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How does Texas sourcing work?

Overview

You need to have a better understanding of how Texas sourcing works.

Environment

AvaTax

Resolution

  • Here's the documentation from the state describing Texas sourcing.
  • For Intra-state transactions (Texas Origin to Texas Destination), both the origin and destination addresses are used to calculate sales tax. The tax jurisdictions are determined as follows:
    • The rates from the origin address are used first, but if the local tax rates from the origin address are less than 2% total, the destination address is used to apply additional local tax up to the state-mandated 2% limit.
    • Some service tax codes will be entirely destination-based