Resources & Forms

When you calculate the sales tax by multiplying the tax rate by the sales price, calculate the tax to the third decimal place. If the third decimal place is equal to or greater than five, round up to the next cent. If the third decimal place is four or less, round down to the next cent.

EXAMPLE: You sell a taxable item for $250 and must charge 8.25 percent tax. The tax rate multiplied by the sales price equals $20.625. Because the third decimal place is a five, round up and charge $20.63. You can also use a rate chart.

Use this chart to determine which tax exemptions may apply to your organization. Remember that while federal and Texas state and local government entities are automatically exempt from the taxes indicated in the chart, nonprofit organizations must apply with the Comptroller’s office and receive exempt status.

Texas public schools, colleges and universities have a dual exemption as both educational organizations and as government entities.

Purchases must relate to the nonprofit’s exempt purpose. Employees and volunteers cannot buy personal items tax free, even if traveling on official business or if reimbursed by the nonprofit organization.

Beer, wine and liquor purchases do not usually qualify for exemption because they are not part of the nonprofit’s exempt purpose. An exempt religious organization can claim an exemption when it buys sacramental wine.

Organization	Sales Tax	State Hotel Tax	Local Hotel Tax	Motor Vehicle Tax
Charitable	Yes	Yes	No	No
Educational – Public College/University	Yes	Texas schools only	No	Texas schools only
Federal Tax Exemption 501(c)(3), (4), (8), (10) or (19)	Yes	No	No	No
Texas State and Local Government Agency	Yes	No	No	Yes

 

Sales Tax

If a nonprofit organization has qualified for sales tax exemption with the Comptroller’s office, it can claim a sales tax exemption when it buys a taxable item by giving the seller a properly completed Form 01-339, Texas Sales and Use Tax Exemption Certification (exemption certificate) (PDF).

An authorized agent can buy items tax free by giving the seller a properly completed exemption certificate in the exempt nonprofit organization’s name. An “authorized agent” is a person designated by the exempt organization to buy items on its behalf.

Sellers do not have to accept an exemption certificate. If a seller does not accept an exemption certificate, the exempt organization can ask the seller for a completed Assignment of Right to Refund (PDF) to request a refund directly from the Comptroller’s office.

Hotel Tax

If a nonprofit organization has qualified for hotel tax exemption with the Comptroller’s office, it must give the hotel a properly completed Form 12-302, Texas Hotel Occupancy Tax Exemption Certificate (PDF), and letter of hotel tax exemption from the Comptroller’s office at check-in. The exemption is only for the state hotel tax and not local hotel taxes. The Comptroller’s Tax-Exempt Entity Search lists nonprofits that are exempt from state hotel tax.

An employee traveling on official business for the exempt organization qualifies for the exemption. A representative claiming an exemption who is not an employee of the exempt organization must pay the hotel directly with the organization’s funds, such as an organization check, credit card or direct billing, to qualify for the exemption.