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Sales and use tax collections in the 12 most populous Houston-area cities totaled $1.286 billion in ‘23, up 3.8 percent from $1.240 billion for the comparable period in ’22. Adjusted for inflation, however, collections slipped 0.7 percent.

Collections are a proxy for general economic activity in the region. Both businesses and consumers pay sales taxes on their purchases and the pace of collections tends to track the business cycle. Overall receipts are trending up in nominal terms but down when adjusted for inflation. 

 Industry-specific data is only available at the state level. Statewide:

• Collections in construction and manufacturing showed nominal gains compared to a year ago while receipts from wholesale trade and mining-related activities (i.e., oil and gas) slipped.
• Remittances from retail rose slightly, mainly from online shopping. Receipts from home improvement centers and furniture and home goods stores continued to slide.
• Service sector receipts grew moderately last month as consumers continue to spend on live entertainment. 
• Receipts from restaurants were up from a year ago, but at less than the rate of inflation for food away from home.

Collections in the region’s 12 most populous cities for the month of December ’23 totaled $103.5 million, up 2.8 percent from $100.7 million in December ’22. Adjusted for inflation, overall collections were down 0.4 percent.

ABOUT THE SALES AND USE TAX

Texas levies 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 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 rate, leading to an overall rate of 8.25 percent for the city. Cities with less than a 2.0 percent rate, like Houston, may have additional sales and use tax rates that may be related to transit, crime control, emergency services, and more. 

The Texas Comptroller of Public Accounts 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. January ’24 sales data will be available in March ’24. 

Prepared by Greater Houston Partnership Research Division

Patrick Jankowski
Chief Economist
Senior Vice President, Research
pjankowski@houston.org

Leta Wauson
Research Director
lwauson@houston.org