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Sales and use tax collections for the 12 most populous Houston-area cities totaled $1.0 billion in the 12 months ending May ’21, up 2.7 percent from $983.4 million for the same period a year ago. Collections for the month of May totaled $89.7 million, up 23.4 percent from $72.7 million in May ’20. A year ago, businesses nationwide were beginning to reopen after lockdowns due to the COVID-19 pandemic. Demand remained low in May ’20 despite reopening economies, stifling collections, while spending in May ’21 exceeds pre-pandemic levels.
Sales tax collections for the City of Houston jumped 25.2 percent from May ’20 to May ’21. All but two of the 12 most populous cities in the Houston region recorded double-digit gains in sales tax collections since May ’21. Galveston and La Porte reported single-digit gains of 7.3 percent and 1.1 percent in collections, respectively. 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, but as COVID-19 led to stay-home orders and business closures, sales tax collections declined.
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.
 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
Senior Vice President, Research
Houston-area sales tax collections increased 2.7% since May '20
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