Tax on Restaurant Food in Texas: Rates, Exemptions, and Gratuities

The tax on restaurant food in Texas is the state’s 6.25 percent sales tax plus any local sales tax, for a combined rate of up to 8.25 percent on the prepared meal, non-alcoholic drinks, and any delivery charge. Alcoholic drinks are taxed separately at a higher effective rate, and a few items on a restaurant bill can stay tax-free if specific conditions are met.

The Rate You Actually Pay

Texas charges a base sales tax of 6.25 percent on most retail purchases, including prepared food from restaurants.¹ Cities, counties, transit authorities, and special-purpose districts can add up to 2 percent on top of that, which brings the maximum combined rate to 8.25 percent.²

Not every address hits the ceiling. The exact rate depends on which local jurisdictions overlap at the restaurant’s location, so you might pay 8.25 percent at one place and 7.75 percent a few miles down the road.

What Counts as Taxable Restaurant Food

Texas Tax Code Section 151.314 exempts food for human consumption but pulls three categories of prepared food back into the tax base:

Food sold ready for immediate consumption. Meals, sandwiches, salads, processed meats, ice cream in cones or small cups, and similar items from restaurants, cafeterias, delis, food trucks, hotel kitchens, or any vendor selling food from a vehicle.³
Food sold heated or heated by the seller. Anything the restaurant warms up before handing it over loses its grocery exemption.³
Two or more ingredients mixed by the seller and sold as a single item. Food that’s only cut, repackaged, or pasteurized doesn’t count.³

Texas also uses a utensil test. When food is sold with eating utensils provided by the seller, it qualifies as prepared food and is taxable.⁴ Most menu items trip at least one of these triggers, so the safe assumption is that your restaurant bill carries sales tax on the food.

Items That Can Stay Tax-Free

Bakery Items

Bakery goods get special treatment, but it depends on where you buy them. A bakery, meaning a retail location that primarily sells baked goods from a display case for off-premises consumption, can sell bread, rolls, pastries, doughnuts, cookies, and tortillas tax-free regardless of whether they’re heated or served with utensils.³ A standalone donut shop doesn’t collect sales tax on a heated croissant served on a plate.

At a restaurant or other retailer that isn’t primarily a bakery, the same items are exempt only if sold without plates or other eating utensils.⁴ A muffin handed to you in a bag is tax-free. The same muffin on a plate with a fork is taxable.

Items That Need Further Preparation

Foods that still need cooking by the buyer before they’re safe to eat, like raw eggs, uncooked fish, and raw meat, stay exempt even when sold at a restaurant.⁵ Refrigerated items the buyer typically reheats at home also fall outside the prepared food definition.⁴ A whole cold rotisserie chicken sold without utensils from a deli counter could qualify, though the line gets blurry.

Delivery Fees and Third-Party Apps

Delivery charges on restaurant food are taxable. Texas treats delivery and shipping charges connected to a taxable item as part of the taxable sale.⁶ Since the meal is taxable, any delivery fee added by the restaurant or by a platform like DoorDash or Uber Eats is also subject to sales tax. A $5 delivery fee on a $25 order means tax applies to $30.

Coupons and Discounts

Texas taxes what you actually pay, not the menu price. When you use a coupon the restaurant itself is absorbing, meaning no one reimburses the restaurant for the discount, sales tax applies only to the amount you’re charged after the discount. A $5 coupon on a $15 meal means you pay tax on $10.⁷ Buy-one-get-one promotions work the same way: tax is due only on what the customer actually hands over.

Tips and Mandatory Gratuities

A tip you leave voluntarily is never taxed. The state doesn’t touch whatever you decide to leave for your server.⁸ Mandatory gratuities, the kind added to the bill for large parties, follow a stricter rule.

A mandatory gratuity of 20 percent or less stays tax-free when three conditions are met: it’s clearly labeled as a tip or gratuity on the bill, it’s separated from the food price, and the money goes entirely to employees who regularly provide table service, such as waitstaff, busboys, and bartenders.⁷ If any portion is kept by the restaurant or paid to non-service staff like cooks, dishwashers, or owners, that portion becomes taxable.⁸

Mandatory gratuities above 20 percent are taxable in full, regardless of how the money is distributed.⁹ A 22 percent service charge doesn’t just get taxed on the 2 percent overage; the entire 22 percent becomes part of the taxable sales price.

Why Your Alcoholic Drinks Cost More

Alcohol at a restaurant carries two separate taxes that work differently from the sales tax on food.

The mixed beverage gross receipts tax is 6.7 percent, imposed on the business itself based on what it takes in from selling alcohol.¹⁰ The restaurant cannot charge this one to you as a line item. A permittee may add an informational statement on the receipt disclosing the amount of gross receipts tax it owes on the sale, but that statement cannot appear as a charge.¹¹

The mixed beverage sales tax is 8.25 percent and is the consumer-facing portion. The restaurant collects it from you, either by adding it to the drink price or by building it into the listed price.¹² The business must pick one method and stick with it. Either way, you’re paying 8.25 percent on every drink, and the restaurant is also absorbing the 6.7 percent gross receipts tax, which is typically reflected in the menu price.

Catering and Food Trucks

Caterers are treated as sellers of prepared food and must collect sales tax on everything billed in connection with a taxable meal, including charges for serving, room rentals, and equipment like tables and chairs provided to the customer.⁴ If a caterer uses a hotel banquet room, the hotel occupancy tax on that room is passed through as part of the taxable sale.

Food trucks and other mobile vendors follow the same rules as brick-and-mortar restaurants. Texas administrative code defines a mobile vendor as someone selling food from a motor vehicle, pushcart, or similar, and the prepared food they sell is taxable.⁴ A taco bought from a truck is taxed the same as one bought from a sit-down restaurant. The state’s annual sales tax holiday in August covers clothing, footwear, school supplies, and backpacks under $100, and does not reach restaurant meals or prepared food.¹³

1
Texas Comptroller of Public Accounts. Sales and Use Tax
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Texas Comptroller of Public Accounts. Local Sales and Use Tax Collection – A Guide for Sellers
3
Texas Public Law. Texas Tax Code 151.314 – Food and Food Products
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Legal Information Institute. 34 Texas Admin Code 3.293 – Food; Food Products; Meals; Food Service
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State of Texas. Texas Tax Code 151.314 – Food and Food Products
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Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions
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Texas Comptroller of Public Accounts. Restaurants and the Texas Sales Tax
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Legal Information Institute. 34 Texas Admin Code 3.337 – Gratuities
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Texas Comptroller of Public Accounts. Quick Reference Guide for Hotels
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Texas Comptroller of Public Accounts. Mixed Beverage Gross Receipts Tax
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Legal Information Institute. 34 Texas Admin Code 3.1001 – Mixed Beverage Gross Receipts Tax
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Texas Comptroller of Public Accounts. Mixed Beverage Sales Tax
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Texas Comptroller of Public Accounts. Sales Tax Holiday