Texas Sales Tax Nexus: $500,000 Threshold, Permit Registration, and Enforcement Trends

Texas's $500,000 Economic Nexus Threshold Explained

Texas requires remote sellers to collect and remit Texas sales and use tax if their total revenue from sales of tangible personal property and taxable services delivered into Texas exceeds $500,000 during the preceding 12 calendar months. That single test — gross revenue over a trailing 12-month window — is the entire economic nexus determination. There is no transaction count, no alternative threshold, and no current-year trigger separate from the rolling lookback.

The Texas Comptroller of Public Accounts administers this rule under Texas Tax Code Section 151.0242. The threshold applies to any seller without physical presence in Texas that makes sales into the state. If you already have physical nexus — employees, inventory in a Texas warehouse, or a trade show presence exceeding the temporary threshold — you have a collection obligation regardless of revenue.

The rolling 12-month lookback is an important distinction from states like California (which also uses $500K but measures on a prior-calendar-year basis). With Texas's rolling approach, you can trigger nexus at any point during the year — not just at the January 1 reset that calendar-year states use. This means continuous monitoring, not just a year-end check.

What Counts Toward the $500K (and What Does Not)

Texas's threshold calculation is broader than many sellers expect because it includes both tangible personal property and taxable services. This is a meaningful difference from states that only count goods.

What Counts Toward the $500,000

• All sales of tangible personal property delivered to Texas addresses — physical goods shipped to Texas buyers, regardless of where the seller is located or where the order was placed
• Taxable services delivered to Texas customers — Texas taxes a defined list of services including data processing, information services, real property repair and remodeling, credit reporting, debt collection, insurance services, internet access, and certain telecommunications. Revenue from these services counts toward your $500K
• Marketplace-facilitated sales — orders fulfilled through Amazon, Etsy, Walmart Marketplace, or other marketplace facilitators count toward your threshold calculation, even though the marketplace collects and remits tax on those transactions
• Gross revenue before deductions — Texas measures gross receipts, not net sales. Returns, discounts, and allowances do not reduce your threshold number

What Does Not Count

• Non-taxable services — most professional services (consulting, legal, accounting, marketing) are not taxable in Texas and do not count toward the $500,000 threshold
• Sales delivered outside Texas — only sales where the product or service is delivered to a Texas address count. A Texas-based company that takes delivery in Oklahoma does not add to your Texas total
• Exempt tangible goods — while most states count exempt sales toward the threshold, the Comptroller's guidance focuses on “total revenue” from taxable items delivered into Texas

The October 2019 Effective Date and Prior-Year Liability

Texas's economic nexus rule took effect on October 1, 2019 — about 15 months after the Supreme Court's South Dakota v. Wayfair decision in June 2018. Sellers who had exceeded $500,000 in Texas sales during the 12 months ending September 30, 2019 were required to register and begin collecting on October 1, 2019.

Texas did not apply its economic nexus rule retroactively — meaning the Comptroller did not seek back taxes for periods before October 1, 2019 based solely on economic nexus. However, sellers who had physical nexus in Texas before that date (warehouse space, employees, trade show attendance) may have had a pre-existing obligation that the Comptroller can still enforce.

For sellers who crossed the $500K threshold in late 2019 or 2020 and never registered, the exposure window has now grown to over six years. Texas's statute of limitations for sales tax assessments is four years from the date the tax was due — but if no return was ever filed, the Comptroller can go back to the date the obligation began. At Texas's state rate of 6.25% (with local rates pushing the combined rate to 8.25% in many jurisdictions), a seller doing $600,000 annually in direct Texas sales could face more than $200,000 in back taxes and penalties.

How to Register for a Texas Sales and Use Tax Permit via eTAPS

Once you determine that you have economic nexus in Texas, you must register for a Texas Sales and Use Tax Permit before you begin collecting. Registration is free and handled online through the Texas Comptroller's eTAPS portal.

1. Go to the eTAPS portal on the Texas Comptroller of Public Accounts website and select “New Registration”
2. Select your entity type — sole proprietorship, LLC, corporation, partnership, or other. Remote sellers typically register as an out-of-state entity
3. Provide your federal EIN and business formation details including state of incorporation, date of formation, and NAICS code
4. Enter your estimated monthly Texas sales tax liability — this determines your filing frequency (monthly for $1,500+ in monthly liability, quarterly for $500-$1,499, annually below $500)
5. Provide information about your sales channels — the Comptroller asks about e-commerce platforms, marketplace participation, and the types of products or services sold
6. Submit and receive your permit number — most remote sellers receive their Texas Sales and Use Tax Permit number within 5-10 business days via the eTAPS portal

Your collection obligation begins on the effective date of your permit — not the date you receive the physical permit document. If you register in March but your permit is effective April 1, you must collect starting April 1. Do not wait for the permit to arrive in the mail. Configure your tax automation software (TaxJar, Avalara, or similar) to begin collecting Texas sales tax based on the permit effective date.

Texas has a single state rate of 6.25%, but local jurisdictions can add up to 2% in additional taxes, bringing the combined rate to a maximum of 8.25%. The applicable rate is determined by the delivery address. Like most origin-based states, Texas applies origin-based sourcing for in-state sellers — but remote sellers use destination-based sourcing, meaning you collect based on where the buyer receives the product.

Texas's Aggressive Enforcement: Third-Party Data Subpoenas

Texas stands out among states for the aggressiveness of its non-filer enforcement program. The Texas Comptroller's office has invested heavily in identifying remote sellers who meet the $500,000 threshold but have not registered — and the primary tool is third-party data subpoenas.

The Comptroller has issued subpoenas to marketplace facilitators, payment processors, and shipping companies to obtain records on sellers transacting with Texas buyers. This data allows the Comptroller to match seller revenue against permit registrations and identify gaps. If the data shows $800,000 in Texas-bound shipments from a seller with no Texas permit, that seller receives a notice — and typically an assessment for back taxes, penalties, and interest.

This approach is more proactive than most states, which tend to rely on sellers self-identifying through registration. Texas actively seeks out non-compliant sellers rather than waiting for voluntary compliance. The Comptroller has publicly discussed this enforcement strategy, making it clear that anonymity is not a reliable shield for sellers above the $500K threshold.

Having Nexus vs. Being a “Marketplace Provider” Under Texas Law

Texas draws a clear distinction between remote sellers who have economic nexus and marketplace providers (what most states call “marketplace facilitators”). Understanding this distinction is critical because it determines who collects and remits the tax.

A marketplace provider under Texas law is a platform that lists or advertises tangible personal property for sale, collects payment from the buyer, and directly or indirectly processes the sale. Amazon, Etsy, Walmart Marketplace, and eBay all qualify. Texas requires marketplace providers to collect and remit sales tax on all sales facilitated through their platform — the individual seller does not collect on those transactions.

A marketplace seller is a business that sells through a marketplace provider. If all of your Texas sales go through a qualifying marketplace provider, the marketplace handles tax collection and remittance. However — and this is the key point — marketplace sales still count toward your $500,000 economic nexus threshold. If your combined marketplace and direct sales into Texas exceed $500K, you have nexus and must register for a permit, even if the marketplace handles tax on every one of those orders.

Why register if the marketplace is collecting? Because most sellers eventually have some direct sales — through their own website, wholesale channels, or phone orders. Once you have nexus, those direct sales require you to collect Texas sales tax. And the Comptroller expects you to have an active permit so they can track your compliance. For a broader look at how marketplace facilitator rules interact with seller obligations, see the marketplace facilitator laws by state guide.

Texas vs. the $100K Standard Used by Most States

The majority of states adopted some version of South Dakota's $100,000 threshold after the Wayfair decision. Texas's $500,000 threshold makes it an outlier — along with California, the only other major state at that level. Here is how the approaches compare.

The practical impact: a seller doing $300,000 in annual revenue across all states has economic nexus in every $100K-threshold state where they meet or exceed that bar — but is nowhere near Texas or California. For growing e-commerce brands, Texas is typically one of the last states where nexus triggers. But once it does, the combination of a broad tax base (including services), aggressive enforcement, and no safe harbor for non-filers makes compliance urgent. For a complete state-by-state comparison, see the sales tax nexus thresholds by state hub.