Texas Comptroller Glenn Hegar announced on Monday that the state collected $3.8 billion in sales tax revenue for February 2025, reflecting a 4.3% increase compared to February 2024. The reported revenue, largely based on sales made in January and remitted to the agency in February, underscores steady economic growth in the state.
Sustained Growth in Tax Collections
“State sales tax collections exhibited solid growth compared with February 2024,” Hegar noted. “This comes on the heels of a strong month in January and was more than the overall rate of general price inflation.”
The report also highlighted that over the three-month period ending in February 2025, sales tax revenue grew 4% year-over-year. Sales tax remains Texas’ largest source of state funding, accounting for 58% of all tax collections.
Business Sector Trends Show Mixed Results
While consumer spending drove an increase in overall sales tax collections, Hegar pointed out that revenue trends varied across business sectors.
Construction and wholesale trade sectors saw slight declines compared to last year.
Manufacturing posted the largest year-over-year revenue jump in two years.
Information sector receipts, primarily fueled by computer and data processing services, also showed significant growth.
Revenue From Other Major Taxes
In addition to sales tax, Texas saw notable increases in several other tax categories:
Motor vehicle sales and rental taxes: $650 million (+11% from February 2024)
Motor fuel taxes: $310 million (+2%)
Oil production tax: $486 million (+6%)
Natural gas production tax: $221 million (+19%)
However, not all tax categories experienced growth:
Hotel occupancy tax: $57 million (-2%)
Alcoholic beverage taxes: $128 million (-0.5%)
Retail and Restaurant Spending Trends
While overall sales tax revenue increased, Hegar noted shifts within the retail trade sector:
Sales from sporting goods, electronics, appliances, and general merchandise stores were down significantly compared to last year.
Home improvement stores rebounded with strong growth after a sluggish January.
Restaurant sales increased slightly but failed to keep pace with inflation in food-away-from-home prices.
Economic Outlook
The continued rise in tax collections suggests steady economic activity in Texas, though sector-specific trends indicate evolving consumer and business spending patterns. With strong manufacturing and information sector performance, alongside gains in oil and gas tax revenue, Texas remains on solid financial footing.
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