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 tax and those that may do so in the future. As for franchise tax, all cities in our territory impose a franchise tax that we must collect and pay to them. Any meter in the city limits must pay that tax. We do not keep any of these funds, whether they are sales tax or franchise tax. We simply collect for 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.

Municipalities

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.
• A list of all cities that do not currently impose the tax but are eligible to do so.

Any city not included on either list is not eligible to impose the tax.