The same invoice, taxed twice: Texas and platform fees

Texas has no income tax, but it does have a sales tax. The state rate is 6.25 percent, and cities, counties and special districts add up to 2 percent, for a maximum of 8.25 percent. We explained how the tax works in principle back in August in No price in America is real until you reach the checkout.

Texas taxes not just goods but certain services too, including, since 1987, so-called data processing services. The law dates from the era of mainframes and punch-card payroll. Twenty percent of the charge for data processing is exempt; the tax applies to the remaining eighty percent.

In 2025, the Comptroller's office under its previous leadership expanded its administrative rule on this tax. Since October 1, 2025, Rule 3,330 of the Texas Administrative Code has said that services a marketplace operator provides to its sellers can count as taxable data processing if they include storing product listings and photos, keeping transaction records and providing reports.

In practice, that means sales tax is due on the fee a seller pays the marketplace. And sales tax is, as always, also due on the sale to the customer. The same sale is taxed twice.

Not just online sellers. The Comptroller's order lists who is affected: sellers on online marketplaces, restaurants delivering through delivery platforms, families renting out a room short term, rideshare drivers, dog sitters and people who assemble furniture or run errands through apps.

At a roundtable in early September, small business owners told the Comptroller what this means for them. They said the tax puts Texas sellers at a disadvantage against competitors from other states, makes restaurants financially less stable, and that every dollar it drains is a dollar missing for equipment, staff and growth.

To see why the double tax caught so many people off guard, you need to know how sales tax normally works for online sellers in Texas. Since 2019, marketplace operators in Texas have been required to collect sales tax from the customer on sales through their platform and remit it to the state themselves. The individual seller doesn't have to deal with it for those sales.

For Anna and Tobias, that was a relief. Their bags are bought in California, Florida and New York, and the marketplace takes care of the tax in each of those states. They thought sales tax had nothing to do with them.

Then, in the fall of 2025, a new line appeared on their fee statement. Not on the sale to the customer, but on the fee they themselves pay the marketplace. A tax on their business expenses, charged by a company that at the same time remits the tax on their sales. Many small sellers first assumed it was a mistake.

It wasn't. It was a new interpretation of an old rule.

The Comptroller, in office since August 1, has signed Executive Order DH-2026-01. It directs his office to publish an amendment to Rule 3,330 in the Texas Register without delay. The paragraph covering marketplace operators' services is to be deleted. A new paragraph is to state explicitly that fees, commissions and other charges a platform bills a seller for listing, offering or facilitating sales are neither taxable data processing nor a taxable information service.

The Comptroller is blunt about why. The 1987 law was never written for platforms, a Comptroller has no business inventing new taxes by administrative rule, and the money collected in excess never belonged to the state.

And now the sentence that gets lost in many reports. The order itself states explicitly in point 3 that the rule change only becomes legally effective once the legally required process is complete. Publication in the Texas Register is followed by a 30-day public comment period. Only then can the office formally adopt the change.

Until then, the rule stands as it is today. If you receive a marketplace invoice today showing sales tax on the fee, you still owe that tax. If you buy platform services and the provider doesn't charge tax, you may, as things stand, have to report it yourself as use tax.

The order leaves open whether refunds for past periods will be possible. It talks about returning the money to where it belongs, but sets out no refund procedure. If you've paid significant amounts over the past twelve months, keep your records and keep an eye on what happens next.

Last year the two of them sold $180,000 worth of bags. The marketplaces charged them a combined $20,000 in fees and commissions.

Under the current rule, eighty percent of that $20,000 is taxable, so $16,000. At Austin's combined rate of 8.25 percent, that comes to $1,320 a year. On top of the sales tax their customers pay on the bags themselves.

$1,320 doesn't sound dramatic for a business with $180,000 in revenue. But after materials, shipping, fees and workshop rent, Anna and Tobias earn perhaps fifteen percent of revenue, around $27,000. The double tax costs them almost five percent of their profit. A restaurant with delivery that pays $60,000 a year in platform fees loses $3,960 this way.

Once the amended rule takes effect, these amounts disappear going forward.

You can read this order politically, and the Comptroller himself frames it in very political terms. But if you're thinking about bringing your business to Texas, another reading is more interesting.

Texas has a tax system built on a few clear pillars: no income tax for individuals, a franchise tax for businesses that, for the 2026 and 2027 reports, only kicks in at annual revenue of $2.65 million, and sales tax. When an agency stretches those pillars through administrative rules, it undermines the promise of simplicity. That a new officeholder wants to reverse it within two months of taking office signals that this promise carries real political weight in Texas.

At the same time, the case shows how fast the tax picture can change, even in a low-tax state. A rule that took effect in October 2025, a roundtable in September 2026, an order on the last day of the month. If you do business in Texas, don't sort out your tax obligations once when you set up and then forget them: review them every year.

For sellers who sell through platforms and are looking for a base in America, this change makes Texas a bit more attractive again. A warehouse in Texas, a workshop, a small team: that's the setup where your own Texas LLC is almost always the right structure, because it sits where the business actually happens. Why Texas draws so many entrepreneurs from Europe is explained in Company formation in Texas.

If you already have a Texas company, have two things checked. First, whether your platforms charged sales tax on fees over the past twelve months, and how much. Second, whether your own sales tax filings are complete, because the double taxation ends going forward, but the obligation to pay tax on the actual sale remains. We help with both as part of our business tax services.

And if you're still planning, don't compare Texas on formation costs alone, but on the full tax picture over five years: federal taxes, franchise tax, sales tax and the tax in your home country. That's exactly what our written tax plan delivers, coordinated with your accountant at home.

Nothing changes here, and that matters. The change only affects sales tax on platform fees. The annual franchise tax filing remains, including for companies below the revenue threshold that only file the Public Information Report. What you need to do by May 15 is covered in Texas has no income tax, but it still has a deadline.

If you're hoping the change means online sellers in Texas will pay no tax at all, you'll be disappointed. It means the same revenue should no longer be taxed twice. That's less spectacular, but it's exactly what a small business depends on: rules you can rely on.

Anna read the news on her phone on the evening of September 30, between two seams. She called Tobias over, and they opened a bottle of wine they'd been saving for Christmas.

The next morning they took their tax files out of the cupboard and started sorting the fee invoices from the last twelve months. Not because they already know whether they'll get anything back, but because they've learned that in America you need to be ready when a door opens.

That may be the best way to describe what Texas means for people like Anna and Tobias. Not a paradise without rules, but a place where a workshop behind the house can grow into a business that ships to all fifty states, and where the government listens when small business owners say something isn't right. You'll find more about living and working in the Lone Star State in our Texas section, and every formation package with prices under Services.

Consultation & implementation

If you'd like to find out what this means for your own situation, the best step is to book a consultation.