Only around a year after Texas implemented a rule that treated some marketplace fees like taxable data processing services, the state is looking to reverse the decision. The current Texas Comptroller of Public Accounts, Don Huffines, criticized how the previous administration handled the rule, even calling it a hidden tax on small businesses.

If this amendment goes through, it will reduce costs for sellers and businesses in Texas, and also serve as a cautionary tale for other states that may attempt to implement similar rules and laws in the future.

Texas is Working to Remove Sales Tax on Marketplace Seller Fees

Texas is in the process of eliminating sales tax on marketplace seller fees, only around a year after the rule was implemented for marketplaces.

Don Huffines, who became the Texas Comptroller of Public Accounts in August 2026, is reversing the controversial change implemented by the previous administration, and even called it a hidden tax on small businesses that shouldn’t have been imposed.

He officially signed an executive order back in late September 2026 that directed his office to make changes to Rule 3.330, which governs the sales and use tax treatment of data processing services. Under Texas law, data processing services are subject to state sales and use taxes.

Currently, many marketplace fees and services are considered data processing services in Texas, and thus taxable by the government. The amendment being proposed by the new Comptroller would ensure that these marketplace fees charged to sellers aren’t considered that way any longer.

Aiming to Make Texas Friendlier for Businesses and Sellers

If this change goes through, it would provide broad relief for sellers across retail, delivery, and even gig platforms and websites. Specifically, Huffines wants to eliminate the data processing tax on marketplace fees that are tied to short-term lodging, vehicle rental or sharing, transportation services, and prepared food and grocery delivery.

He also wants to remove it for fees associated with pet care and pet-sitting services, personal or errand-running services, and marketplace seller services that are tied to offering products on marketplace platforms.

Ultimately, the move is being made to ensure Texas is a friendlier destination for sellers and ensure that businesses aren’t being unfairly taxed on the services they provide and the fees they pay.

The Change Isn’t Final Yet

However, sellers in Texas need to be aware that this change hasn’t been implemented yet. This amendment to Section 3.330 is scheduled to be published in the Texas Register on October 16th, and this will be followed by a 30-day comment period where the public can share thoughts on the proposed changes.

There’s been no final adoption of effective date released, and until the change is official and takes legal effect, sellers in Texas need to continue to comply with the current law.

Also, keep in mind that while the proposal promises to end the tax, it’s still uncertain if sellers will be able to recover any amounts already collected or if the rule will simply stop these taxes from being collected in the future.

Our Take

A Rare Regulatory Pullback That Could Serve as a Cautionary Tale for Other States

With this attempt to reverse a decision made only a year ago, Texas likely realized that the idea of squeezing even more out of sellers in an already-expensive business landscape was a recipe for disaster.

Sellers clearly weren’t thrilled about the added costs, and some of them may have moved operations to states with friendlier rules if Texas didn’t show a willingness to make a change.

This short-lived rule in Texas (as long as the proposed change ends up taking legal effect, of course) may also serve as a cautionary tale to other states that sellers don’t take kindly to when governments attempt to bleed them dry with additional costs, taxes, and fees.