Texas sales tax on telecommunications services is 6.25% at the state level, and local jurisdictions can add up to 2% more, but only where a city, county, transit authority, or special purpose district has specifically voted to impose the tax on telecom. That gives a maximum combined rate of 8.25% and a floor of 6.25% for addresses that fall outside any opted-in local jurisdiction. Internet access is not taxed at all, and long-distance calls that neither originate in nor are billed to Texas are exempt.
Which Services Texas Taxes
Section 151.0103 of the Texas Tax Code defines telecommunications services as the electronic or electrical transmission of sounds, signals, data, or information through any medium: wires, cable, radio waves, microwaves, satellites, fiber optics, or any technology developed in the future.1State of Texas. Texas Tax Code 151.0103 – Telecommunications Services In practice that captures landline calls, mobile cellular service, long-distance service, fax transmissions, paging, and data transmission between two points.
The definition targets the function, not the pipe. A voice call taxable over copper stays taxable when it moves to fiber or VoIP. Providers can’t route around the tax by changing the underlying technology.
What Isn’t Taxed
Section 151.0103 pulls several categories out of the telecommunications definition entirely:
- Internet access service. Charges for connecting to the internet are excluded from the telecom definition and separately exempted under Section 151.325. Federal law under the Internet Tax Freedom Act also blocks states from taxing internet access.2Texas Public Law. Texas Tax Code 151.0103 – Telecommunications Services
- Data storage and processing. Storing data for later retrieval, or processing information to change its form or content, is not a telecommunications service.
- Prepaid telephone calling cards. Their sale or use is outside the telecom definition. Prepaid wireless service is handled separately.
- Pay telephone coin calls. The coin-paid portion of a pay phone call is exempt.1State of Texas. Texas Tax Code 151.0103 – Telecommunications Services
The internet access carve-out is the one most people will run into. If your monthly bill bundles internet with phone service, only the phone portion is subject to telecom sales tax. Providers should itemize the two so the internet component isn’t swept in.
Cable and streaming video are taxable in Texas but under a separate taxable-services category rather than as telecommunications, so the rules discussed here don’t govern them.3Texas Comptroller of Public Accounts. Taxable Services
How Local Tax Works
Here’s the part of the rate math that catches people: telecommunications services are exempt from local sales tax by default. A city, county, transit authority, or special purpose district has to vote specifically to impose local sales tax on telecom before it applies at any address in that jurisdiction.4Texas Comptroller of Public Accounts. Jurisdictions That Impose Local Sales Tax on Telecommunications Services
Many jurisdictions have opted in. The Comptroller’s most recent published list shows 438 cities, 42 counties, 7 transit authorities, and 235 special purpose districts imposing local telecom taxes.4Texas Comptroller of Public Accounts. Jurisdictions That Impose Local Sales Tax on Telecommunications Services Where overlapping jurisdictions each impose their local rate, the stacked local addition can reach 2%, producing the 8.25% ceiling. At an address in no opted-in jurisdiction, the total is 6.25%.
The rate follows the customer’s service address. Providers combine every applicable local rate for that address and show consumers the combined amount as a single line on the bill.
Interstate vs. Intrastate Calls
Texas draws a line between calls that stay in the state and calls that cross state borders. Intrastate telecommunications, where both ends are in Texas, get both the state rate and any applicable local telecom tax. Interstate long-distance calls that originate from or are billed to a Texas number get state sales tax only; no local tax is added.5Texas Comptroller of Public Accounts. Sales Tax on Telecommunications Services
Interstate long-distance calls that are neither originated from nor billed to a Texas address are exempt entirely under Section 151.323.6Texas Public Law. Texas Tax Code 151.323 – Certain Telecommunications Services This sourcing rule matters most for multi-state businesses, where the allocation between interstate and intrastate traffic directly changes the tax owed.
Who Can Buy Telecom Services Tax-Free
Beyond the interstate and internet access exclusions, three exemptions cover specific purchasers:
- Resale. Telecommunications providers buying services to resell them to end customers can buy tax-free using Form 01-339, the Texas Sales and Use Tax Resale Certificate. This keeps the same service from being taxed at each stage of the supply chain.7Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions – Resale Certificates
- Government entities. Federal, state, and local government bodies are exempt from Texas sales tax, including the telecom portion. That covers the United States government, Texas state agencies, counties, cities, special districts, and other political subdivisions.8State of Texas. Texas Tax Code 151.309 – Governmental Entities
- Network access charges. Regulated telecommunications providers that pay a local exchange company for network access are exempt on those access charges under Section 151.323.6Texas Public Law. Texas Tax Code 151.323 – Certain Telecommunications Services
Exempt purchasers have to give the seller a valid exemption certificate. Without documentation on file, the provider is required to charge the tax. Keep certificates current and easy to find; auditors will ask.
Other Charges on Your Bill That Aren’t Sales Tax
Sales tax isn’t the only line item on a phone bill, and the others are collected under different authority.
Texas charges a 911 equalization surcharge of $0.06 per line per month on standard phone lines and wireless connections.9Texas Comptroller of Public Accounts. 9-1-1 Equalization Surcharge Prepaid wireless works differently: a 911 fee of 2% of the purchase price is collected at the point of sale and remitted to the Comptroller quarterly.10Texas Comptroller of Public Accounts. 9-1-1 Prepaid Wireless Emergency Service Fee
The Federal Universal Service Fund charge is a federal cost, not a Texas tax. Carriers contribute to the fund based on a percentage of their interstate revenue, and the FCC sets the contribution factor each quarter. For the second quarter of 2026, the factor is 37.0% of a carrier’s interstate end-user revenues.11Federal Communications Commission. Contribution Factor and Quarterly Filings – Universal Service Fund The FCC does not require carriers to pass the cost through to customers, but nearly all of them do.12Universal Service Administrative Company. The Universal Service Fund It typically appears as a percentage of the interstate portion of your charges and is not set by Texas.
Filing and Payment for Providers
Providers report and remit collected telecom sales tax on Form 01-114, the Texas Sales and Use Tax Return.13Texas Comptroller of Public Accounts. Texas Sales and Use Tax Forms The return splits revenue into taxable and non-taxable categories and applies the correct local jurisdiction codes for each service address. Because local telecom tax is opt-in, identifying which jurisdictions have adopted it is essential to accurate reporting.
Filing runs through the Comptroller’s WebFile system, with payment by ACH debit, credit card, or mailed check. Monthly filers are due by the 20th of the month following the reporting period.14Texas Comptroller of Public Accounts. Sales and Use Tax
Late Penalties
Penalties climb fast. Payments 1 to 30 days late incur a 5% penalty. After 30 days, the penalty doubles to 10%. If payment remains outstanding past the date on a formal Notice of Tax Due, another 10% is added, bringing the total to 20%.15Texas Comptroller of Public Accounts. Penalties for Past Due Taxes Interest runs on top of that.
Timely Filing Discount
Providers who file and pay on time earn a 0.5% discount on the tax collected. Monthly and quarterly filers can claim an additional 1.25% prepayment discount on top of that.16Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions For high-volume providers, that adds up.
Records
Texas requires businesses to keep sales tax records for at least four years from the date the record was created, extended through any period in which a tax assessment, refund, administrative hearing, or judicial proceeding is pending. Exemption and resale certificates must also be retained for at least four years after the last transaction they cover.17Legal Information Institute. 34 Texas Administrative Code 3.281 – Records Required If an audit opens inside that window, reconstructing after the fact costs far more than keeping the paperwork organized from the start.