Shipping is taxable in Texas whenever the item being shipped is taxable. The delivery charge follows the tax status of what’s in the box: taxable goods mean taxable shipping, and it doesn’t matter whether the fee is labeled shipping, freight, delivery, or handling, or whether it sits on a separate line of the invoice. Texas applies its 6.25% state sales tax plus up to 2% in local tax (an 8.25% combined maximum) to the full sales price, and the Comptroller treats delivery charges as part of that price.1Texas Comptroller. Sales and Use Tax
The Rule in Practice
Texas administrative code applies sales tax to all transportation or delivery charges billed by the seller when a taxable item is sold, whether those charges are broken out separately or bundled into the item price.2Cornell Law Institute. Texas Administrative Code 34 – Transportation and Delivery Charges Sell a $500 television with a $50 delivery fee, and sales tax is calculated on the full $550. The same math applies to furniture, electronics, clothing outside a tax-free weekend, and taxable services like equipment repair. If the product is taxable, the shipping goes on top of the taxable base.
The carrier doesn’t change the answer. Ship by your own truck, UPS, FedEx, or USPS, and the delivery charge is still taxable when the goods are. The Comptroller looks at what the seller invoiced, not who moved the package.
When Shipping Isn’t Taxed
If every item in the order is exempt from sales tax, the shipping charge is exempt too. This works only when the shipment contains zero taxable items.
Common exempt goods in Texas include:
- Grocery staples such as flour, sugar, bread, milk, eggs, and fresh produce bought for home consumption
- Over-the-counter drugs required by the FDA to carry a Drug Facts panel, including pain relievers, allergy medications, cold remedies, and sunscreen
- Wound care items like adhesive bandages, gauze, medical tape, and liquid bandage products
- Dietary supplements labeled with a Supplement Facts panel
A delivery containing only groceries and OTC medicine carries no tax on the merchandise or the shipping.3Texas Comptroller. Grocery and Convenience Stores Add one taxable item, and it becomes a mixed order with different rules.
Mixed Orders
When a single shipment contains both taxable and exempt items under one combined delivery charge, the seller has to allocate the shipping between the two categories. Taxing the whole charge or exempting the whole charge is not an option.
The standard method is price-based allocation. Work out what percentage of the merchandise total is taxable, then apply that percentage to the shipping fee. An order with $70 in taxable clothing and $30 in exempt groceries is 70% taxable. On a $10 delivery charge, $7 is subject to sales tax and $3 is exempt.
Weight-based allocation is also acceptable, but only if you keep detailed records of each item’s weight. Most sellers use the price method because it’s simpler. Keep the invoices and calculations for at least four years. If an auditor asks how you allocated a mixed-order shipping charge and you can’t show the math, the Comptroller can treat the entire delivery fee as taxable.4Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions – Keeping Records
The Sales Tax Holiday Trap
Texas holds an annual sales tax holiday in early August (August 7 through August 9 in 2026) for clothing, footwear, backpacks, and school supplies priced under $100 per item. The catch: the Comptroller treats the delivery charge as part of the item’s sales price when applying that $100 threshold.5Texas Comptroller. Sales Tax Holiday Tax Free Weekend
A pair of jeans priced at $95 with a $10 shipping charge has a total sales price of $105. Because that’s over $100, the full $105 is taxable during the holiday. The $95 sticker price alone doesn’t save you. When shipping is billed per item on an invoice mixing qualifying and non-qualifying products, only the delivery fee tied to the qualifying exempt item is exempt.
When the Delivery Arrangement Changes the Answer
Two narrow situations pull the shipping charge out of the taxable sales price:
- Buyer-arranged carrier. If the buyer independently contracts and pays a carrier directly, outside the seller’s invoice entirely, that freight cost isn’t part of the seller’s sales price and isn’t taxable. Total separation is the requirement. A seller who arranges the carrier and passes the cost through as a line item is still charging a taxable delivery fee.
- FOB shipping point contracts. When the sales contract specifies FOB shipping point, meaning title and risk of loss pass to the buyer at the seller’s dock, the freight charge may be treated as a service to the buyer after the sale is legally complete and may not be taxable.
Both exceptions are fact-dependent. The FOB exception in particular turns on what the contract actually says about title transfer, not on the label used on an invoice. Auditors look at the substance of the deal.
Which Local Rate Applies to the Shipping
Texas is destination-based for local sales tax. The combined state and local rate applied to the order, shipping included, is based on where the customer receives the item, not where the seller’s warehouse is.6Texas Comptroller of Public Accounts. Local Sales and Use Tax Collection – A Guide for Sellers
That changes the total tax on shipping from one delivery to the next. A customer in a city with the full 2% local rate pays 8.25% on the whole invoice, delivery charge included. A customer in an unincorporated area with no local tax pays only the 6.25% state rate. Sellers shipping across jurisdictions need to look up the correct combined rate for each delivery address, and the Comptroller publishes a rate locator tool for that purpose.7Texas Comptroller. Remote Sellers – Section: Local Use Tax
What Getting It Wrong Costs
Sales tax on shipping carries the same audit exposure as sales tax on the underlying goods. Texas applies a layered penalty structure to late or incorrect filings:1Texas Comptroller. Sales and Use Tax
- A $50 late filing fee on any report filed after its due date, even when no tax is owed
- A 5% penalty on unpaid tax filed 1 to 30 days late
- A 10% penalty on unpaid tax filed more than 30 days late
- Interest starting 61 days after the due date
These stack. Two months late means the $50 filing fee, a 10% penalty on the tax due, and interest. The larger risk for many sellers is the audit itself. The Comptroller can look back four years, and if your shipping allocations on mixed orders aren’t backed by records, every questionable transaction is presumed taxable. A small per-order error, repeated across thousands of invoices, becomes a real assessment.
Keep sales and use tax records for at least four years, including invoices, shipping documents, exemption and resale certificates, and any calculations used to split delivery charges. If an audit, appeal, or refund claim is open when that four-year clock runs out, hold onto the records until the matter is resolved. A resale certificate you accepted but can’t produce during an audit means the sale is presumed taxable.4Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions – Keeping Records