A taxable item sold, leased, or rented to, or stored, used, or consumed by, any of the following governmental entities is exempted from the taxes imposed by this chapter:
(1) the United States;
(2) an unincorporated instrumentality of the United States;
(3) a corporation that is an agency or instrumentality of the United States and is wholly owned by the United States or by another corporation wholly owned by the United States;
(4) this state;
(5) a county, city, special district, or other political subdivision of this state; or
(6) a state, or a governmental unit of a state that borders this state, but only to the extent that the other state or governmental unit exempts or does not impose a tax on similar sales of items to this state or a political subdivision of this state.
Official text of the Texas Tax Code as published by the Texas Legislative Council.