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Taxable Services in the State of Texas

In the state of Texas, the term “taxable services” is defined in Tax Code Section 151.0101 to include the following broad service categories, each of which encompasses a variety of specific services. 

Amusement Services
The provision of amusement, entertainment, or recreation, but does not include the provision of educational or health services if prescribed by a licensed practitioner of the healing arts for the primary purpose of education or health maintenance or improvement.

Cable and Satellite TV Services
The distribution of video programming, with or without the use of wires, to subscribing or paying customers.
*Satellite television service provided directly to a customer’s premises is exempt from local sales and use tax. This applies to both residential and nonresidential customers.

Credit Reporting Services
Creation or delivery of a credit report (or any part of a credit report) for a fee or any other consideration.
*Tax is due on credit reporting services if the address of the credit applicant is in Texas at the time of the request for a report, and the person who requested the credit report is in Texas or is doing business in Texas.

Data Processing Services
Using a computer for word processing, data entry, production, compilation, storage or manipulation is a taxable data processing service.
*Twenty percent of the charge for data processing services is exempt from tax.

Debt Collection Services
Actions performed in order to collect or adjust a delinquent debt, to collect or adjust a claim, or to repossess property subject to a claim.
*Tax is due on the total charge for debt collection activities when the last known address of the debtor in the creditor’s records, at the time the account is placed for collection, is in Texas; and the creditor for whom the debt is collected is located in Texas, or is engaged in business in Texas, at the time the debt is referred for collection.

Information Services
Gathering and furnishing general or specialized news or other current information to others, including electronic data research or retrieval and providing access to databases of such information.
*20% of the charge for information services is exempt from tax. Information services are not taxable when provided to Federal Communications Commission (FCC)-licensed radio or television stations or to newspapers published daily, weekly or at other short intervals.

Insurance Services

Internet Access Services
Services that enable users to connect to the Internet in order to access content, information, electronic mail or other services offered over the Internet.
*The first $25 of a charge for Internet access, per account, per month, is exempt from sales tax. Tax is due on any amount over $25 for Internet access.

Motor Vehicle Parking and Storage Services

Nonresidential Real Property Repair, Restoration or Remodeling Services
All charges for labor and materials to rebuild, replace, alter, modify or upgrade existing nonresidential realty.
*“Nonresidential real property” includes: commercial establishments such as manufacturing facilities, restaurants, offices, farms, ranches and hospitals, parking lots, retention ponds and similar improvements but does not include: property used as a family dwelling such as apartment complexes, nursing homes and retirement homes.

Personal Property Maintenance, Remodeling or Repair Services

Personal Services

Real Property Services

Security Services
Services for which a license is required by the Private Security Bureau of the Texas Department of Public Safety under sections 1702.101 or 1702.102 of the Texas Occupations Code.

Telecommunications Services
Involves the electronic or electrical transmission, conveyance, routing or reception of sounds, signals, data or information using wires, cable, radio waves, microwaves, satellites, fiber optics or any other method now in existence or that may be devised.

Telephone Answering Services
Receiving and relaying of telephone messages by a human operator.

Utility Transmission and Distribution Services
Services provided by a transmission and distribution utility are taxable if the transmission or delivery is directly to an end-use customer whose consumption of the electricity.

Taxable Labor
Sales that may commonly be considered “services” are taxable if the labor results in the sale of a taxable item, even if the customer provides the raw materials, tools, or equipment. This includes services such as photography, embroidering, woodworking, custom tailoring, catering, furniture assembly and much more.

 

For specific examples, exclusions, and more information on each of these categories please Contact Us