Comptroller Don Huffines Ends Hidden Double Tax on Texas Families and Small Businesses
(AUSTIN) — Texas Comptroller Don Huffines today signed an executive order to abolish a hidden tax that hit Texans twice when they ordered food, booked a ride, or shopped online.
“For the past year, small business owners across this state have been getting hit by a hidden tax nobody voted for,” Huffines said. “Groceries cost more. Rent costs more. Texans are tightening their belts, and the last thing they need is their own government quietly driving up prices.”
Huffines announced his executive order during the Texas Comptroller of Public Accounts Annual Briefing, an event attended by industry members, associations, tax practitioners, and consultants.
In 2025, the previous leadership of this office adopted a new interpretation of an old tax rule affecting data processing services that swept in marketplace fees — the fees a business pays a platform to reach customers online. Under that reading, the government taxed the fee a seller pays to a platform like Amazon, eBay, or Etsy; a local restaurant pays to DoorDash, Grubhub, or Uber Eats for delivery; or a family pays to list a spare bedroom as a short-term rental. That tax came on top of the sales tax already charged, if applicable, on the purchase itself. In many cases, the result was that a business paid tax on the marketplace fee and the customer also paid tax on the item — the same transaction, taxed twice.
The tax also reached into the gig economy — ride-share drivers, dog walkers, and people doing errands or furniture assembly through an app could see the same tax applied to the platform fees tied to their work.
When the Legislature created the data processing tax in 1987, it was written for a world of mainframes and data-entry workers entering paper invoices and receipts into a usable database — not for the apps and platforms Texans rely on today.
Huffines said this office incorrectly “cast a huge net, grabbing money anywhere possible, because government never has enough of your money. That ends today. That's not tax policy. That's tax invention. A Comptroller doesn't get to invent new taxes by rulemaking any more than a judge gets to invent new crimes that aren't on the books.”
The Huffines rule change ends taxes on marketplace fees tied to:
- sellers offering products on marketplace platforms like Amazon, eBay, and Etsy;
- prepared food and grocery delivery such as DoorDash, Grubhub, Uber Eats, and similar apps;
- short-term lodging;
- ride-hailing and other transportation services;
- vehicle rental or sharing;
- pet care and pet-sitting services; and
- household, personal, and errand-running services.
Huffines invited small business owners earlier this month to participate in a roundtable discussion to learn how the controversial rule impacts their businesses. The business owners explained how the new interpretation of the tax rule hurt their businesses.
The business owners “told me this tax puts Texas sellers at a disadvantage against out-of-state competitors who don't pay it,” Huffines said. “They told me it makes restaurants less financially stable. They told me every dollar wrongly collected is a dollar they can't put into new equipment, new jobs, or growing their business.”
The Huffines executive order directs the agency to publish a proposed amendment to Rule 3.330 to remove marketplace and platform fees from the definition of taxable data processing services.
The proposed amendment will be filed with the Texas Secretary of State and published in the Texas Register, followed by a 30-day public comment period. Texans can submit comments to the Comptroller's office during that window.
“Ending this tax isn't a cost to government because this money never belonged to the government. You cannot lose what was never yours,” Huffines said. “It's going back where it belongs: to the Texans who earned it. That's how you make Texas affordable again. Not by government deciding it knows better how to spend your money, but by getting out of the way and letting Texans keep more of what they earn.”
This is the latest step in Huffines' Taxpayer First Project, his effort to bring fairness, transparency, consistency, and respect to how Texas collects taxes. He said his office will continue to review how the data processing tax is interpreted and may propose additional changes in the future.
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