Texas State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Texas, with full citations and the original source on every page.
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Are membership fees for access to an unstaffed, automated self-service dog-wash facility taxable in Texas when its stations are permanently plumbed into the building?
No. Customers washed their own dogs without employee assistance, so the taxpayer did not provide taxable dog-grooming services. The permanently plumbed stations were real-property improvements, not le…
Does Texas sales tax apply to a company's fee for reviewing and proofreading auto dealers' manufacturer-warranty reimbursement claims before they're submitted?
No. A company that only reviews, edits, and proofreads dealers' warranty reimbursement claims already entered into the manufacturer's own system — without keeping its own database, entering data, or s…
Does Texas's sales tax exemption for gas and electricity sold to a qualifying data center cover hydrogen used to power on-site fuel cells?
No. The Texas Comptroller's long-standing interpretation of the sales tax exemption for gas and electricity sold to data centers limits "gas" to natural gas, so hydrogen purchased to power data center…
Is a ready-mix concrete producer that delivers to job sites a taxable 'ready mix concrete contractor,' and where does it source local sales tax on its sales — the plant or the delivery site?
The producer is a seller of materials, not a "ready mix concrete contractor," because its own crew doesn't finish or incorporate the concrete into the property — the customer's crew does. As a materia…
Is a mobile app operator's fee to truck-stop fuel sellers — charged for running the discount-fuel app that generates codes and transaction reports — taxable as a Texas data processing service?
Yes. The app operator's percentage-based fee to fuel stops is taxable as a data processing service, because generating per-driver fuel codes, verifying purchases, and compiling transaction reports for…
Is an employer-sponsored telehealth benefit — including online questionnaires, medication profiles, educational content, and at-home test kits — subject to Texas sales tax?
No. Telehealth services aren't a taxable service category in Texas at all, and this provider's related questionnaires, medication profiles, and educational content don't independently qualify as taxab…
Is a company's cleanup and removal of non-hazardous spills from Texas highways — including its rolloff-box charges — a taxable real property service, even when billed to a state agency?
Yes. Removing and disposing of Class 1-3 non-hazardous spills from Texas roadways is a taxable real property service, and stays taxable even when the state highway department is billed or a government…
When a supplier's on-site technicians only power equipment on/off and do maintenance — but the customer's own staff actually run it — is that a taxable equipment rental or a nontaxable operator-provided service?
It's a taxable equipment rental, not a nontaxable operator-provided service. The supplier's on-site technicians only activate/deactivate the equipment and perform maintenance and monitoring — they don…
Does an open-ended staffing arrangement with no end date and continuously rotating workers qualify for Texas's sales tax exemption for temporary employment services?
No. A staffing arrangement that continues indefinitely, with no end date and rotating staff filling the same ongoing housekeeping roles, does not supplement the client's workforce for a limited, speci…
Is selling bitcoin (or other cryptocurrency) taxed as a sale of tangible personal property or a security for Texas franchise (margin) tax purposes, and where is that revenue sourced?
Neither. Texas ruled that selling bitcoin (and cryptocurrency generally) is the sale of intangible property for franchise (margin) tax purposes — not tangible personal property and not a security. Tha…
Does Texas's sales tax exemption for equipment used to recycle fracturing wastewater cover a company's water-treatment plant that treats wastewater for resale — including water it eventually disposes of in a saltwater well?
No, not under the specific fracturing-wastewater-recycling exemption (§ 151.355(7)) — that exemption requires the treated water to actually be reused in fracturing work, and this company mainly treats…
If a nontaxable engineering firm passes along the cost of taxable materials or services to its client with a markup, does the whole reimbursement become taxable, or just the markup?
The entire reimbursement becomes taxable, not just the markup. A nontaxable service provider (like an engineer) can pass through the exact cost of taxable materials or services it buys for a client, t…
When a subscription bundle mixes a taxable data processing service (like website creation) with nontaxable marketing services (like social media posts) for one lump-sum price, is the whole bundle taxable?
Yes, generally. When a taxable data processing service (like custom website creation, online ordering, or reservation management) is bundled with nontaxable marketing services (like social media posts…
Is a federally-mandated prescription-drug-data (RxDC) compliance reporting service — even the tier where an attorney and CPA are involved — a taxable Texas data processing service?
Yes, at all three service tiers. A company that helps employer health plans file federally required prescription-drug-cost (RxDC) reports — testing, converting, compiling, storing, and extrapolating e…
Is injecting nitrogen into an oil/gas pipeline to create a safe environment for maintenance work a taxable service, and is the nitrogen itself taxed as a sale to the customer?
The service charge is not taxable. Pipelines aren't "buildings," so purging one with nitrogen isn't a taxable real property cleaning service, and simply clearing a pipeline for safe operation doesn't …
Do the costs of building and maintaining private logging roads count as cost of goods sold (COGS) for Texas franchise (margin) tax purposes?
Yes. The Texas Comptroller ruled that a timber company's costs to build and maintain private logging roads — used to move harvested timber from the woods to its own lumber mill — qualify as cost of go…
Does Texas's manufacturing sales tax exemption cover a steel manufacturer's dedicated quality-control lab equipment — lathes, presses, ovens, and materials-testing machines — used to test finished plates before sale?
Yes. Equipment a manufacturer uses exclusively to prepare and test product samples for quality control — here, a lathe, mechanical press, ovens, and testing machines like a Charpy impact tester, tensi…
When a company's own operators keep full remote control of a frac-sand handling system at all times — with the customer never able to touch the controls — is that a taxable equipment rental?
No — it's a nontaxable service, not a taxable equipment rental, because the customer never has operational control: the provider's own operators keep exclusive custody of the remote/logic controllers …
Can a SaaS logistics company buy the cloud hosting services it uses to run its software tax-free under Texas's resale exemption, since it charges customers a monthly access fee?
No. Texas ruled that a logistics-software company's purchases of cloud hosting services don't qualify for the resale exemption, because the company uses the cloud services itself to run its software a…
Is a company that hosts a customer's cryptocurrency-mining machines in its facility — providing power, internet, physical security, and monitoring — providing a taxable data processing or security service under Texas law?
No, mostly. Texas ruled that hosting a customer's cryptocurrency-mining machines — providing electricity, internet, facility security, and routine monitoring — is neither a taxable data processing ser…
When a driver-education company rents racetrack garage spaces to event registrants — some used to park cars, others used as hospitality tents or meeting space — does Texas sales tax apply to the full lump-sum garage rental fee?
Mostly yes. Texas ruled that garage spaces a driver-education company rents to event registrants are taxable motor vehicle parking (not exempt real property rental) whenever the space is available for…
Is a company that runs a POS platform and mobile app connecting restaurants to workplace food events (popup counters, delivery, catering) a marketplace provider, and are the fees it charges restaurants taxable data processing services?
Yes to both. Texas ruled the company is a marketplace provider that must collect and remit sales tax on the restaurants' food sales, and separately that its Popup, Order Total, and Delivery fees (plus…
Does a restaurant owe Texas sales tax on the disposable collars it uses to temporarily extend soft-serve ice cream cups while blending toppings?
Yes, tax applies. The Comptroller ruled that disposable collars a restaurant uses to temporarily extend soft-serve cups during blending are taxable "hand tools" excluded from Texas's manufacturing exe…
When an equipment manufacturer's finance arm sells extended-warranty service contracts (CVAs) through independent equipment dealers, is the dealer responsible for collecting Texas sales tax on those contracts?
Yes. Texas ruled that the extended-warranty equipment protection plans (CVAs) sold by a manufacturer's finance subsidiary are taxable extended warranty contracts, and a dealer that invoices and collec…
Is a company's service of reviewing and approving or denying medical pre-authorization requests for an insurer, using proprietary software staffed by medical professionals, a taxable insurance, data processing, or information service in Texas?
No. Texas ruled that a company's service of reviewing medical pre-authorization requests for an insurer — deciding coverage using proprietary software plus licensed medical staff — is not taxable. It …
When a multinational company routes goods through a chain of intercompany sales inside a Texas bonded warehouse before a U.S. customer imports them, are those in-bond sales taxable, and does merely taking title to the goods there create Texas nexus for the out-of-state entities involved?
Split ruling. Texas held that the chain of sales occurring while goods sit in a Texas bonded warehouse are exempt from sales and use tax under the constitutional Imports and Exports Clause, because th…
Can a private land developer building a new library and community center — which it will transfer to the county upon completion in a land-swap deal — issue a tax exemption certificate to its contractor for construction materials and services?
Yes. Texas ruled that even though the developer building the new library and community center is a private, non-exempt entity, its construction contract qualifies as an "exempt contract" because the p…
Is a nonprofit's fee for accrediting third-party training centers taxable, and is the separate fee it charges those centers to maintain student certification records in its online repository taxable?
Split ruling. Texas held that a nonprofit's certification/accreditation service — reviewing and approving third-party training centers' courses, materials, and facilities — is not a taxable service. B…
Is the lump-sum membership fee for a business-coaching program for contractors — bundling consulting, a resource library, and a free SEO website — fully taxable when only part of what's included is a taxable service?
Yes, mostly. Texas ruled that a trade-contractor coaching membership's lump-sum signup and monthly fees are presumed fully taxable, because the bundle mixes nontaxable business consulting with taxable…
Can an oil-and-gas well-servicing consulting company exclude from its Texas franchise (margin) tax total revenue the payments it passes through to subcontractors?
Yes, partly. A company providing on-site consulting and supervision for oil-and-gas well completions and workovers can exclude from its Texas franchise tax total revenue the payments it passes through…
Are the sub-ballast, riprap, and culvert materials a contractor buys to build new railroad track and roadbeds in Texas exempt from sales tax as supplies essential to running trains?
Yes. Texas ruled that sub-ballast, riprap, and steel/precast culverts incorporated into new railroad track and roadbed construction are exempt from sales and use tax, because they're essential to the …
Is a residual referral fee a point-of-sale technology company earns from a credit card processor, for referring its retail/hospitality clients to that processor, subject to Texas sales tax?
No. Texas ruled that a point-of-sale technology company's residual referral fee — paid by a credit card processor as a cut of processing income for merchants the company referred — is not subject to s…
Is the fee a college-admissions testing company charges students to take its test by computer (instead of paper) — including scoring and sending results to schools — subject to Texas sales tax as a data processing service?
No. Texas ruled that a testing company's fee for administering its college-admissions test by computer — including compiling responses, generating a score, and sending results to a student's chosen sc…
When a finance company charges a customer one lump-sum monthly payment covering a sale-leaseback of equipment and software, plus office build-out and training costs, is the entire monthly charge subject to Texas sales tax?
Yes. Texas ruled that a finance company's lump-sum monthly rental charge — covering an operating-lease sale-leaseback of equipment and software, plus office leasehold-improvement work and training — i…
For an advertising agency selling website development, third-party CRM consulting, branding, and lump-sum retainer marketing services, which of these are taxable data processing or graphic arts, and which are nontaxable consulting?
Split ruling across many service lines. Website blueprinting alone is nontaxable, but building, custom-designing, or supporting a website is taxable data processing (80% taxable after the 20% exemptio…
Is a website-analytics company's fee to install tracking JavaScript, plus its charges for processing user-behavior data and providing dashboard reports to detect bots and fraud, a nontaxable proprietary information service, or taxable software/data processing?
Taxable across the board, just under different categories. Texas ruled that a website-analytics company's one-time fee to install tracking JavaScript on a customer's site is a taxable sale/license of …
Are reusable surgical retractor blades and handles that a manufacturer sells to hospitals and clinics exempt from Texas sales tax as therapeutic medical devices?
Taxable, with a narrow exception. Texas ruled that reusable surgical retractor blades and handles are "therapeutic devices," not orthopedic devices, and health care providers who buy them owe sales ta…
When a natural gas utility offers customers a voluntary, separately billed charge to purchase carbon offset credits for their gas usage, is that charge subject to Texas sales tax and the Miscellaneous Gross Receipts Tax?
Yes to both. Texas ruled that a natural gas utility's voluntary, separately stated carbon offset charge is treated as part of the sales price of the natural gas itself, not a separate nontaxable produ…
Can a private company that leases unimproved port authority land, and is required to build a container depot on it that becomes port property, issue a tax exemption certificate to its contractor for construction materials?
Yes. Texas ruled that even though the tenant building a container depot on Port of Houston Authority land is a private, non-exempt company, its 20-year ground lease qualifies as an "exempt contract" b…
For a certified large data center project that requires creating 40 qualifying jobs, can those new employees work temporarily at an affiliated, already-existing data center in the same county while the new data center is still under construction?
Yes. Texas ruled that jobs the employer internally assigns and codes to a new, under-construction large data center project qualify for the project's $500 million capital-investment sales tax exemptio…
Does a facilities management company that coordinates cleaning, maintenance, security, and catering subcontractors for commercial building tenants and landlords qualify as an exempt "property management company," and are its coordinated services and markup fee taxable?
Mostly taxable. Texas ruled the company does NOT qualify as an exempt "property management company" because it doesn't secure tenants or collect/apply rental revenue for its clients — it's simply a fa…
Is a biometric identity-verification service that lets airport travelers skip through security lines faster subject to Texas sales and use tax?
No. A biometric identity-verification service that lets enrolled travelers move faster through airport security is not subject to Texas sales and use tax. It isn't a taxable security service because t…
Which of a benefits administrator's employee health-benefit and retirement plan administration services are subject to Texas sales and use tax?
It depends on the specific service. Flex Spending Account/HRA administration, COBRA administration, and retirement plan/401(k) recordkeeping services are NOT taxable in Texas. ACA Comprehensive compli…
Can a certified large data center project in Texas be expanded to add a building on land sold to an affiliated company, and can that affiliate also become a tax-exempt qualifying owner?
Yes to both. A certified large data center project can expand to include a new building on an adjoining lot even after that lot is sold to a commonly-owned affiliate, and the affiliate can be added as…
Are sales of native grass, forbs, and legume seeds exempt from Texas sales tax, and does a seed seller need an exemption certificate from customers or its own sales tax permit?
Sales of the seeds are exempt from Texas sales tax because seeds fall under the always-exempt agricultural-items category, and the seller doesn't need to collect an exemption certificate from customer…
Do I owe Texas sales tax when I redeem a gift certificate I won at a charity auction for full-price merchandise at a store?
Yes. Texas treats a merchandise certificate won at a charity auction as a gift certificate, not a discount coupon, because it doesn't reduce the price of anything -- it's redeemed at full price. Buyin…
When is a city entitled to Section 351.156 tax revenue from a planned hotel-and-convention-center project, and which nearby restaurants and retail count as 'connected to' the qualified hotel or convention center?
Yes, conditionally. The city (eligible under Section 351.152(31)) will be entitled under Section 351.156 to the state sales/use and hotel taxes — and, with written consent, local and mixed beverage ta…
Is a Texas city entitled to receive state sales, hotel occupancy, and mixed beverage tax revenue generated by a new convention-center hotel project and the restaurants/bars/retail located near it?
Yes, conditionally. The city qualifies under Tax Code § 351.156 to receive state sales tax, hotel occupancy tax, and (with local agreement) mixed beverage tax revenue generated by the qualified hotel,…
Can a property-holding subsidiary use its parent company's Texas R&D sales tax exemption registration when the subsidiary purchases items that the parent actually uses in research?
No. The Texas research and development sales tax exemption only protects the entity that actually purchases the property AND performs the qualified research itself -- a subsidiary that buys equipment …
Are a nonprofit medical association's journal subscriptions, self-study learning materials, and membership dues subject to Texas sales tax?
No, all three are exempt from Texas sales tax. The nonprofit's peer-reviewed medical journal and its exam-prep Learning System (print, digital, or complete) qualify as exempt publications of a scienti…
Can a nonprofit still sell tax-exempt concert tickets under Texas's amusement-services exemption if it hires a for-profit company to produce and promote the events?
Yes. A 501(c)(3) nonprofit's concert ticket sales remain exempt from Texas sales and use tax even when it hires a for-profit company to promote and produce the events, as long as the nonprofit holds i…
Are a video-conferencing/telecom company's lump-sum charges for remote support, on-site maintenance, and infrastructure add-on services taxable in Texas?
Yes, all three lump-sum service charges are taxable. Remote Services are taxable because they include telecommunications services (and possibly software repair); On-Site Services are taxable as repair…
Are the custodian, authorization, and copy fees a medical-records retrieval company charges attorneys and insurers for litigation-related records subject to Texas sales tax?
It depends on the fee type. Custodian fees (reimbursing what the medical provider charged) and authorization fees (the retrieval company's own service charge) are NOT taxable. Copy fees for tasks like…
Is a web-based severe-weather forecasting and alert service (for clients like offshore rigs and refineries) subject to Texas sales tax as a taxable information service?
No. A web-based weather forecasting service — including severe weather alerts, hurricane forecasting, lightning proximity alerts, and meteorologist access, built from purchased meteorological data plu…
Is an implantable cardiac-monitoring device exempt from Texas sales tax as a therapeutic or prosthetic device, and can the manufacturer sell it tax-free to hospitals on a resale certificate?
Split ruling. The device is a therapeutic (not prosthetic) device: it's exempt from Texas sales tax ONLY when sold directly to a patient with a prescription. When the same device is sold to a hospital…
Are winter-storm rate-relief-bond charges on a Texas gas utility's bills subject to sales tax and Miscellaneous Gross Receipts Tax, and does the new public-school electricity tax break apply to natural gas too?
The bond-related charges are exempt: initial bond funding proceeds and the customer rate relief charges gas utilities bill to repay winter-storm-Uri recovery bonds are excluded from both sales tax and…
Must a peer-to-peer car-sharing platform collect Texas motor vehicle gross rental receipts tax on vehicles owned by its hosts?
No. Because the platform did not own or hold title to the listed vehicles, it did not have to collect Texas gross rental receipts tax. Each vehicle-owning host had to obtain a Texas Motor Vehicle Rent…
Are an online-learning company's subscription plans and its fees for referring prospective students to universities subject to Texas sales tax?
Split ruling. Most of the company's subscription plans (student tutoring, test prep, degree-sponsorship programs) are NOT taxable. But the teacher-focused classroom management plan (with lesson planni…
Is a cloud-based virtual patient simulation platform, sold to universities for nursing and healthcare courses, subject to Texas sales tax?
No. A cloud-based platform that lets nursing and healthcare students practice patient interactions through virtual patient simulations, graded with instructor feedback, is an educational service and n…
Is a fintech company's payment card management program (authorizing and settling debit/prepaid card transactions for business customers) a taxable data processing service in Texas?
No. A payment card management program that authorizes, processes, and settles debit/prepaid card transactions -- operating under a sponsorship agreement with federally insured issuing banks that have …
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These are official tax letter rulings and advisory opinions issued by Texas's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.