Ezel / Tax Rulings / TX
TX 8903L0926A01 Sales and/or Use Tax (State,Local,MTA) 1989-03-30

Was a consumer's deductible payment for an automobile warranty repair taxable?

Short answer: No. The internal memo treated the warranty deductible like an insurance-repair deductible and concluded that tax was not due.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is NOT a taxpayer-specific letter ruling. It is an internal Texas Comptroller of Public Accounts Taxability Section memorandum published on the State Tax Automated Research (STAR) system for reference. It does not carry letter-ruling reliance protection under 34 Tex. Admin. Code Rules 3.1 and 3.10 and is included only as a historical record of 1989 guidance. It may no longer reflect current warranty or sales-tax policy. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Texas internal guidance treated the deductible a consumer paid for a repair under an automobile warranty as nontaxable.

The memo compared the $25, $50, or similar warranty deductible to a deductible paid on an insured collision repair and applied the same no-tax result.

Common questions

Was the warranty-repair deductible taxable? No, under this 1989 internal decision.

Was the memo a taxpayer-specific ruling? No.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

March 30, 1989

To: Taxability Section

From: Martin Cherry

Subject: Automobile Warranty Deductible charges

I need to pass along a decision so we're all on the same wave
length. The issue involves repairs to cars under warranty.

It is our position that the "deductible" charge paid by consumers
in connection with warranty repairs is not taxable.

Customers pay the first $25 or $50 or whatever amount -- a
deductible -- for this repair just as they would in connection
with a repair to a wrecked auto covered by insurance. The
consumer doesn't owe tax on the deductible in a traditional
insurance situation, and it's not due here either.

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