Which dirt, sand, gravel, and limestone products are taxable in Texas, and does washing, sizing, crushing, or mixing make a difference?

Plain-English summary

A seller of sand, fill dirt, and top soil dug directly from the earth asked how Texas sales tax applies to "unprocessed" versus processed materials. The Comptroller drew the line at processing, and defined it precisely:

Not taxable (natural or only washed/sized):

• Sand, fill dirt, and top soil dug directly from the earth — the charge, including the transportation charge, is not taxable.
• Gravel that has only been washed and screened for size.
• Mortar sand — sand that has been washed repeatedly.

Taxable (crushed, cut, or mixed):

• Cement sand — sand that has been added to cement — is taxable, because it has been mixed.
• Crushed limestone and gravel that was crushed prior to sale.

The key principle: crushing is processing, but washing and sizing are not. In fact, limestone companies that crush or cut limestone for sale are traditionally allowed to take manufacturer's exemptions (provided they don't also act as contractors) — and if crushing weren't treated as processing, those companies would lose those exemptions.

Two practical points close the letter. The policy is not retroactive: if you already collected the tax, you must send it in, and the Comptroller cannot authorize a refund of tax collected on these materials — but you are not required to collect tax on unprocessed dirt, sand, or gravel going forward. And you may give your suppliers a resale certificate in lieu of tax on limestone you purchase to resell.

What this means for you

Sellers of dirt, sand, gravel, and stone

Ask one question about each product: has it been crushed, cut, or mixed? If yes, it is processed and taxable (and so is its delivery). If it has only been dug, dried, washed, or sized, it is unprocessed and not taxable — the transportation charge for unprocessed material rides along tax-free.

Watch the specific product lines

Mortar sand (washed) is not taxable, but cement sand (mixed with cement) is. Screened-and-washed gravel is not taxable, but crushed gravel is. The physical handling, not the label, controls.

Limestone crushers and the manufacturer's exemption

Because crushing counts as processing, a company that crushes or cuts limestone for sale can claim manufacturer's exemptions — as long as it isn't also acting as a contractor. And you can buy limestone for resale tax-free by giving your supplier a resale certificate.

Past collections

The change isn't retroactive. Remit any tax you already collected; the Comptroller won't refund tax collected on these materials, but you can stop taxing unprocessed material going forward.

Common questions

Q: Is raw sand, dirt, or top soil taxable in Texas?
A: No. Material dug directly from the earth is not taxable, and neither is the transportation charge.

Q: Does washing or sizing gravel make it taxable?
A: No. Washing and sizing are not processing, so washed-and-screened gravel and repeatedly washed mortar sand are not taxable.

Q: What makes a material taxable?
A: Crushing, cutting, or mixing — that is processing. Crushed limestone, crushed gravel, and cement sand (sand mixed with cement) are taxable.

Q: Can a limestone crusher claim a manufacturer's exemption?
A: Yes, because crushing is processing — provided the company does not also act as a contractor.

Q: Can I get back tax I already collected on these materials?
A: No. The policy is not retroactive; remit tax you collected, but stop collecting on unprocessed materials going forward.

Q: Can I rely on this 1988 letter for my own business?
A: Treat it as guidance only. It is based on the specific facts presented and can change with different facts; on the STAR system it binds the Comptroller only as to the taxpayer it was issued to and may no longer reflect current policy.

Citations and references

Rules and statutes: The letter applies the Comptroller's processed-versus-unprocessed policy and the manufacturer's exemption but does not cite a specific rule or Tax Code section by number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8809L0913F12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

September 29, 1988

Dear **:

I'm sorry for the delay in answering your letter concerning tax on

"unprocessed" dirt, sand, and gravel. I understand you sell sand, fill dirt,

and top soil dug directly from the earth. Your charge for these materials is

not taxable, including your transportation charge.

Gravel that has been washed and screened for sized is not taxable.

Mortar sand, sand that has been washed repeatedly, is not taxable. Cement

sand, sand that has been added to cement, is taxable, because it has been

mixed. Crushed limestone is taxable.

Crushing is processing. Traditionally, limestone companies that crush or

cut limestone for sale are allowed to take manufacturer's exemptions (provided

they do not also act as contractors). If crushing was not considered

processing, these companies would lose their manufacturer's exemptions.

However, washing and sizing are not processing activities. But, if gravel was

crushed prior to sale, then tax would be due on crushed gravel.

This policy is not retroactive. If you collected the tax, send it in. We

cannot authorize a refund of tax collected on these materials. But, you are

not required to collect tax on unprocessed dirt, sand, or gravel in the future.

You may give your suppliers a resale certificate in lieu of tax on

limestone you purchase to resell.

This opinion is based on the facts presented. If there are additional or

different facts, the opinion may change.

If you have any questions or need more information, please call our

toll-free number

1-800-531-5441. The regular number is 512/463-4614. You may write me at

the Taxability Section of the Legal Services Division

Sincerely,

Adina Whittemore

Taxability Section, Legal Services Division