Texas Tax Law

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The tax law in Texas can be complex for people who are not lawyers or accountants. However, it is important to understand how the laws affect you.  If you fail to file your taxes on time or make misrepresentations in your tax return, the consequences can be serious.

In Texas, the agency that governs taxation is the Comptroller’s Office, which has the authority to levy fines and charge interest on unpaid taxes. If you do not file your taxes, for instance, you may be charged penalties and interest on the amount that you should have paid. Additionally, if you underreport income or claim deductions that you are not entitled to receive, you can also face severe financial penalties.

The Texas Comptroller’s Office is responsible for collecting more than 60 types of taxes, fees, and assessments to serve the state, including local sales tax that it collects on behalf of cities, counties, and local governments.

The money that the state collects is used to fund state and local programs that provide important services for Texas. Here’s a look at some of the biggest areas where tax dollars are used:

  • Public education: Taxpayers support a variety of public education programs from K-12 through higher education.
  • Transportation: The state’s gas tax funds the Texas Department of Transportation (TxDOT), which is responsible for building and maintaining Texas’s vast highway system.
  • Public safety and criminal justice: State taxes play a major role in funding these two functions through multiple agencies, including the Department of Public Safety, the Texas Department of Criminal Justice, and local district attorneys’ offices across the state.
  • Public debt: Money collected through taxes, fees, and other sources is often used to repay bonds that have been issued by state agencies or local governments.
  • Economy: TX state tax dollars can fund programs that promote a healthy business climate and workforce development initiatives that help Texas businesses stay competitive.

What Is Tax Law

Tax law touches upon many important parts of our lives. Employment tax, income tax, gift tax, transfer tax, sales tax – they are all a part of how we define who can do what and when and with what and why, or at least they should be.

The vast majority of us will never run afoul of the Internal Revenue Service (IRS) or state tax law, but tax issues in Texas are quite common. Many of these instances will relate to an individual’s failure to properly report their income or a shady deduction on a tax return.

Texas Sales Tax Laws

In Texas, the state sales and use tax rate is 6.25%. In addition, cities, counties, special-purpose districts, and transit authorities may also impose their own sales and use tax of up to 2%. The maximum combined tax rate in the state may not exceed 8.25%.

Welcomed by customers and retailers alike, the state has four annual sales and use tax holidays, during which taxpayers may purchase specified items tax-free. Depending on the weekend in question, eligible purchases include:

  • Emergency preparation supplies
  • Energy-saving products
  • Water-efficient products
  • Back-to-school supplies

With the exception of the state’s annual sales and use tax holidays, if a retailer fails to collect and remit sales tax to the Texas Comptroller’s Office, they may owe additional taxes and can face an assessment of additional interest and penalties.

Definition of Tax Law in Texas

If you are a Texas resident and are confused about what is expected of you with regard to taxes, you can seek a legal professional’s assistance. Whether you need the definition of an obscure tax law term or guidance with respect to which legal taxes you must pay, a lawyer can provide comprehensive support at every step of the way.

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