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Monthly Update: Sales Tax

February '21, Latest Data
Published on 4/15/21
Monthly Update: Sales Tax

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Sales and Use Tax Collections

Sales and use tax collections for the 12 most populous Houston-area cities[1] totaled $952.3 million in the 12 months ending February ’21, down 5.7 percent from $1.0 billion for the same period a year ago. Collections for the month of February totaled $68.8 million, down 4.1 percent from $71.7 million in February ’20.  

Sales tax collections for the City of Houston fell 4.9 percent from February ’20 to February ’21. Seven of the 12 most populous cities in the Houston region–Baytown, Houston, Galveston, La Porte, Pasadena, Sugar Land, Texas City–recorded losses in sales tax collections during this period, with two cities reporting double-digit declines (Galveston and Texas City). 

Sales tax collections mirror trends in the overall Houston economy. During the fracking boom, sales tax collections grew at double-digit rates. The 12-month growth rate peaked at 11.1 percent in October ’12 and then trended down. 

During the fracking bust of ’15 and ’16, sales tax collections fell below the levels of ’13 and ’14, and by March ’17, were down 4.2 percent from their previous peak. As the region recovered in ’17, sales tax collections grew again as Houstonians rebuilt their homes and replaced goods damaged by Hurricane Harvey. Economic growth slowed again in ’18, which also slowed tax collections. The regional economy showed signs of improvement in early ’20, but as COVID-19 led to stay-home orders and business closures, sales tax collections declined.
 

About the Sales and Use Tax

Texas levies a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. Local taxing jurisdictions may also impose up to 2.0 percent sales and use tax for a maximum overall rate of 8.25 percent. The City of Houston has a 1.0 percent rate, and the Metropolitan Transit Authority of Harris County has a 1.0 percent sales and use tax rate, leading to an overall rate of 8.25 percent for the city. Cities with less than a 2 percent rate, like Houston, may have additional sales and use tax rates that may be related to transit, crime control, emergency services and more. For the sales and use tax rates for the Top 12 cities in the Houston region, visit https://www.houston.org/houston-data/sales-and-use-tax-rates.

The Texas Comptroller releases allocated payments from the sales and use tax monthly. There is a two-month delay between when the tax is collected and when it is allocated.

 

[1] The 12 most populous cities in the region are Houston, Pasadena, Pearland, League City, Sugar Land, Conroe, Baytown, Missouri City, Galveston, Texas City, Friendswood and La Porte. As a group, they represent 80.0 percent of all sales tax collections in the region. The other 102 smaller cities account for the remaining 20 percent.

Prepared by Greater Houston Partnership Research Division

Elizabeth Balderrama
Manager, Research
713-844-3615
ebalderrama@houston.org

Patrick Jankowski
Senior Vice President, Research
713-844-3616
pjankowski@houston.org

Economy Key Economic Indicators
-5.7%

Houston-area sales tax collections decreased 5.7% since February '20

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