Prosper, TX Sales Tax Rate: 8.25% Split, Exemptions, and Holiday

The sales tax rate in Prosper, TX is 8.25%, and it’s the same whether your address sits in the Collin County or Denton County side of town.1Texas Comptroller of Public Accounts. Texas Sales and Use Tax Rates That figure is also the highest combined rate Texas allows anywhere in the state, so no county or special district tax can be layered on top of it.2Texas Comptroller of Public Accounts. Local Sales and Use Tax Frequently Asked Questions

How the 8.25% Is Split

Texas takes 6.25% on every taxable sale statewide.3State of Texas. Texas Tax Code 151.051 – Sales Tax Imposed The other 2% is local, split among entities Prosper voters approved over the years:

  • Town of Prosper general operations: 1.50%, which includes allocations to the Prosper Economic Development Corporation (Type A) and the Prosper Community Development Corporation (Type B).
  • Prosper Crime Control and Prevention District: 0.25%.
  • Prosper Fire Control District: 0.25%.

State law caps the local portion at 2%, and Prosper has hit that ceiling.4State of Texas. Texas Tax Code 321.101 – Sales and Use Tax Nothing more can be added unless one of the existing local taxes is repealed first.

What the Rate Applies To

The 8.25% covers most tangible goods sold in town: clothing, electronics, furniture, appliances, building materials, and similar items. Leases and rentals of tangible property are taxed the same way.5Texas Comptroller of Public Accounts. Sales and Use Tax

Texas also taxes a specific list of services:6State of Texas. Texas Tax Code 151.0101 – Taxable Services

  • Telecommunications, including voice calling plans and bundled phone service.
  • Cable and video programming, including satellite TV, streaming video, and video on demand.
  • Amusement services such as admission fees to entertainment venues and exhibitions.
  • Repair and remodeling labor on tangible personal property and real property, including home renovations.
  • Security services, alarm monitoring, private investigation, laundry, and similar personal services.
  • Data processing, which includes software-as-a-service and cloud platforms. Texas exempts 20% of the charge, so you effectively pay tax on 80% of the subscription.
  • Information services (databases, electronic research tools), which follow the same 80/20 split.
  • Motor vehicle parking and storage.

Standalone internet access is no longer taxable in Texas. Senate Bill 1405 removed it from the taxable services list effective July 1, 2025.7Texas Comptroller of Public Accounts. Taxable Services If your internet is bundled with a taxable service like cable TV or phone, the whole charge can still be taxable unless the provider breaks out the internet portion separately on the bill.

What’s Exempt

Groceries

Food bought for home preparation is exempt: produce, meat, dairy, eggs, cereals, snacks, frozen foods, and the rest of the standard grocery aisle.8State of Texas. Texas Tax Code 151.314 – Food and Food Products Prepared food sold ready to eat is taxable, so restaurant meals, deli items assembled by the seller, and heated food all carry the 8.25%. Soft drinks, candy, and ice fall outside the grocery exemption too.

Medicine and Medical Supplies

Prescription drugs, insulin, and any over-the-counter product with a “Drug Facts” panel are tax-free, as are dietary supplements.9State of Texas. Texas Tax Code 151.313 – Health Care Supplies The exemption also covers hearing aids, braces, prosthetic devices, corrective lenses, hospital beds, blood glucose test strips, and ostomy supplies. Diapers (adult and children’s) and baby wipes are exempt too, which many shoppers don’t realize.

Manufacturing Inputs

Businesses that manufacture goods for sale can buy machinery, equipment, replacement parts, and raw materials that become part of the finished product without paying sales tax.10State of Texas. Texas Tax Code 151.318 – Property Used in Manufacturing Chemicals, lubricants, and gases consumed during manufacturing are also covered. The property has to be directly used in or essential to the manufacturing operation. Office supplies and break room items don’t qualify.

The August Sales Tax Holiday

Texas runs a back-to-school sales tax holiday each August. In 2026, the tax-free window opens Friday, August 7, and closes at midnight on Sunday, August 9.11Texas Comptroller of Public Accounts. Sales Tax Holiday Clothing and footwear priced under $100 per item are exempt from both state and local sales tax during that weekend.12State of Texas. Texas Tax Code 151.326 – Clothing and Footwear for Limited Period

Some items stay taxable even during the holiday. Athletic clothing and footwear designed primarily for a sport (cleats, football pads), protective gear (steel-toed boots, hard hats), and accessories like handbags, jewelry, watches, and wallets don’t qualify regardless of price. Rented clothing is also excluded. The $100 cap applies per item, not per receipt, so three $80 shirts in one purchase are all exempt.

Buying From Out-of-State Sellers

When you buy something from an out-of-state seller who doesn’t collect Texas sales tax, you owe the equivalent as use tax at the same 8.25%.2Texas Comptroller of Public Accounts. Local Sales and Use Tax Frequently Asked Questions This comes up less than it used to, because most major online retailers and marketplaces already collect Texas tax at checkout. It still applies to purchases from smaller out-of-state vendors, private-party sales across state lines, and things you bring back from a trip.

Businesses report use tax on their regular sales tax return. Individual consumers without a sales tax permit can file a use tax return with the Texas Comptroller. The obligation technically applies any time a taxable item enters Texas without sales tax having been charged.

If You Sell Taxable Goods or Services in Prosper

Any business making taxable sales in Prosper needs a Texas sales tax permit before its first sale. The Comptroller’s online registration is free, and permits usually arrive within two to three weeks.13Texas Comptroller of Public Accounts. Texas Online Tax Registration Application You’ll need your Social Security number (or federal employer ID for partnerships and corporations), your NAICS code, and corporate filing details if they apply.

Filing frequency depends on volume. Quarterly filers submit returns by April 20, July 20, October 20, and January 20, each covering the previous three months. Higher-volume sellers may be assigned monthly filing. Permitted sellers who report and pay on time can keep 0.5% of the tax collected as a discount.5Texas Comptroller of Public Accounts. Sales and Use Tax

Late filing gets expensive. A return filed one to 30 days late carries a 5% penalty on the tax owed. Past 30 days, that becomes 10%. If tax remains unpaid after a formal Notice of Tax Due, another 10% is added, bringing the total to 20% of the original amount.14Texas Comptroller of Public Accounts. Penalties for Past Due Taxes Interest starts on the 61st day after the due date, and a $50 flat penalty applies to any late return even if no tax was due that period.

Remote Sellers and Marketplaces

Out-of-state businesses selling into Texas must collect and remit sales tax once they exceed $500,000 in total Texas revenue over the prior 12 calendar months.15Texas Comptroller of Public Accounts. Remote Sellers That threshold counts all gross revenue from Texas sales, taxable and nontaxable, including shipping and handling.

Marketplace platforms like Amazon, Etsy, and eBay are treated separately. Texas requires marketplace facilitators to collect and remit the tax for third-party sellers on transactions those platforms process. Sales you make through your own website still count toward the $500,000 threshold and require your own permit once you cross it.