Is data processing taxable in Texas?
Yes, on 80% of the price. Texas taxes data processing services but exempts 20% of the value, so the tax applies to 80% of the transaction. Information services get the same treatment.
| Short answer | Taxable on 80% of the price |
|---|---|
| Authority | TX Tax Code §151.351 |
| Last reviewed | 2026-04-24 |
Why
Texas Tax Code §151.351 exempts 20% of the value of information services and data processing services. The remaining 80% is taxable.
AgentTax applies the 80% base to compute and data processing work, and to information services, which §151.351 names alongside data processing.
Business vs. consumer buyers
AgentTax applies the same answer to business and consumer buyers here. Only a few states change the answer by buyer: Iowa and Washington exempt some business purchases by statute, and Maryland and Ohio split the rate or taxability by use.
Where the line is
- Information services are taxed the same way: on 80% of the price.
How AgentTax classifies data processing
Processing data the customer furnishes and returning the processed result: compute, transformation, analysis and API calls that operate on the buyer's own data. AgentTax routes compute work, API access and data processing to its data processing category.
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Open the calculatorFrequently asked questions
- Are information services taxable in Texas?
- Yes, on 80% of the value. Texas Tax Code §151.351 exempts 20% of both information services and data processing services.
- How do I calculate Texas tax on data processing?
- Apply the rate to 80% of the sales price. The other 20% is exempt under §151.351.
Related
- All Texas digital tax answers
- Is SaaS taxable in Texas? (full guide)
- Are professional services taxable in Texas?
- Data processing: every state we cover
- Is data processing taxable in California?
- Is data processing taxable in Connecticut?
- Is data processing taxable in Iowa?
- Is data processing taxable in Kansas?
- Is data processing taxable in Kentucky?
- Is data processing taxable in Louisiana?
Further reading on the AgentTax blog
- The Tax That Already Applies: Texas and Ohio Data Processing Rules and AI Agents
- Texas Promises to Stop Governing Data Processing Tax by Internal Directive - What the Taxpayer First Project Means for AI Agents
Sources
- TX Tax Code §151.351
- Tex. Tax Code Sec. 151.351 - Information Services and Data Processing Services
This page is for informational purposes only and is not tax, legal, or accounting advice. It reflects AgentTax's current interpretation of evolving law, which can change. Consult a qualified tax professional before making compliance decisions. Positions on this page come from the AgentTax tax policy registry (v1.24.0); see our methodology.