The tax rate in Houston, Texas depends on which tax you mean. Sales tax runs 8.25%, the highest rate Texas allows. Property tax stacks rates from several local entities and totals roughly $2.12 per $100 of appraised value for a typical Houston homeowner. There is no state income tax. Hotel stays, vehicle purchases, and fuel each carry their own rates on top.
Sales Tax
The combined sales tax rate in Houston is 8.25%. That total splits three ways: 6.25% to the state of Texas, 1% to the City of Houston, and 1% to the Metropolitan Transit Authority of Harris County. Harris County itself imposes no separate county sales tax.1Texas Comptroller of Public Accounts. Sales and Use Tax
The tax applies to most tangible goods and to certain services the Comptroller designates as taxable, including amusement services, data processing, and real property repair or remodeling.2Texas Comptroller of Public Accounts. Taxable Services Unprepared groceries, prescription medications, and over-the-counter drugs are exempt.
August Sales Tax Holiday
Texas suspends state and local sales tax on most clothing, footwear, school supplies, and backpacks priced under $100 per item during one weekend each August. In 2026, the holiday runs August 7 through 9.3Texas Comptroller of Public Accounts. Sales Tax Holiday For Houston shoppers, that is 8.25% off every qualifying item.
Online and Out-of-State Purchases
If an online retailer does not collect Texas sales tax at checkout, you owe an equivalent 8.25% use tax on the purchase. After the Supreme Court’s 2018 decision in South Dakota v. Wayfair, most large retailers collect the tax automatically, but smaller out-of-state sellers below the economic nexus threshold may not. In those cases the obligation shifts to the buyer.
Property Tax
Houston has no single property tax bill. Several overlapping jurisdictions each set their own rate per $100 of appraised value, and your total is the sum of all of them. For tax year 2025, a homeowner inside Houston city limits served by HISD typically pays:
- Houston ISD: $0.87834Houston Independent School District. Tax Information
- City of Houston: $0.519195City of Houston. Notice of Meeting to Vote on Tax Rate
- Harris County: $0.380966Harris County Tax Office. Tax Rate Information
- Harris County Hospital District: $0.187617Harris County Tax Office. Notice of Adopted 2025 Tax Rate
- Houston Community College: $0.0988028Houston Community College. Truth in Taxation
- Harris County Flood Control District: $0.049667Harris County Tax Office. Notice of Adopted 2025 Tax Rate
- Port of Houston Authority: $0.005907Harris County Tax Office. Notice of Adopted 2025 Tax Rate
The combined rate works out to about $2.12 per $100 of appraised value. On a $300,000 home, that is roughly $6,360 a year before any exemptions. Your exact bill depends on which jurisdictions overlap your lot. Homeowners in a different school district, a municipal utility district, or a special levee improvement district will see different numbers.
Homestead Exemption
If you own and live in the home as your primary residence, Texas requires school districts to exempt $140,000 of the appraised value from taxation. Homeowners who are 65 or older or who have a disability get a $150,000 school district exemption instead.9Texas Comptroller of Public Accounts. Property Tax Exemptions The amount rose from $40,000 to $100,000 in 2023 and then to $140,000 in 2025.10Office of the Lieutenant Governor of Texas. Increasing the Homestead Exemption to $140,000, and $150,000 for Seniors
On a $300,000 home with the standard exemption, HISD taxes apply to $160,000 of value rather than the full $300,000. Other taxing entities may offer additional local-option exemptions of up to 20% of appraised value, though not all of them do.9Texas Comptroller of Public Accounts. Property Tax Exemptions
Protesting Your Appraisal
Your appraised value drives the whole bill. The Harris Central Appraisal District sets it each year, and you can protest if it seems too high. The deadline is May 15 or 30 days after HCAD mails your Notice of Appraised Value, whichever is later. Filing is free. Most protests resolve through an informal settlement discussion before reaching the Appraisal Review Board, and binding arbitration or a judicial appeal remain available after an ARB decision.
No State Income Tax
Texas does not tax individual income. Wages, retirement distributions, investment income, and freelance earnings are all free from state-level income tax for every Texas resident. The tradeoff is that property and sales taxes carry a heavier share of the state’s revenue load.
Business owners should know about one related tax: the Texas franchise tax, sometimes called the margin tax. For report year 2026, the rate is 0.75% of taxable margin for most businesses and 0.375% for those primarily in retail or wholesale trade.11Texas Comptroller of Public Accounts. Franchise Tax Businesses with total revenue at or below $2,650,000 owe nothing and need not file a no-tax-due report.12Texas Comptroller of Public Accounts. 2026 Franchise Tax Instructions Sole proprietorships owned by natural persons are generally exempt; LLCs, corporations, and partnerships are subject whether or not they turn a profit.
Hotel Occupancy Tax
A hotel room in Houston carries a combined 17% occupancy tax on the room rate. Four separate levies stack: 6% to the state (on rooms costing $15 or more per night), 7% to the City of Houston, 2% to Harris County, and 2% to the Harris County-Houston Sports Authority.13Texas Comptroller of Public Accounts. Hotel Occupancy Tax14Houston First Corporation. FAQs The rate applies to traditional hotels, motels, and short-term rentals alike. A $200-per-night room generates $34 in occupancy taxes on top of the rate itself.
Vehicle Sales Tax
Texas charges 6.25% on motor vehicle purchases, collected at title transfer rather than at the point of sale. At a dealer, the tax is calculated on the sales price minus any trade-in allowance.15Texas Comptroller of Public Accounts. Motor Vehicle – Sales and Use Tax
Private-party sales use a different base. The tax applies to the greater of the price you actually paid or 80% of the vehicle’s Standard Presumptive Value, a figure the Comptroller derives from wholesale transaction data. If you paid less than 80% of SPV on a vehicle that is genuinely worth less, a certified appraisal can be used as the taxable value instead.16Texas Comptroller of Public Accounts. Standard Presumptive Value (SPV) – Motor Vehicle Tax Guide
New residents bringing in a vehicle previously titled in their name in another state pay a flat $90 new-resident use tax rather than the full 6.25%.15Texas Comptroller of Public Accounts. Motor Vehicle – Sales and Use Tax
Fuel Tax
Texas charges 20 cents per gallon on gasoline and diesel. The federal government adds 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel. Combined, Houston drivers pay roughly 38 cents per gallon in fuel taxes, baked into the pump price with no separate line item.
No Texas Estate or Inheritance Tax
Texas imposes neither a state estate tax nor an inheritance tax. Heirs owe nothing to the state based on the value of what they receive. Federal estate tax can still apply, but only to estates exceeding $15,000,000 per individual for 2026, a threshold set by legislation signed in July 2025.17Internal Revenue Service. What’s New – Estate and Gift Tax Most Houston families fall well below that line.