The sales tax rate in Westlake, Texas is 8.25%, which is the highest combined rate allowed anywhere in the state.1Texas Comptroller of Public Accounts. Texas Sales and Use Tax Rates That total is made up of the 6.25% Texas state sales tax plus a 2% local tax collected by the Town of Westlake. The rate is the same whether a purchase happens on the Tarrant County or Denton County side of town.
Where the Local 2% Goes
Texas caps the local portion of any sales tax at 2%,2Legal Information Institute. 34 Texas Administrative Code 3.334 – Local Sales and Use Taxes and Westlake uses the whole allotment. The town divides it into three dedicated streams:3Town of Westlake. Sales and Use Taxes
- 1% to the General Fund, which covers day-to-day municipal operations.
- 0.5% to property tax reduction, used to lower the property tax burden on residents and businesses.
- 0.5% to 4B economic development, currently committed to debt service on the town’s Civic Campus project.
What Is Taxed in Westlake
The 8.25% rate applies to retail sales, leases, and rentals of tangible personal property — anything you can see, weigh, measure, feel, or touch.4State of Texas. Texas Tax Code 151.009 – Tangible Personal Property Clothing, furniture, electronics, prepaid calling cards, and computer programs all fall inside that definition.
Texas also taxes 17 categories of services, which catches more businesses than owners expect.5State of Texas. Texas Tax Code 151.0101 – Taxable Services Among them: telecommunications and internet access, data processing, credit reporting and debt collection, repair and maintenance of personal property (motor vehicle repairs are carved out), security and alarm monitoring, information services, landscaping and janitorial work, personal services such as laundry and massage, and certain insurance services.
Downloaded software is treated as tangible personal property and taxed at the full rate. Software-as-a-Service subscriptions fall under the data processing tax, so cloud tools a Westlake business pays for are generally taxable as well.6Texas Comptroller of Public Accounts. Data Processing Services Are Taxable
What Is Exempt
Most food for human consumption is exempt from Texas sales tax, including meat, dairy, produce, eggs, bread, and snacks such as chips, nuts, granola bars, and popcorn.7Texas Public Law. Texas Tax Code 151.314 – Food and Food Products Candy, soft drinks, and ice do not qualify. Prescription drugs dispensed by a licensed practitioner are also exempt.8Texas Public Law. Texas Tax Code 151.313 – Health Care Supplies
Purchases by religious, educational, and charitable organizations are exempt when the items relate to the organization’s purpose and no individual profits from the transaction.9State of Texas. Texas Tax Code 151.310 – Exemptions for Religious, Educational, and Public Service Organizations Nonprofits qualified under IRC Section 501(c)(3), (4), (8), (10), or (19) are covered, and each exempt organization can hold up to two one-day tax-free fundraising sales per calendar year with individual items priced at $5,000 or less.
Inventory bought for resale is not taxed at the wholesale stage. The buyer gives the seller a resale certificate, and tax is collected only when the item reaches the final consumer.10Texas Public Law. Texas Tax Code 151.302 – Sales for Resale Using a resale certificate to avoid tax on items you actually consume in your own business is a common audit trigger.
The August Sales Tax Holiday
Texas runs a back-to-school sales tax holiday each August. In 2026 it falls on Friday, August 7 through Sunday, August 9, and qualifying items are free of both state and local tax at Westlake retailers.11Texas Comptroller of Public Accounts. Sales Tax Holiday
- Clothing and footwear are tax-free if each individual item is under $100. There is no cap on how many you can buy.
- Backpacks are tax-free under $100, including wheeled backpacks and messenger bags, with a limit of 10 per transaction without an exemption certificate.
- School supplies on the state’s eligible list (notebooks, pens, crayons, calculators, folders, glue, and similar items) are tax-free under $100.
Jewelry, watches, handbags, luggage, computers, software, textbooks, and specially designed athletic or protective clothing are not covered.
If You Sell From Outside Texas
Out-of-state sellers only need to collect Texas sales tax once their total Texas revenue tops $500,000 in the prior twelve months.12Texas Comptroller of Public Accounts. Remote Sellers That figure counts gross revenue from both taxable and nontaxable sales into the state, including shipping and handling. Once you cross it, you must obtain a Texas permit and begin collecting no later than the first day of the fourth month after exceeding the threshold.
Sellers who use Amazon, eBay, Etsy, Walmart Marketplace, or similar platforms generally do not collect Texas tax themselves. The marketplace is required to collect and remit on third-party sales and should send a written certification confirming it does so.13Texas Comptroller of Public Accounts. Remote Sellers and Marketplace Frequently Asked Questions Without that certification, you remain responsible until you get it.
Getting a Sales Tax Permit
Before you collect sales tax in Westlake, you need a Texas sales tax permit from the Comptroller. The permit is free, and the online application is the fastest route. Have the following ready:14Texas Comptroller of Public Accounts. Texas Online Tax Registration Application
- Your Social Security number (sole owners) or federal EIN.
- SSNs or EINs for each partner, officer, or director.
- Your NAICS code.
- Your business start date and physical Westlake location.
- For Texas corporations, your Secretary of State file number.
If any sole owner, partner, officer, or director lacks a Social Security number, the online application is not available and you need to submit paper Form AP-201 by email or fax. Collecting sales tax without a valid permit is illegal, so this step comes before your first sale.
Filing Deadlines and Discounts
The Comptroller assigns a filing frequency based on how much tax you are expected to collect. Businesses collecting more than $100,000 per year file monthly; others file quarterly or yearly. Returns are due on the 20th of the month after the reporting period closes.15Texas Comptroller of Public Accounts. Sales and Use Tax Quarterly deadlines fall on April 20, July 20, October 20, and January 20. Yearly filers file by January 20 for the whole prior calendar year. If a deadline lands on a weekend or legal holiday, it moves to the next business day.
Businesses that paid $50,000 or more in a single tax category during the prior fiscal year must file electronically through Webfile, and those that paid $10,000 or more must pay electronically.16Texas Comptroller of Public Accounts. File and Pay
Filing on time pays. You can keep 0.5% of the tax collected as a timely-filing discount, and prepaying your estimated tax adds another 1.25% on top of that.15Texas Comptroller of Public Accounts. Sales and Use Tax
Late Penalties
Missing a deadline gets expensive quickly:17Texas Comptroller of Public Accounts. Penalties for Past Due Taxes
- 1 to 30 days late: 5% penalty on the tax owed.
- More than 30 days late: 10% penalty.
- After the Comptroller issues a formal Notice of Tax Due: an additional 10%, bringing the total to 20%.
A flat $50 penalty applies to each late report, even one showing zero tax. Interest starts accruing on the 61st day after the original due date at a rate reset each January. A zero-dollar return still has to be filed; skipping it costs you the $50 regardless.
Keeping Records
Every permit holder has to keep sales tax records for at least four years unless the Comptroller gives written permission to destroy them sooner.18Texas Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions That covers invoices, receipts, and any exemption or resale certificates you accepted. If you are audited, filing a refund claim, or appealing an assessment, hold the records until the matter is resolved.
One trap worth avoiding: if you did not collect tax on a sale because the buyer handed you a resale or exemption certificate, and you cannot produce that certificate during an audit, the Comptroller will presume the sale was taxable and assess the tax against you. Organizing certificates by customer or transaction, rather than tossing them in a drawer, is the simplest protection.