The Houston Rate and Where It Applies
Inside the City of Houston, sales tax is 8.25 percent: the 6.25 percent state rate, 1 percent for the city and 1 percent for METRO, the regional transit authority. That is the state maximum, so no other local tax can be added inside the city. The difficulty is that a Houston mailing address does not mean a location is inside city limits. Large parts of Harris County use Houston addresses but sit in unincorporated areas, smaller cities or special districts with their own combinations of county, emergency services, development or management district taxes. BOMCAS sets up each location and delivery address with the correct local code.
Taxable services, remote sellers and filing frequency are explained on the Texas sales and use tax page. Below is how the rate and the special taxes work in Houston.
Locations Outside the City
A store in Spring, a warehouse near Bush Intercontinental or an office on the Katy Freeway may face a different local rate than a downtown address. Texas sources most sales by a seller's place of business, so the rate at the location where the order is received and filled usually applies. Businesses with more than one location report each one separately on the return, and a mistake in the local code moves tax between jurisdictions even when the total is right. We check the Comptroller's address lookup for every outlet.
Plant, Refinery and Oilfield Purchases
Industrial clients along the ship channel buy large amounts of equipment, parts and services. Tangible personal property used directly in manufacturing or processing can qualify for exemption, but tools, safety gear, office equipment and many maintenance supplies do not. Repair and maintenance of nonresidential real property is a taxable service, while some new construction under a lump-sum contract is not taxed to the owner at all. Contractors and plant owners need the contract type settled before invoices go out, and exemption certificates on file for each purchase that is claimed as exempt.
Restaurants, Bars and Mixed Beverage Tax
Houston's restaurant scene runs from Bellaire Boulevard to the Heights, and bars and restaurants that sell mixed drinks deal with two extra taxes. The customer pays mixed beverage sales tax of 8.25 percent on alcohol served, and the permit holder also owes the 6.7 percent mixed beverage gross receipts tax. Both are filed monthly and are separate from the regular sales tax return. Point-of-sale settings that combine food and drink in one total make these returns hard to reconcile.
Hotels and Short-Term Rentals
Hotel stays in Houston carry 17 percent tax: 6 percent state, 7 percent City of Houston, 2 percent Harris County and 2 percent for the Harris County–Houston Sports Authority. Owners of short-term rentals in Montrose, the Museum District or near NRG Park owe the same taxes when a guest stays fewer than 30 days, unless the booking platform has agreed to collect them. The city and county taxes are reported to local offices, not to the Comptroller.
Use Tax on Out-of-State Purchases
Equipment bought from a Louisiana or Oklahoma supplier that did not charge Texas tax, and software or parts ordered online, can owe use tax at the Houston rate where the item is first used. Audits of Houston contractors and plants often focus on these purchases, so we review the fixed asset list and large vendor invoices each quarter.
What We Handle
- Permit applications and local codes for each outlet.
- Monthly or quarterly returns and timely filing discounts.
- Exemption and resale certificate files.
- Mixed beverage returns for bars and restaurants.
- Hotel tax filings for short-term rental owners.
- Use tax accruals and audit preparation.
Houston Sales and Use Tax Questions
What is the sales tax rate in Houston?
8.25 percent inside city limits: 6.25 percent state, 1 percent city and 1 percent METRO.
Is every Houston address taxed at the same rate?
No. Many Houston addresses are outside the city and fall under different county, district or city taxes, so each location needs its own check.
How much is hotel tax in Houston?
17 percent in total: 6 percent state, 7 percent city, 2 percent Harris County and 2 percent sports authority.
Do bars pay more than regular sales tax?
Yes. Mixed beverage sales tax of 8.25 percent applies to drinks and the permit holder also pays a 6.7 percent gross receipts tax.
Talk to BOMCAS About Sales and Use Tax in Houston
Separate tax accounts in the books keep returns clean, and sales totals tie to the business return. Restaurants also run tips through payroll, unfiled periods go to catch-up filing, large purchases are a planning question, rental hosts report income on personal returns, and Canadian sellers should read cross-border tax. Statewide, we also cover business tax preparation, personal tax preparation, bookkeeping, payroll, tax planning, back taxes and late filing and cross-border tax, all reachable from the Texas overview.
Tell BOMCAS about your Houston business or household and we will reply with next steps and what we need for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. Every Houston service is on the Houston overview. This page is general information, not advice for your situation.