State Guide / Texas
Texas is the second-largest state market in the country and one of the friendliest tax environments. From Kansas City, parcel reaches Dallas in a day and most of the Triangle in 1 to 2. Here is how that math actually works.
TL;DR
Texas e-commerce demand concentrates in four metros. Dallas-Fort Worth is the biggest, with Houston second, then Austin and San Antonio. Together those four metros (the Texas Triangle, with Austin filling out the eastern leg) represent roughly 70 percent of the state population and a higher share of DTC orders. The state is geographically vast, but population is not evenly distributed.
DFW is also the most important inland freight market in the country after Chicago. The DFW industrial market wrapped 2025 with 27.2 million square feet of positive net absorption and over 56 million square feet leased, well above long-term norms[5]. Vacancy in DFW sat near 9.1 percent in Q1 2025, down from a peak a year earlier[2]. New supply continues to deliver, but the absorption picture has been healthier than most national markets.
Houston is a different animal. Its industrial market is closely tied to the petrochemical economy and the port. Houston vacancy ticked up to roughly 7.3 percent in Q3 2025, mostly due to a spike in deliveries (9.5 million square feet of new completions, the highest since 2023)[3]. Statewide, Texas industrial vacancy averaged 9.3 percent in Q3 2025[4].
Two things are worth noting about cost. First, Texas warehouse wages run meaningfully below California or the New York metro, which is why many distribution-heavy operations have shifted inventory to DFW over the last decade. Second, Texas has no personal income tax, which makes labor recruiting easier in some categories, especially for management-level operators relocating from higher-tax states[6].
Texas markets itself on a no-income-tax story, and for personal income that is true. There is no individual income tax, and Texas does not have a traditional corporate income tax[6]. What it has instead is the Texas franchise tax, sometimes called the margin tax. It applies to entities with annualized revenue above the no-tax-due threshold (currently $2.47 million)[7]. For most early-stage DTC brands the franchise tax is zero, but at scale it is a real line item.
The state and local sales tax burden is moderate. The state base sales tax rate is 6.25 percent, with up to 2 percent in local additions, capping at 8.25 percent in most jurisdictions. Texas uses an origin-based sales tax model for sales sourced inside the state, which is operationally simpler than California's destination-based model.
Texas is the largest energy producer in the country, and that has two operational implications worth knowing[8]. Industrial electricity rates in deregulated parts of ERCOT (most of Texas except El Paso, the eastern Texas corner, and a few municipal islands) are volatile. They can be quite low in normal weather and quite high during heat waves and winter storms. Cold storage operators feel this most. For dry storage and standard distribution, electricity is rarely the swing factor in 3PL pricing.
Texas is a right-to-work state with a large bilingual labor pool, especially in Houston and the south Texas border markets. For warehouse staffing, that translates to deeper pools and lower turnover than many high-cost coastal markets, though the picture varies sharply by metro. DFW has tightened over the last several years as Amazon and large e-commerce operators have consolidated local labor. South of San Antonio, labor remains comparatively available.
Long Beach and Los Angeles dominate the public conversation about ports, but Port Houston is the largest port on the U.S. Gulf Coast and one of the fastest-growing container ports in the country. In 2024, Port Houston handled a record 4.14 million TEUs, up 8 percent year over year[1]. Container volume has more than doubled in roughly a decade.
For brands sourcing from Asia, Long Beach plus on-dock rail to the Midwest is still the most common path. For brands sourcing from Europe, India, or Latin America, Houston is increasingly competitive on transit time, and after the Houston Ship Channel widening project, neo-Panamax vessels (15,000 to 17,000 TEU class) now call at the Bayport terminal[1]. The economic shift matters when you compare landed cost across origins.
DFW is also one of the country's biggest intermodal markets. Both BNSF and Union Pacific operate large terminals (Alliance for BNSF, Dallas Intermodal Terminal for UP) and DFW serves as a major relay point for Pacific to inland flows. Brands moving freight west-to-east often touch DFW even when their final destination is elsewhere.
“If your imports go through Long Beach, you usually do not need a Texas warehouse. If your imports go through Houston, you might.”
Kansas City is roughly 540 miles from Dallas by interstate, which puts most DFW destinations in zone 4 or 5 from a KC origin. That translates to one business day on UPS Ground and FedEx Home Delivery for most DFW ZIP codes. Houston sits in zone 5 to 6 for most KC origins, with 2 day ground transit. Austin and San Antonio run between those two.
UPS / FedEx Ground transit days, KC origin to TX destination
| Texas metro | Approx. zone | UPS/FedEx Ground days | Air option |
|---|---|---|---|
| Dallas-Fort Worth (75001 - 76299) | 4 to 5 | 1 to 2 | Next day |
| Houston (77001 - 77299) | 5 to 6 | 2 | Next day |
| Austin (78701) | 5 | 2 | Next day |
| San Antonio (78201) | 5 to 6 | 2 | Next day |
| El Paso (79901) | 6 to 7 | 2 to 3 | Next day |
| Brownsville / Rio Grande Valley | 6 | 2 to 3 | Next day |
| Lubbock / Amarillo (Panhandle) | 5 to 6 | 2 | Next day |
Transit times reflect publicly published carrier zone tables and standard service guides[10][11]. Validate against your specific origin ZIP and account.
Texas is one of the easier states to serve from a central US node. Kansas City to DFW in 1 day at ground rates is fast enough that even brands with aggressive 2-day promises can lean on Ground instead of paying for Air. Houston in 2 days is solid for most consumer use cases. The brands that chafe are the ones promising same-day in DFW or Houston, where the only realistic answer is a local building.
Texas hosts a diverse industry mix. The four categories where we see the most fulfillment activity are oil and gas adjacent equipment, BBQ and food (especially regional craft food brands), outdoor and ranch lifestyle apparel, and consumer electronics tied to Austin's tech corridor.
Texas is the largest crude producer in the United States[8], and an entire ecosystem of B2B suppliers (PPE, tools, industrial consumables, safety products) sells into Permian, Eagle Ford, and Gulf Coast operators. These shipments are usually B2B and freight, not retail parcel. From Kansas City, freight shipments to Texas energy basins move on the same lanes as anywhere else, and we work with brand-side ops teams on these flows regularly.
Regional craft food (Texas BBQ rubs, salsas, pickles, hot sauces) is a strong DTC vertical. The fulfillment work centers on lot tracking, FEFO rotation, and shipping perishables in temperature- stable seasons. We can ship ambient food anywhere in the country from Kansas City; cold chain shipments need different planning, and we will tell you up front whether your SKU profile is something we are the right partner for.
Brands selling to ranchers, hunters, and outdoor consumers have a customer base concentrated in Texas and the south. AOV is often higher and customers tend to be tolerant of 3 to 4 day delivery, which makes a Kansas City origin a clean fit.
Austin's tech corridor produces a steady stream of small consumer electronics brands (audio, smart home, peripherals). These brands tend to value packaging quality, serial-number tracking, and clean returns processes. None of those depend on the warehouse being in Texas.
We will be honest: Texas is one of the harder states to justify a second warehouse in if you already have a strong central US node. From Kansas City, you reach DFW in a day and Houston in two. That said, here is when Texas does pencil.
Step 1
Pull your last 90 days of orders by destination ZIP
If Texas is more than 30 percent of orders and your AOV is over $200, the math may favor a Texas node. Below those, a single Kansas City warehouse usually wins.
Step 2
Compare landed cost from KC versus DFW
Apply your real carrier rate card. The shipping savings rarely beat the additional rent and labor unless your volume is well above $20 million GMV with a Texas-skewed customer base.
Step 3
Look at imports separately
If your inbound containers go through Houston, the inbound side may justify Texas independently of outbound. Run those numbers separately, then combine.
Storing inventory in Texas creates physical nexus for sales tax purposes. The franchise tax is separate, applies to entities with annualized revenue above the no-tax-due threshold, and is based on entity-level revenue, not on warehouse location alone[7]. Talk to a Texas CPA about the specifics.
Texas is origin-based for in-state sales sourced inside Texas. For sales shipped from outside Texas to a Texas customer, the destination ZIP rate applies. Most modern sales tax engines handle the distinction automatically.
Yes. UPS Ground and FedEx Home Delivery from Kansas City reach DFW in 1 business day and Houston, Austin, and San Antonio in 2 days for most ZIP codes[10][11].
The DFW industrial market continues to absorb new supply, with vacancy near 9 percent in early 2025 and over 27 million square feet of net absorption for the year[2][5]. Houston has more new supply hitting the market and slightly higher vacancy[3]. For tenants, conditions are relatively favorable compared to the historic tightness of 2021 and 2022.
If you ship significant volume to Mexico through Laredo, then yes, a Texas border-adjacent warehouse can save days and drayage cost. For occasional Mexico orders, a forwarding partner from a central US node often does the same job at lower fixed cost.
We will run the math against your last 90 days of orders and your current carrier rates. We will tell you when KC wins and when it doesn't.
Last reviewed 2026-04-25.
Metros in Texas
Other states