Texas Sales Tax Nexus and Use Tax Exposure Guide

Texas is one of the largest sales tax jurisdictions in the United States and aggressively enforces sales tax and use tax compliance. Businesses frequently trigger Texas nexus earlier than expected due to economic thresholds, marketplace activity, inventory storage, or employee presence. Sales tax and use tax exposure in Texas can exist even when a business has no office in the state and even when tax is not collected at checkout. Understanding how Texas nexus works helps businesses avoid unnecessary registration, missed filings, or long term exposure.

What Texas sales tax nexus means

Texas sales tax nexus exists when a business has sufficient connection to the state that creates an obligation to register, collect, file, or remit sales tax or use tax. Nexus does not automatically mean tax is owed. It means Texas may require compliance actions depending on the facts. Texas enforces both sales tax and use tax rules and actively reviews out of state sellers.

Texas economic nexus thresholds

Texas enforces economic nexus for remote sellers.

A business generally triggers economic nexus in Texas if, during the current or prior twelve month period, it exceeds:

500,000 dollars in total revenue from sales into Texas There is no transaction count threshold. Only revenue matters.

Important details:

Revenue includes taxable and nontaxable sales
Marketplace sales may count depending on structure
Nexus can trigger mid-period and filing obligations may follow quickly

Crossing the threshold creates a potential obligation to register and begin compliance.

Physical nexus triggers in Texas

Texas sales tax and use tax nexus can also be triggered by physical presence.

Common physical nexus triggers include:

Inventory stored in Texas warehouses or fulfillment centers
Employees, contractors, or sales representatives in Texas
Installation, repair, or service work performed in Texas
Business-owned vehicles operating in Texas

Temporary or indirect presence can still create nexus.

Marketplace facilitator rules in Texas

Texas has marketplace facilitator laws requiring certain marketplaces to collect and remit sales tax on behalf of sellers. However marketplace collection does not automatically remove all seller responsibilities.

Common situations where obligations remain:

Registration may still be required
Use tax obligations may still exist
Direct sales outside the marketplace are not covered
Reporting obligations may still apply

Assuming marketplace collection solves everything often leads to exposure.

Common Texas sales tax and use tax exposure risks

Texas exposure often develops quietly as businesses grow.

Common exposure scenarios include:

Exceeding the $500,000 threshold without tracking it
Registering late after nexus already existed
Incorrect tax collection on taxable items
Missing required filings after registration
Ignoring use tax on business purchases

Exposure does not always require immediate action, but ignoring it usually increases risk.

Texas product and service taxability complexity

Texas taxes many services and tangible items differently than other states.

Common taxability challenges include:

Data processing services
Software and digital products
Bundled products and services
Manufacturing related exemptions

Incorrect taxability assumptions are a major source of Texas exposure.

What Texas sales tax and use tax exposure can include

Exposure may include:

Required registration that did not occur
Missed sales tax or use tax filings
Under-collected or misapplied tax
Penalties and interest over time
Increased audit risk

Exposure means decisions should be made intentionally, not reactively.

How to decide next steps for Texas nexus

A practical approach looks like this:

Step 1

Confirm whether Texas nexus exists

Step 2

Identify when nexus may have started

Step 3

Determine whether registration is required now

Step 4

Review whether tax was collected correctly

Step 5

Decide next steps before filing or paying anything

This approach avoids unnecessary registration and overcorrection.

How TaxMap helps with Texas sales tax nexus

TaxMap helps businesses:

Apply Texas nexus rules to real transaction data
Identify likely nexus trigger dates
Separate Texas from other states that may not require action
Understand whether exposure exists and how material it may be
Prepare structured outputs for CPAs or advisors

TaxMap supports clarity before compliance for growing and established businesses.

Check your Texas exposure

Related guides

Frequently asked questions

No. Sales tax applies to sellers making taxable sales in Texas. Use tax applies when sales tax was not collected. Texas enforces both.

Remote sellers may need to register if they exceed the 500,000 dollar economic nexus threshold or have physical presence in Texas.

Sometimes. Marketplaces may collect tax, but sellers may still have registration, reporting, or use tax obligations.

Does Texas require filing even with zero sales?

Once registered, Texas generally requires returns to be filed even for periods with no taxable sales.

Can Texas exposure exist even if I never registered?

Yes. Exposure often exists before registration occurs.

Texas sales tax and use tax nexus