In Texas, every time someone buys items such as clothing, electronics, or furniture, the seller collects sales tax. The state sales tax is set at 6.25%, and cities, counties, and special districts can add up to 2% in local sales tax. Local sales and use tax revenue may be used for general city operations or allocated to specific purposes such as economic development, public infrastructure, or community projects.
The Economic Development Corporation (EDC) Dashboard, maintained by the Texas Comptroller of Public Accounts, is a public reporting tool that tracks how cities allocate these local sales taxes.
In this study, the attorneys at Porter Law Firm present 2026 data showing how Texas’ average sales tax compares to other states, the number of cities with varying sales tax rates, how many direct local sales tax to specific voter-approved purposes, and how those allocations are distributed among cities that use local sales tax for economic and industrial development, municipal development, property tax relief, sports and community venues, or street maintenance and repair.
Learn more about our findings below.
Key Takeaways
- Texas’ combined state and local sales tax rate is 14% higher than the average combined rate across the U.S., ranked 14th overall.
- 77% of Texas cities levy the maximum combined sales tax rate of 8.25%.
- Meadowlakes collects the lowest sales tax in the state at 6.25%.
- South Texas collects the highest average sales tax in the state at 8.17%, and the Panhandle collects the lowest at an average of 8.00%.
- Economic and industrial development is the most common special-purpose allocation, with 714 Texas cities directing a portion of their local sales tax to this category.
- Property tax relief (355 cities) and street maintenance and repair (231 cities) are the next most frequently adopted special-purpose allocations.
- The maximum allocation toward economic and industrial development is 1%, adopted by 62 cities.
- San Antonio, Texas is the only city allocating local sales tax toward municipal development, at 0.13%.
- Athens, Texas has the highest allocation for property tax relief at 0.63%.
- Five cities allocate 0.50% toward sports and community venues, representing the highest rate within that category.
- Tool, Texas allocates its full 2% local sales tax toward street maintenance and repair.
How Texas’ Combined Sales Tax Rate Compares to Other States
Texas’ combined state and local sales tax rate is 14% higher than the average combined rate across the U.S.
Texas has a combined rate of 8.20%, ranked 14th overall, and the average rate, omitting states where rate information is unavailable, is 7.21%.
The top 10 states with the highest rates are the following:
- Louisiana (10.11%)
- Tennessee (9.61%)
- Washington (9.51%)
- Alabama (9.46%)
- Arkansas (9.46%)
- Oklahoma (9.06%)
- California (8.99%)
- Illinois (8.96%)
- Kansas (8.69%)
- New York (8.54%)
The top 10 states with the lowest rates are the following:
- Alaska (1.82%)
- Hawaii (4.50%)
- Maine (5.50%)
- Wyoming (5.56%)
- Wisconsin (5.72%)
- Virginia (5.77%)
- Kentucky (6.00%)
- Maryland (6.00%)
- Michigan (6.00%)
- Idaho (6.03%)
Combined Sales Tax Rate by Texas Cities
Roughly 77% of cities in Texas, or a total of 938 cities, levy the maximum combined sales tax rate of 8.25%.
Only a very small number of cities collect less than the maximum. Meadowlakes collects only the state sales tax at 6.25% and Douglassville has a rate of 6.50%.
Just 18 cities, about 1.39% of all Texas cities, have a total rate of 6.75%. These cities are: Hideaway, Oak Grove, Road Runner, Hillcrest, San Patricio, Retreat, South Mountain, Christine, New Home, Gallatin, Tira, Cottonwood, Barry, Sandy Point, Hebron, Powell, and Dayton Lakes.
The average sales tax rate by general Texas regions is:
- Central Texas: 8.09%
- East Texas: 8.11%
- North Texas: 8.15%
- Panhandle: 8.00%
- South Texas: 8.17%
- Upper Gulf Coast: 8.14%
- West Texas: 8.05%
Understanding Local Tax Allocation
Cities in Texas may levy up to an additional 2% in local sales tax on top of the state’s 6.25% rate. Portions of this local sales tax may be allocated to specific voter-approved purposes beyond the general City Sales Tax (CST), which is intended for general city operations, funding police and fire departments, parks and recreation programs, libraries, and more.
These allocations are drawn from the same 2% local sales tax cap and do not increase the overall local rate beyond that limit. The primary allocation categories include:
- Economic and Industrial Development: These taxes are allocated toward programs that promote business and industry growth. This can include initiatives such as business incentives, workforce development, and marketing efforts to attract new businesses.
- Municipal Development: These taxes help fund city-owned infrastructure and public services, such as constructing new municipal facilities, improving existing utilities, or expanding city-operated programs.
- Property Tax Relief: These taxes are used to help reduce the property tax burden on homeowners and businesses. In effect, this shifts part of the city’s revenue generation from property taxes to sales taxes.
- Sports and Community Venues: These taxes fund the construction, renovation, maintenance, or financing of public venues such as stadiums, arenas, convention centers, or other community facilities that serve as gathering spaces.
- Street Maintenance and Repair: These taxes are allocated toward repairing and maintaining roads, streets, sidewalks, and related infrastructure to improve safety and long-term reliability.
Special-Purpose Sales Tax City Participation
The chart below shows the number of Texas cities that allocate part of their local sales tax to specific purposes. Cities may choose to dedicate all or just a portion of the 2% local sales tax to one category or divide it among multiple categories. Because of this, a single city can be counted in more than one category on the chart.
Texas has 1,225 incorporated cities. More than half are allocating local sales tax toward economic and industrial development, with 714 cities doing so. A total of 355 cities are focused on property tax relief, and 231 dedicate funds to street maintenance and repair.
Very few cities focus on municipal development, with only San Antonio doing so at a rate of 0.13%, as of 2026. Eleven cities allocate funds to sports and community venues, including San Antonio. Notably, Arlington, home to major stadiums such as AT&T Stadium and Globe Life Field, dedicates 0.5% of its local sales tax to these facilities, which have been central to the city’s entertainment economy and tourism draw.
Division of Special-Purpose Sales Tax by City
The following chart shows all cities, as of 2026, that allocate a portion of their local sales tax to a special purpose. These cities, along with others not shown, may also have an additional portion within the 2% local cap that is used for other operations. Cities are listed in alphabetical order.
The maximum allocation toward economic and industrial development is 1%, adopted by 62 cities, though rates range as low as 0.13%. Athens, Texas has the highest allocation for property tax relief at 0.63%. Five cities allocate 0.50% toward sports and community venues, representing the highest rate in that category, though rates of 0.25% and 0.13% also appear. Tool, Texas allocates its full 2% local sales tax toward street maintenance and repair. Poetry, Texas allocates 1.50% of its local sales tax to this category as well, though other cities allocate smaller portions, with rates as low as 0.13%.
For more information on sales tax allocation, visit the municipality’s official website.
Methodology
We analyzed Texas city sales and use tax rates and allocation data from the Texas Comptroller of Public Accounts. Average state sales tax rates were also compiled using data from the Tax Foundation.
Fair Use Statement
Findings from our study may be republished and shared, provided that any mention includes a link back to this page so readers can access the full study.