Texas
Texas is home to 3.3 million small businesses that power the state’s economy and employ nearly half its workforce. As these businesses navigate a rapidly evolving digital economy, policymakers must ensure that new regulations protect, rather than jeopardize, the state’s small businesses.
Key Policy Issues
Double Taxation for Online Marketplace Sellers
Data Processing Tax
Overview: In 2025, an archaic underlying tax on data processing services was approved to apply to online marketplace seller fees. Sellers with a Texas billing address thus face higher costs compared to out-of-state competitors selling to Texas consumers who don’t need to pay the tax. While brick-and-mortar stores pay sales tax once, online sellers are unfairly penalized for embracing digital tools to expand their reach.
Status: The Texas Legislature introduced HB 1681 and SB 265 in 2025 to protect the data processing tax from being passed on to small businesses. Unfortunately, neither HB 1681 nor SB 265 advanced. Until the 2027 session, small business owners in Texas must petition directly to the Comptroller to repeal this tax.
Key Officials
Texas Small Business Leaders, Make Your Voice Heard.
A 6.25% tax on top of sales tax was implemented under former Texas Comptroller Glenn Hegar. It is actively reducing seller payouts on online marketplaces like eBay, Etsy, and Poshmark, making it harder for small businesses to grow and compete. Click here to send a letter to Comptroller Huffines urging him to repeal the tax hurting the profit margins of small businesses.
Spotlight: 3C Small Business Advocates in Texas
Meet Frailey Woodworks: A Family Business Selling Nationwide with Online Tools
