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Texas - Sales and Use Tax Exemptions and Exemption Certificates

Texas sales tax is imposed on all retail sales, leases and rentals of tangible personal property and certain services. All gross receipts of a seller are presumed taxable unless a properly completed resale or exemption certificate is accepted by the seller.

TEXAS EXEMPTIONS

Some of the enumerated exemptions are:

Texas Exempt Entities: Government entities, religious, educational, or charitable organizations. (Texas Tax Code §§ 151.309, 151.310 and 151.321)

Texas Exempt Items: Some of the exempt items are sales for resale, items taxed by other laws, health care supplies, food stamp purchases, water, Food products for human consumption, agricultural items, gas and electricity, property used in manufacturing, property used in the production of motion pictures or video or audio recording an d broadcasting, magazines, containers, certain telecommunication services, aircraft, equipments used for mineral exploration or production, interstate shipments, common carriers and services across state lines, rolling stocks, energy efficient products, coin operated services, environment and conservation services (Texas Tax Code §§ 151.301 through 151.355)

CAUTION: Sales tax exemptions mentioned above are very briefly described. Please see the exemption statute and the applicable regulations for details. Transactions that do not meet the requirements of the exemption statute and its applicable regulations do not qualify for the sales tax exemptions.

TEXAS EXEMPTION CERTIFICATES: All gross receipts of a retailer are subject to sales or use tax unless a valid and properly completed exemption certificate or resale certificate is accepted by the seller. The exemption certificate is proof that the taxable item was purchased by an exempt organization or for exempt use. The resale certificate is proof that the taxable item was purchased for resale. (Rule § 3.285, Rule § 3.287)

01-339 Texas Sales and Use Tax Resale Certificate / Exemption Certification:

Texas Application of Exemption: Certain qualifying organizations including 501(c) organizations; educational, religious and charitable groups; qualifying homeowners associations are exempt from sales tax, however, these organizations are not automatically exempt from tax.Such organizations must prove their exempt status. To o apply for and obtain a letter of exemption from the comptroller, an organization must complete the appropriate application as listed below. Rule § 3.322

  • Form AP-204- Federal and all others
  • Form AP-205-Charitable: To receive a state tax exemption as a charitable organization, a nonprofit charitable organization must devote all or substantially all of its activities to the alleviation of poverty, disease, pain and suffering by providing food, drugs, medical treatment, shelter, clothing or psychological counseling directly to indigent or similarly deserving individuals for little or no charge.
  • Form AP-206 - Homeowners: A qualifying homeowners' association must be a nonprofit corporation organized primarily to operate residential property.
  • Form AP-207 - Educational: A qualifying nonprofit educational organization must be devoted solely to systematic instruction in the common accepted arts, sciences and vocations with a regularly scheduled curriculum, faculty, and an enrolled student body.
  • Form AP-209 - Religious: A qualifying nonprofit religious organization must primarily be an established congregation regularly meeting at a particular location for worship services

TEXAS EXEMPTION CERTIFICATE VERIFICATION

 
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