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Monthly Update: Sales Tax

July '21, Latest Data
Published on 9/15/21
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 $1.0 billion in the 12 months ending July ’21, up 6.6 percent from $976.4 million for the same period a year ago. Collections for the month of July totaled $90.5 million, up 20.1 percent from $75.3 million in July ’20. July sales tax collections statewide surpassed pre-pandemic levels, with non-retail sectors outpacing retail trade in collections, according to the Texas Comptroller’s Office of Public Accounts. Texas Comptroller Glenn Hegar stated that “oil and gas mining exhibited the largest percentage increase among major economic sectors” and that “construction and manufacturing returns both exhibited strong growth” in July collections.

Sales tax collections for the City of Houston rose 19.2 percent from July ’20 to July ’21. All but one (League City) of the 12 most populous cities in the Houston region recorded double-digit gains in sales tax collections since July ’20. There were no decreases in tax collections during this period.  

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, which ended once the pandemic caused business closures. Pent-up demand and savings accumulated throughout the pandemic led to increased spending in ’21 and, consequently, higher tax collections.  

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

Key Economic Indicators Economy
6.6%

Houston-area sales tax collections increased 6.6% since July '20

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