A consulting, bookkeeping or technology business can sell both taxable and nontaxable activities. Texas looks at what the customer actually receives, how the work fits the statutory categories and how mixed services are billed.
That distinction is more important than the label on an invoice. Calling something “consulting,” “support,” “administration” or “professional services” does not decide the tax result. The actual activities being performed, how they are packaged and whether taxable and nontaxable components are bundled together determine whether Texas sales tax applies.
For service businesses, the practical analysis is therefore not “Texas taxes services” or “Texas does not tax services.” The better question is: Does the work fall within one of the statutory taxable categories, or does the transaction contain another taxable item?
Texas taxable services at a glance
Texas currently lists the following 16 categories under Tax Code §151.0101:
| Taxable service category | Examples or typical activities |
|---|---|
| Amusement services | Concerts, sporting events, health clubs, golf, sightseeing tours, online games |
| Cable television services | Cable, satellite television, streaming video programming, video on demand |
| Personal services | Laundry and garment services, certain massage-parlor services, escort services, Turkish baths |
| Motor vehicle parking and storage | Parking lots, meters, valet parking, permits, vehicle storage |
| Repair, remodeling, maintenance and restoration of tangible personal property | Appliance repair, furniture repair, jewelry repair, dog grooming and similar services, subject to statutory exceptions |
| Telecommunications services | Telephone, mobile service, VoIP, fax, texting and other covered telecommunications |
| Credit reporting services | Creation or delivery of credit reports |
| Debt collection services | Collection of delinquent debts, repossession and certain claims activity |
| Insurance services | Certain appraisals, inspections, investigations, claims processing and loss-prevention services |
| Information services | Databases, financial reports, newsletters, data retrieval and certain research services |
| Real property services | Pest control, janitorial work, landscaping, garbage removal and certain surveying |
| Data processing services | Data entry, storage, manipulation, web hosting, website creation and certain SaaS activities |
| Real property repair and remodeling | Repair, restoration or remodeling of nonresidential real property |
| Security services | Private investigation, locksmith, alarm monitoring, armored transport and other covered security services |
| Telephone answering services | Human-operated message receiving and relaying |
| Utility transmission and distribution services | Certain electricity transmission or delivery to taxable end-use customers |
The current statutory list contains 16 categories after the 2025 removal of Internet Access Service.
Are most professional services taxable in Texas?
Many traditional professional services are not taxable simply because they are services, because Texas taxes only specifically enumerated categories. Consulting, certain engineering work, tax-return preparation and other professional activities can therefore fall outside the taxable-service list when the work is genuinely the exercise of professional judgment rather than a separately taxable activity.
The important qualification is that the business title does not control the result. A consulting firm might sell a nontaxable strategy engagement while also providing taxable data processing, website development or another taxable item. Similarly, an accounting firm can provide nontaxable accounting analysis and also perform activities Texas treats as data processing.
The lesson for a service company is to classify the actual deliverables, not the name of the business.
Are bookkeeping and accounting services taxable in Texas?
The answer depends on what the service actually includes.
Texas explicitly states that a bookkeeper or accountant is not performing taxable data processing merely because a computer is used to apply accounting principles and prepare income statements, balance sheets, profit-and-loss statements, federal income-tax returns, Texas franchise-tax returns or sales-tax returns. In those situations, the computer is a tool used to provide the professional accounting or tax service.
At the same time, activities such as accounts payable preparation, accounts receivable preparation and check preparation can be examples of taxable data processing. Payroll data production, data entry and repetitive computerized manipulation of customer data can also fall within the data-processing rules.
That creates a distinction that is easy to miss: applying accounting knowledge and judgment to produce financial statements or tax work is not automatically taxable data processing; performing routine computerized processing of a client’s data can be.
A bookkeeping engagement can contain both kinds of activity. The appropriate tax treatment therefore depends on the precise scope of work rather than on the word “bookkeeping” appearing on the invoice.
What counts as taxable data processing?
Texas defines data processing broadly as computerized entry, retrieval, search, compilation, manipulation or storage of data or information. Current guidance includes word processing, data entry, data storage, website creation and maintenance, web hosting, some SaaS services and other computerized processing activities.
A major nuance is that 20% of the charge for qualifying data processing services is exempt from tax. In practical terms, the sales-and-use tax calculation generally applies to 80% of the data-processing charge rather than 100% of it.
Using technology alone does not make a service taxable. The rule considers whether the provider is simply manipulating data or instead exercising outside knowledge and discretionary judgment in an individual application.
Is SaaS taxable in Texas?
Texas can treat SaaS as taxable data processing when the service involves computerized storage, manipulation, compilation or retrieval of customer data. The Comptroller expressly notes that data-processing providers include sellers of software as a service and application service providers.
However, that does not mean every technology platform or online service is taxable merely because software is involved. The substance of the service matters, including whether the customer is purchasing data manipulation as the main service or whether the technology is ancillary to another nontaxable professional activity.
Are information services taxable?
Texas taxes certain information services, including the gathering and furnishing of general or specialized news or current information, electronic research or retrieval and access to certain databases. Like data processing, 20% of the charge for taxable information services is exempt, meaning tax generally applies to 80% of the qualifying charge.
Not every activity involving information is taxable. The Comptroller distinguishes between selling information as the product and providing professional analysis, scientific observation or another service in which information is simply part of the output.
Are cleaning, landscaping and pest-control services taxable?
Several services that consumers often think of as ordinary labor fall squarely within Texas’s taxable categories.
Texas treats pest control and extermination, garbage collection, janitorial and custodial services, landscaping, lawn maintenance and certain surveying activities as taxable real property services.
Laundry, cleaning and garment services are also taxable under Texas personal-service rules.
Is repair work taxable in Texas?
Many repair and remodeling services are taxable, but the answer depends heavily on what is being repaired.
Repair, remodeling, maintenance and restoration of tangible personal property is a taxable-service category. Real property is treated differently: repair, restoration and remodeling of existing nonresidential real property is generally taxable, while the rules distinguish that work from new construction, residential work and certain scheduled maintenance.
This is why the question “Is repair labor taxable in Texas?” is too broad to answer accurately.
Some “services” are taxable because they are really sales or fabrication
The 16 statutory service categories are not the only reason a labor charge can create sales tax.
Texas also taxes transactions that involve manufacturing, fabricating, processing or producing tangible personal property. Activities such as photography and videography, producing artwork, printing, calligraphy, embroidery, custom tailoring, woodworking, welding, catering and assembling products can involve labor that forms part of a taxable sale.
The correct analysis therefore has two stages: first determine whether the activity falls within one of the statutory taxable-service categories; then determine whether the transaction is taxable under another provision because the customer is receiving tangible personal property, fabrication or another taxable item.
Is internet access still taxable in Texas?
Separately stated Internet Access Service is no longer one of Texas’s taxable-service categories.
Texas stopped imposing sales tax on separately stated internet-access charges beginning July 1, 2020 because of the federal Internet Tax Freedom Act. The statutory cleanup came later: effective July 1, 2025, Senate Bill 1405 removed Internet Access Service from Texas Tax Code §151.0101 entirely.
This change explains why older articles sometimes show 17 taxable-service categories, while current Texas materials show 16.
There is an important exception to the simple answer. Internet access bundled with taxable services such as telecommunications or cable television can still create tax consequences.
What happens when taxable and nontaxable services are bundled together?
Mixed-service invoices are one of the more difficult areas because Texas does not necessarily let a provider treat an entire package as nontaxable simply because one component is exempt.
When data processing is genuinely ancillary to another nontaxable service and does not have a separate value, the overall service can remain outside the data-processing category. But when taxable data processing and a distinct nontaxable service are sold together for one charge, Texas applies specific allocation and documentation rules.
For certain mixed data-processing packages, if the taxable component represents more than 5% of the total lump-sum charge, the entire charge can be presumed taxable unless the provider separately states a reasonable taxable amount or can substantiate the nontaxable portion. This is not a universal 5% rule for every service sold in Texas.
How much sales tax applies to a taxable service?
The Texas state sales-and-use tax rate is 6.25%, with local jurisdictions able to impose up to an additional 2%, producing a maximum combined rate of 8.25%. The local portion depends on Texas sourcing rules, so a business should not automatically charge 8.25% on every taxable transaction.
Some taxable-service categories have special partial exemptions. Data processing and information services, for example, generally receive a 20% exemption from the service charge before sales tax is calculated.
How can a business determine whether its service is taxable?
A useful analysis begins with the actual work performed rather than the business’s marketing description.
First, identify what the customer receives. Next, compare that activity with the 16 statutory taxable-service categories and their definitions. If the service falls outside those categories, determine whether the transaction is nevertheless taxable because it involves tangible personal property, fabrication or another taxable item.
Then examine how the service is invoiced. A standalone nontaxable consulting engagement may produce a different result from a single monthly package containing consulting, website maintenance and data processing.
Finally, check for industry-specific exclusions, partial exemptions or special rules before deciding the tax treatment.
Common mistakes service businesses make
One common mistake is assuming that all services are exempt because Texas is traditionally associated with taxing goods. The opposite mistake is charging sales tax on every service “just to be safe.” Another recurring mistake is treating a business label as decisive. Finally, businesses often overlook bundled-service rules.
The real question is always what the provider is doing for the customer.
Frequently asked questions
Are all services taxable in Texas?
No. Texas generally taxes only services specifically listed in Tax Code §151.0101. The current statute contains 16 broad taxable-service categories.
Are consulting services taxable in Texas?
General consulting is not itself one of the 16 taxable-service categories. However, a consulting engagement can include separately taxable activities such as data processing, website development or taxable products.
Are bookkeeping services taxable in Texas?
Not automatically. A bookkeeper or accountant using professional accounting judgment to prepare financial statements or tax returns is not performing taxable data processing merely because a computer is used. Tasks such as computerized accounts-payable or accounts-receivable preparation can fall within taxable data processing.
Is SaaS taxable in Texas?
It can be. Texas treats many SaaS and application-service-provider offerings as taxable data processing when they involve computerized storage, manipulation, compilation or retrieval of customer data.
Are website design and web development taxable?
Website creation, repair and maintenance can be taxable data processing when the work involves storage, manipulation, compilation or entry of data. Specific facts matter.
Are accounting and tax-return preparation taxable?
Preparing financial statements or federal, Texas franchise or Texas sales-tax returns using accounting knowledge is not treated as taxable data processing merely because the work is performed on a computer.
Are landscaping and lawn-care services taxable?
Yes. Texas includes landscaping and lawn maintenance within taxable real-property services.
Is internet access taxable in Texas?
Separately stated Internet Access Service is not currently one of the taxable-service categories. It was formally removed effective July 1, 2025. Bundled internet access can still be affected when sold together with taxable services.
Are data-processing services taxed on the full charge?
Texas provides a 20% exemption for qualifying data-processing services, so sales tax generally applies to 80% of the charge. Information services receive a similar 20% exemption.
The right question is what the business actually provides
The most reliable way to determine whether a service is taxable in Texas is not to start with the company’s profession. Start with the transaction.
A service business should identify exactly what the customer receives, determine whether that activity fits one of the 16 taxable-service categories, check whether another taxable-item rule applies and then review how the activity is bundled and invoiced.
Businesses that need help with the resulting permit, reporting or Texas sales-tax compliance can review Texas Sales Tax services. For the broader filing process see Texas Sales Tax Guide.