What is the City or County Sales Tax, City Franchise Fee, or Other Tax on my bill?
As indicated below, most governmental entities may not impose sales tax on residential electric service, but there are exceptions. We have some cities in our territory that impose such a tax. There are links below that list the cities in Texas that impose the “City Sales Tax” and those that may do so in the future.
As for the City Franchise Fee, all cities in our territory impose a franchise fee that we must collect and pay to them. Any meter in the city limits must pay that fee. We do not keep any of these funds, whether they are sales tax or franchise fee. We simply collect for the governmental entities.
The “Other Tax” that you may see on your bill captures all the miscellaneous taxes that our billing system does not have a category for. An example is, in Hill County, there is an Emergency Service District that requires a tax to be collected. We do not keep any of these funds; they are simply collected and remitted to the governmental entities.
Local Sales and Use Tax on Residential Use of Gas and Electricity
Residential use of natural gas and electricity is exempt from most local sales and use taxes. Counties, transit authorities (MTA/CTD) and most special purpose districts (SPDs) cannot tax residential use of gas and electricity. Any city that adopted local sales tax effective Oct. 1, 1979, or later MAY NOT tax residential use of gas and electricity. See Attorney General Opinion No. H-1282 (1978).
However, certain municipalities that adopted local sales tax before Oct. 1, 1979, and two specific types of SPDs associated with those municipalities can opt to impose local tax on these purchases.
Any city that imposed sales tax before Oct. 1, 1979, could have retained the tax by ordinance on or before May 1, 1979, OR can reimpose the tax at any time. See Rule 3.334(l).
For more information, access:
A list of all cities that currently impose tax on residential use of natural gas and electricity. The effective date of the re-imposition of the tax is provided for those cities that did not retain the tax prior to May 1, 1979.
Any city not included on either list is not eligible to impose the tax.