Texas Moves to End Sales Tax on Amazon, DoorDash and Other Platform Fees

Texas is moving to undo a year-old tax treatment that added another cost to selling products, delivering meals, driving passengers and doing business through some of the country’s largest online platforms.

State Comptroller Don Huffines signed an executive order Sept. 30 directing his agency to remove marketplace and platform fees from the definition of taxable data-processing services. The change could reach businesses and independent workers using Amazon, eBay, Etsy, DoorDash, Grubhub, Uber Eats and a long list of other digital marketplaces.

The tax has not disappeared yet.

The comptroller must formally propose an amendment to Texas Rule 3.330, publish it through the state rulemaking process and allow 30 days for public comment before a final rule can take effect. The Texas Comptroller’s order says the change will cover marketplace fees connected with online retail, prepared-food and grocery delivery, short-term lodging, ride-hailing, vehicle sharing, pet care and household or errand services.

How Texas ended up taxing marketplace fees

Texas has taxed data-processing services for decades. State law defines the category broadly enough to include computer-based data entry, retrieval, searches, storage and manipulation.

The state significantly revised Rule 3.330 in 2025, adding language that specifically addressed marketplace providers. Under that rule, an online marketplace could be providing taxable data processing when its platform entered, retrieved, searched, manipulated or stored information for sellers and other customers.

The marketplace provision took effect Oct. 1, 2025. The adopted 2025 rule followed a lengthy rulemaking process in which marketplace businesses and sellers raised concerns about the costs and competitive effects of the change.

That meant the tax question was no longer limited to companies traditionally thought of as data processors. A restaurant paying a platform to receive and manage delivery orders, an Etsy merchant paying marketplace fees or another business using an online platform could face sales tax on qualifying charges.

The customer might separately pay sales tax on whatever taxable product or service was purchased.

Huffines has characterized that combination as a “double tax.” More precisely, the state has been taxing two different charges associated with the same commercial transaction: the underlying taxable purchase and, when the rule applies, the marketplace service provided to the business or worker using the platform.

A small percentage that can add up

Texas imposes a 6.25% state sales and use tax, while cities, counties and other local jurisdictions can add as much as another 2%, producing a maximum combined rate of 8.25%. Texas sales-tax guidance confirms that statewide structure.

Data-processing services receive a special break: 20% of their value is exempt from tax under Section 151.351 of the Texas Tax Code. That leaves 80% of the charge taxable.

At the maximum combined tax rate, that works out to tax equal to as much as 6.6% of the full data-processing charge.

A business facing a $100 marketplace fee, for example, could therefore pay up to $6.60 in Texas state and local tax on that fee. A $20 platform charge could produce up to $1.32 in tax.

Those amounts are modest on a single transaction but can become substantial for a restaurant processing thousands of delivery orders, a high-volume online seller or a worker repeatedly paying platform commissions.

The dispute goes beyond Amazon sellers

The issue has become more significant as platforms have moved deeper into ordinary commerce.

Restaurants increasingly rely on delivery marketplaces. Independent merchants sell through Amazon, Etsy, eBay and specialty platforms. Drivers use ride-hailing applications to reach customers. Homeowners rent rooms or properties online. Pet sitters, cleaners and other service workers often find and manage jobs through apps.

Texas held a small-business roundtable in September focused on the effects of the tax treatment. Participants included marketplace sellers, restaurant owners and physicians paying for electronic medical-record services. The comptroller’s account of that meeting said businesses argued that the interpretation increased their costs and put some Texas sellers at a disadvantage.

The current reversal, however, is aimed specifically at marketplace and platform fees. It does not eliminate Texas’ broader tax on data-processing services.

Software-as-a-service providers, web-hosting businesses and other companies can still fall within the taxable category. Texas continues to describe computer-based data storage, web hosting, website maintenance and other services as taxable data processing. The comptroller’s current taxable-services guidance also notes the 20% exemption available for qualifying data-processing charges.

What happens next

The most important distinction for businesses is timing.

Huffines’ order starts the rule change; it does not itself rewrite Rule 3.330. The comptroller said the proposed amendment will be filed with the Texas secretary of state, published in the Texas Register and opened to public comment for 30 days before the agency moves toward a final rule.

As of the Oct. 2 edition of the Texas Register, the marketplace amendment was not among the proposed rules published in that issue.

That means businesses should not assume the tax treatment ended Sept. 30 simply because the executive order was signed.

Several practical questions also remain, including the effective date of the final amendment, how platforms will change their billing systems and whether businesses that paid tax under the 2025 interpretation will have any route to refunds or credits.

There is another question consumers may notice more directly: whether lower costs for restaurants, merchants and gig workers eventually translate into lower prices or fees.

Removing the tax does not require Amazon, DoorDash, Uber Eats or any other platform or seller to reduce what customers pay. But in an economy where an increasing share of everyday commerce passes through digital intermediaries, Texas is moving toward treating the fee for reaching that marketplace differently from the purchase that happens inside it.