McAllen sets all-time high in monthly sales tax allocation

McAllen received a record $12.6 million in its February sales tax allocation — which reflects strong holiday spending in December and marks the highest monthly distribution in the city’s history.

The total represents a 5.31% increase over the same period a year earlier and surpasses the previous record of $11.9 million, city officials said in a news release Tuesday. 

“McAllen is no longer simply participating in regional growth. We are defining it,” Mayor Javier Villalobos said in the news release. “As more people choose to visit, invest and shop here, the numbers tell a larger story of confidence in our vision, our connectivity to international markets and our emergence as one of Texas’ most dynamic destination cities.”

Last year, McAllen generated $99.9 million in total sales tax revenue, compared with $96.8 million in 2024 — a 3.23% year-over-year increase. The collections stem from roughly $5 billion in taxable sales, city data show.

McAllen ranked No. 1 in the Rio Grande Valley for total sales tax allocation, No. 16 statewide and third in sales tax per capita among Texas cities with populations exceeding 100,000, city officials said.

Year-to-date allocations are up 5.46% compared with the same period last year. Since 2020, the city’s sales tax allocation has increased nearly 50%, representing $33.2 million in growth over five years.

“Historic revenue growth reflects a simple truth. People are choosing McAllen,” McAllen City Manager Isaac J. Tawil said. “They are coming here to shop, to invest and to experience a community that continues to shine as a true gem of the RGV. That momentum allows us to deliver exceptional quality-of-life services, maintain one of the lowest property tax rates in the region and keep building a city recognized far beyond South Texas.”

Retail strength and cross-border pull

December is traditionally one of the strongest retail months for McAllen, driven by holiday shopping and cross-border visitors.

City officials estimate Mexican shoppers account for up to 30% of the local economy during peak seasons, reinforcing McAllen’s role as a regional retail hub for South Texas and northern Mexico.

Recent national retail expansions also signal continued confidence in the market. Primark has selected McAllen for expansion, and Nordstrom Rack is slated to open soon. 

Local leaders say the city’s retail base, seasonal tourism and business travel continue to intersect, creating consistent sales tax performance even amid broader economic uncertainty.

The latest allocation places McAllen within reach of the $100 million annual sales tax milestone — a benchmark that underscores the city’s scale and influence within the Rio Grande Valley economy.