What Is the Mixed Beverage Gross Receipts Tax, and How Does It Differ from the Mixed Beverage Sales Tax?
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Many people picture alcohol as carrying a single sales tax, the way most retail purchases do. In Texas, a mixed beverage business is subject to two distinct taxes on the same sale, and they fall on different parties and follow different rules. Blurring them together is the single most common source of confusion, and it leads to real errors in pricing, recordkeeping, and audits.
This page draws the line between the two mixed beverage taxes. It is general information, not tax or legal advice.
Two taxes, not one
Both taxes are set out in Tax Code Chapter 183 and administered through Comptroller Rule 3.1001. They apply to the sale, preparation, or service of alcoholic beverages for on-premises consumption by a mixed beverage permittee, and they also reach ice and nonalcoholic mixers served to be mixed with alcohol and consumed on the premises. The key is that they are separate taxes that operate differently.
Mixed beverage gross receipts tax
The mixed beverage gross receipts tax is imposed at a rate of 6.7% under Section 183.021. Its defining features:
- It is paid by the permittee, not the customer. The person or organization holding the mixed beverage permit owes this tax.
- The permittee may not add it to the selling price as a separate charge and may not deduct it from the amount received. Under Rule 3.1001, the tax may not be separately charged to or paid by the customer.
- Because it cannot be added on, it is effectively a cost the business absorbs out of its receipts, and gross receipts for this tax are calculated after removing the separate mixed beverage sales tax.
Mixed beverage sales tax
The mixed beverage sales tax is imposed at a rate of 8.25% under Section 183.041. Its defining features:
- It is a tax the permittee may pass on to the customer, either by adding it as a line item on the bill or by including it in the sales price. The permittee’s records must show that the sales price of alcohol includes the tax when it is built into the price.
- It is administered, collected, and enforced much like the ordinary sales and use tax, and sales subject to it are generally exempt from the normal sales tax, so a mixed beverage permittee collects the mixed beverage sales tax on those items rather than the standard sales tax.
The contrast that matters
The cleanest way to hold the distinction is side by side:
| Mixed beverage gross receipts tax | Mixed beverage sales tax | |
|---|---|---|
| Rate | 6.7% | 8.25% |
| Who owes it | The permittee | Collected from the customer by the permittee |
| Can it be added to the price as a separate charge? | No | Yes (line item or built into price) |
| Statute | Section 183.021 | Section 183.041 |
The 6.7% rate is itself a piece of history worth knowing: the gross receipts tax was reduced to 6.7% effective January 1, 2014, when the legislature created the separate 8.25% mixed beverage sales tax. Before that, the gross receipts tax stood at a much higher rate, which is why older guidance sometimes cites different numbers.
Why the difference is not academic
The distinction drives day-to-day decisions. Because the gross receipts tax cannot be added to the price, a business that tries to pass it to customers as a separate “tax” line creates a problem; an amount identified on an invoice as a “tax” is fully due to the state, on top of the gross receipts tax the permittee already owes. Because the sales tax can be passed on, the business has a choice about how to present it. And because the two are computed differently, with gross receipts figured after deducting the sales tax, treating them as one number produces miscalculations that surface in an audit.
What this means in practice
The operator who keeps these straight separates the permittee-paid gross receipts tax from the customer-collected sales tax in both pricing and records. The gross receipts tax is the business’s own obligation, not a charge to add to the check; the sales tax is the one that can be passed to the customer. Getting that separation right is the foundation for correct pricing, correct receipts, and surviving an audit, all of which are addressed separately.
This article is for general educational purposes only and is not tax or legal advice. It does not create an attorney-client relationship and does not substitute for advice from a qualified tax professional. Texas tax law and Comptroller rules change, and how the mixed beverage taxes apply depends on the specific facts and permit type. The rates and rules described here should be confirmed against current primary sources. For advice about a specific situation, consult a licensed Texas attorney or qualified tax advisor.