obtain an Employer Identification Number from the IRS first using Form SS-4. Foreign entities can apply by phone or fax — they do not need an SSN to do so.
- No U.S. bank account? You can register and receive your permit. You’ll need a way to remit tax — most foreign sellers use ACH from a U.S. business bank account, a Wise Business USD account that supports ACH, or pay-by-credit-card (with a 2.25% + $0.25 fee on payments over $100). Permit issuance is not gated by having a bank account.
- No U.S. address? Texas accepts a foreign business address on the application. You’ll need a reliable mail-receiving setup since the permit and any Comptroller notices are mailed.
We do this every week for international clients. For step-by-step help, see our guides on registering without an SSN and foreign sellers without a U.S. bank account.
How long it takes and what you receive
Plan for 2 to 3 weeks for processing. You’ll receive your Texas Sales and Use Tax Permit by mail, along with your Webfile number (an alphanumeric code starting with “RT”) that you’ll use to log in and file returns. The permit does not expire and does not need to be renewed.
Filing and Remitting Texas Sales Tax
Texas assigns your filing frequency based on your tax liability, with returns due on the 20th of the month following the period. And yes — Texas pays you a small discount for filing on time.
Filing frequencies: monthly, quarterly, annual
The Comptroller assigns frequency at registration based on your projected sales, then reviews annually:
| Annual Texas tax liability | Filing frequency |
|---|---|
| Less than $500/year | Annual |
| $500 – $5,000/year | Quarterly |
| More than $5,000/year | Monthly |
If you’re a high-volume monthly filer with prior-year liability above the published EFT threshold, the Comptroller will require you to remit by electronic funds transfer (EFT) and may also require monthly prepayments.
Due dates and the prepayment discount
Texas sales and use tax returns are due on the 20th day of the month following the reporting period (e.g., June monthly return is due July 20). Returns filed via Webfile must be submitted by 11:59 p.m. Central Time on the due date.
Texas offers two discounts for compliant filers:
- Texas offers a timely filing discount for sales tax returns filed and paid on time, but the exact percentage and any caps depend on current Comptroller guidance. If you want to confirm your discount entitlement, contact us for a current review.
- Prepayment discount: an additional discount is available to taxpayers who prepay their tax liability. The exact mechanics turn on filing facts and current Comptroller guidance — if you’re a high-volume Texas filer and want to take advantage of the prepayment discount, contact us for a current review.
How to file via Webfile
You log in at the Comptroller’s eSystems portal using your Webfile number, select the period, enter total Texas sales, taxable Texas sales, and tax due (broken out by jurisdiction unless you’ve elected the Single Local Use Tax Rate), apply any timely-filing discount, and submit payment by ACH debit, ACH credit, credit card, or check.
You must file even if you had zero Texas sales for the period. Failure to file a “zero return” will trigger a non-filing notice and a $50 penalty.
Penalties for late filing or non-filing
Texas’s late-filing penalty structure:
| Violation | Penalty |
|---|---|
| Late filing, 1–30 days late | Texas imposes a percentage-based penalty on late sales tax payments, with the rate scaling based on how late the payment is. If you have a late Texas sales tax payment, contact us for a current review. |
| Texas late-filing penalties escalate once a return passes certain day-count thresholds after the due date. If you have an outstanding Texas return, contact us for a current review before filing. | 10% of tax due |
| Late return penalty | $50 per return |
| Non-electronic filing when EFT mandated | Additional 5% |
| Interest | Set annually by Comptroller, applies from due date |
These penalties stack and compound. A single missed monthly return can easily double in cost within a few months.
Texas Taxability Quirks Out-of-State Sellers Get Wrong
Texas has several taxability rules that don’t match what most other states do — and getting them wrong on a tax engine is a common audit finding.
Is shipping taxable in Texas?
Yes, generally. Under Comptroller Rule 34 TAC §3.303, shipping and handling charges follow the tax treatment of the underlying goods:
- Taxable goods → shipping is taxable, even if separately stated on the invoice
- Exempt goods → shipping is exempt
- Mixed shipment → shipping is allocated between taxable and exempt portions
If your tax engine is configured to treat shipping as exempt by default, you have a Texas under-collection problem.
SaaS and digital products: the 20% data processing exemption
Texas treats SaaS unusually. In Texas, data processing services — which can include SaaS — are taxable at the 6.25% state rate plus applicable local taxes on the full charge when the service is taxable (see Texas Comptroller Pub. 94-127).
So if you sell a $100/month SaaS subscription to a Texas customer, the taxable base is $80 and the tax (at 8.25% combined) is $6.60 — not $8.25 as you’d compute under a standard “SaaS taxable” rule.
Pre-written/canned software delivered electronically is taxable as tangible personal property (full rate, no 20% reduction). Custom-developed software is generally exempt as a service.
For a state-by-state SaaS comparison, see our SaaS sales tax guide.
Mixed bundles and the “true object” test
When you sell a bundle of taxable and exempt items for one price, Texas applies a “true object” test to determine taxability of the bundle. If the true object of the transaction is a taxable product, the entire bundle is taxable. If the true object is exempt, the bundle is exempt. Separately stating prices for each component can help — but only if the pricing is reasonable. This is one area where the rules turn heavily on facts; if you sell mixed bundles into Texas at meaningful volume, contact us for a current review of your specific SKUs.
Resale and exemption certificates from Texas buyers
If a Texas buyer claims your sale is for resale or otherwise exempt, you must collect and retain the appropriate exemption certificate:
- Form 01-339 (back) — Texas Sales and Use Tax Resale Certificate for resale claims
- Form 01-339 (front) — Texas Sales and Use Tax Exemption Certification for other exemptions (manufacturing, agriculture, government, nonprofit, etc.)
A valid out-of-state resale certificate is also generally accepted from buyers in other resale-permitting states. Records must be retained for at least four years.
What If You’re Already Behind? Back Taxes and the Texas VDA
If you’ve been over the $500K threshold (or had FBA inventory in Texas) for months or years and never registered, do not just register and start filing — that registration application can trigger a “when did you start selling here?” question that opens up unlimited back-tax exposure. The Voluntary Disclosure Agreement (VDA) program is usually the better path.
Calculating your back-tax exposure
Pull your monthly Texas revenue for the past 4+ years (the standard look-back period). For each month in which you had nexus, estimate:
- Tax due = (taxable Texas sales × applicable rate) — net of any tax already collected by marketplaces as MF
- Penalties = up to 10% of tax due plus the $50 late-return penalty per period
- Interest = compounded monthly from each return’s due date
For most sellers we onboard who’ve been ignoring Texas, the back-tax exposure is meaningful but manageable — and the penalties and interest are often the part that hurts the most.
The Texas Voluntary Disclosure Agreement program
The Texas Comptroller offers a VDA program that, in general, limits the look-back period and waives most penalties in exchange for the seller voluntarily disclosing past liability and paying back tax plus interest. Specific look-back, waiver, and eligibility terms turn on the fact pattern and current Comptroller policy, but key features typically include:
- Look-back limited (commonly 4 years)
- Penalty waiver on disclosed liabilities
- Interest generally still applies
- Eligibility requires that the Comptroller has not already contacted you and you are not under audit
For a deeper dive on the mechanics across states, see our VDA guide.
When VDA makes sense vs. just registering forward
Three rough rules of thumb:
- Crossed the threshold less than 6 months ago? Often fine to just register forward and disclose start date honestly. Exposure is limited.
- Crossed 6+ months ago, FBA inventory in Texas, or ignored the rule for 1+ years? VDA is almost certainly the right path. The penalty waiver alone usually pays for the cost of the VDA process.
- Already received a letter from the Comptroller? You’re no longer eligible for VDA. Time to lawyer up — or have us handle the audit response.
This is one of the highest-leverage decisions in your Texas compliance. Make it wrong and you turn a 4-year exposure into an unlimited one. We do this analysis as part of our standard onboarding for sellers with historical exposure. Book a consult.
Done-for-You: How Sales Tax Compliance USA Handles Texas (and 45 Other States)
You’ve now read 3,000 words on Texas alone. There are 45 other U.S. states with sales tax, each with its own thresholds, rates, marketplace rules, registration mechanics, filing frequencies, and quirks. Most of our clients realize, somewhere around the third state guide, that this isn’t a project — it’s a permanent operational burden.
That’s what we’re here for.
What’s included in our service
- Nexus assessment across all 50 states — based on your actual sales data and inventory locations, we tell you exactly which states you have to register in, which are close, and which are safe.
- Registration in every required state — including paper applications for foreign sellers without an SSN, EIN setup if needed, third-party authorization filings, Single Local Use Tax Rate elections where appropriate.
- Ongoing filing and remittance — monthly, quarterly, annual, on the right schedule for each state. Returns filed on time, every time. Tax remitted from your funds.
- Marketplace facilitator reconciliation — proper handling of Amazon/Walmart/Etsy MF tax so you’re not double-paying or under-reporting.
- Comptroller and DOR correspondence — when Texas (or any state) sends a notice, it comes to us, we respond.
- Voluntary Disclosure Agreement work — for clients with historical exposure, we negotiate the VDA, handle the disclosure package, and limit look-back.
- Audit defence if a state opens an audit.
How we onboard out-of-state and foreign sellers
We specialise in non-U.S. founders. Our standard onboarding handles the foreign-applicant friction points — paper Form AP-201 in Texas, the “no SSN” workaround, EIN application via Form SS-4, U.S. business bank account guidance if you don’t have one, mail-forwarding for state correspondence, the works.
If you’re an Amazon FBA seller in New Zealand, Australia, the U.K., South Africa, or anywhere else — this is exactly what we built the practice for.
One flat payment vs. per-state monthly software fees
Software platforms like the major SaaS sales tax platforms charge per state, per month, every month, forever — and at the end of the day, you’re still the one logging in, doing the registrations, mapping product taxability, and filing returns. They sell you a tool. We sell you the outcome.
Sales Tax Compliance USA is a done-for-you service. One fee. We handle everything. No software for you to learn, no logins to manage, no per-state monthly fees that compound as you grow.
Book a free 30-minute consultation →
Learn more about what’s included in our service →
Frequently Asked Questions
Do out-of-state sellers have to collect Texas sales tax?
Yes, if you have either physical nexus (employees, inventory, or other physical presence in Texas — including Amazon FBA inventory) or economic nexus (more than $500,000 in Texas gross revenue over the preceding 12 months).
What is the Texas economic nexus threshold in 2026?
$500,000 in Texas gross revenue measured over the preceding 12 calendar months, with no separate transaction-count threshold.
Do Amazon FBA sales count toward the Texas $500,000 threshold?
Yes. Marketplace-facilitated sales count toward your gross Texas revenue for purposes of the economic nexus calculation, even though Amazon collects and remits the tax on those sales. And separately — if any of your FBA inventory has been stored in a Texas warehouse, you have physical nexus regardless of dollar volume.
Can a foreign seller register for a Texas sales tax permit without an SSN or EIN?
You need an EIN — apply for one with IRS Form SS-4 (foreign entities can do this without an SSN). Without an SSN for any owner/officer, you cannot use Texas’s online application; you must use paper Form AP-201. A U.S. bank account is not required to register, only to remit tax.
What is the Texas single local use tax rate and should I elect it?
Texas remote sellers may elect the Single Local Use Tax Rate of 1.75%, producing a combined 8.00% rate with the 6.25% state tax; the statutory local cap is 2%, so total tax can otherwise reach 8.25%, and the election is made on Form 01-799 (see Texas Comptroller — Single Local Use Tax Rate). For most multi-state foreign sellers it’s worth electing — it removes the need to track address-by-address local rates.
Is SaaS taxable in Texas for out-of-state sellers?
Yes. SaaS is treated as a taxable data processing service in Texas, with a 20% statutory exemption — meaning 80% of the sales price is subject to tax.
Is shipping taxable in Texas?
Generally yes, when shipping a taxable product. Shipping charges follow the tax treatment of the underlying goods, even if separately stated on the invoice.
What happens if I’ve been over the Texas threshold for two years and never registered?
You have back-tax exposure. The standard look-back is four years. The Voluntary Disclosure Agreement program typically limits look-back and waives penalties — but only if the Comptroller hasn’t already contacted you. If this is your situation, contact us before you do anything else; registering forward without addressing the historical exposure can backfire.
How often do I have to file Texas sales tax returns?
Monthly if your annual Texas tax liability is over $5,000; quarterly if $500–$5,000; annual if under $500. The Comptroller assigns frequency at registration and reviews annually. Returns are due the 20th of the month following the period end.
How much does it cost to register for a Texas sales and use tax permit?
There is no fee to register for a Texas Sales and Use Tax Permit.
Last verified: 2026-05-10. Source: Texas Comptroller of Public Accounts, Texas Tax Code Chapter 151, 34 Texas Administrative Code §3.286, Comptroller Publication 94-170.
This article is for informational purposes only and does not constitute tax advice. Consult a licensed tax professional before acting on any of this content.
