Sales Tax Nexus in Texas: What Online Sellers Need to Know

The Short Answer

Texas triggers sales tax obligations once you hit $500,000 in gross sales — one of the highest thresholds in the US. That threshold includes all your Texas sales across every channel. If you sell exclusively through a marketplace like Amazon or Etsy, you may not need your own Texas permit — but you still need to track your totals.

Economic Nexus Threshold

• Dollar threshold: $500,000 in gross revenue from taxable and nontaxable sales into Texas
• Transaction threshold: None
• Measurement period: Preceding 12 calendar months (rolling)
• Effective date: October 1, 2019

Texas is one of only two Tier 1 states with a threshold above $100,000. If you're selling $200K into Texas, you don't have a Texas sales tax obligation yet — but you should be tracking it.

Registration deadline: Once you cross the threshold, you have until the first day of the fourth month after the month you crossed to register. (Cross in March → register by July 1.)

Does Texas Count Marketplace Sales Toward Your Threshold?

Yes. Texas counts all gross revenue toward your $500,000 threshold — including sales made through marketplace facilitators like Amazon, Etsy, and Walmart. If you sell $400,000 directly and $150,000 through Amazon, your Texas total is $550,000 and you've crossed the threshold.

Exception: If you only sell through a marketplace that certifies it's collecting Texas tax on your behalf, you're not required to hold a Texas permit. But if you also sell directly — even a small amount — you'll need your own registration once you cross $500K combined.

What Taxable Products Look Like in Texas

Texas taxes most tangible goods at the standard combined rate, which stacks a state rate and a local rate. Key notes for online sellers:

• Clothing: Taxable. There's an annual back-to-school sales tax holiday covering items under $100, but clothing is taxable the rest of the year.
• Groceries/Food: Most unprepared food is exempt. Hot prepared food and restaurant meals are taxable.
• Digital goods and SaaS: Texas broadly taxes software, including cloud-based software (SaaS). Texas treats remotely-accessed software as a taxable "data processing service." If you sell software or SaaS products, Texas considers that taxable.
• Remote seller simplification: Texas offers a flat single local use tax rate that remote sellers can elect instead of calculating destination-based local rates. This simplifies things significantly.

How to Register in Texas

Texas is not an SST member, so you register directly with the Texas Comptroller:

• Portal: comptroller.texas.gov/taxes/permit
• Cost: Free
• Timeline: Same-day to 24 hours online
• What you'll need: EIN, business address, expected monthly taxable sales

No CAPTCHA barriers, no fees — Texas is one of the cleaner states to register in.

Filing Requirements

Texas uses three filing frequencies based on your tax liability:

• Monthly: Liability over roughly $500/month
• Quarterly: Liability under $500/month
• Annual: Very small filers under ~$50/year total

Due date: 20th of the month following the reporting period. File electronically via Texas eSystems.

Timely filing discount: Texas gives you a small 0.5% discount on tax due if you file and pay on time. It's modest but worth knowing about.

What Happens If You Don't Register

If Texas discovers you should have been collecting sales tax and weren't:

• Late filing fee: $50 flat fee per report filed after the due date
• Late payment penalty: 5% of tax due, plus an additional 5% for each additional 30-day period, up to a maximum 25%
• Interest: Accrues on unpaid tax
• Lookback period: Texas can audit up to 4 years back

Texas has a Voluntary Disclosure Agreement (VDA) program that can limit your lookback period and reduce penalties if you come forward proactively before Texas finds you first.

How Taxero Handles Texas

Taxero monitors your Texas sales in real time across every channel — Shopify, Amazon, your own store. When you're approaching the $500,000 threshold, we notify you with enough lead time to register before the deadline. If you cross, we handle the registration automatically and set up your Texas filings. We also implement the single local use tax rate election to simplify your rate calculations. No surprises, no missed deadlines.

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If You Haven't Filed Yet — What Zero Filers Need to Know

Not filing Texas sales tax is more common than you think. Plenty of sellers — Shopify store owners, Amazon FBA operators, multi-platform resellers — hit the threshold, kept moving, and ended up months or years behind. It's fixable. Here's what you need to know.

Texas has a Voluntary Disclosure Agreement (VDA) program specifically for businesses that need to get current. If you come forward proactively before Texas finds you, the VDA program limits your lookback period to 4 years and can reduce or waive penalties entirely. Coming forward voluntarily is almost always a better outcome than being audited.

Amazon FBA sellers: physical nexus applies immediately. If Amazon stores inventory in a Texas warehouse — even one pallet — that creates physical nexus from day one. There's no $500K threshold for physical presence. If you've had FBA inventory in Texas, you likely have an obligation regardless of your sales volume. Texas 1099-K data matching makes this a known audit trigger.

What to do: The first step is understanding exactly where you stand — what periods are open, what you might owe, and whether VDA is the right path. Our catch-up assessment walks you through it in 2 minutes.

Run your free catch-up assessment →

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Get Your Free Nexus Report

Not sure if you've crossed the Texas threshold? Run your revenue through our free nexus checker — it takes 2 minutes and shows your exposure across all 46 U.S. sales tax jurisdictions.

Check Your Texas Nexus Exposure →