Tax Policy News

U.S. Postal Service rules changes could mean delays for mail being postmarked by one or more days after it is received by the post office. This could cause payments and reports to be counted late for any submissions to the agency that are date sensitive.

The Postal Service has instituted a nationwide change that affects when postmarks are affixed to mail. Unless a customer requests a postmark at a Postal Service retail location, postmarks are no longer added when mail is first received but are automatically stamped later while being sorted and processed at regional distribution centers.

This means your mail could be postmarked several days after you drop it in a mailbox. Because many federal and state laws define timely payment based on the Postal Service’s postmark, payments or reports may be considered delinquent if they are mailed too close to a deadline — even if they were, in fact, placed in a mailbox before the deadline date.

To avoid possible delinquency and late penalties, the Comptroller’s office urges the public to utilize any automated report or payment system available, mail items early to ensure ample time for postal processing or have the mail clerk postmark your mail when you deliver it at the post office.

Electronic submissions of 2026 franchise tax EZ Computation and Long Form reports cannot be processed until programming to implement changes established by the 89th Texas Legislature is complete. We will provide an update on Webfile and Comptroller.Texas.Gov when this process is complete and those reports can be electronically filed. Currently, taxpayers can still electronically file 2026 Public Information Reports, Ownership Information Reports, Common Owner Reports, extension requests and payments. Printable versions of all 2026 franchise tax forms are available on our franchise tax webpage.

Current cigarette and tobacco products non-retailer permits expire Feb. 28, 2026. The Comptroller's office mailed renewal packets with preprinted applications to all cigarette, cigar and/or tobacco products manufacturers, importers, distributors, bonded agents, export warehouses, import warehouses and wholesalers to renew their cigarette and tobacco products non-retailer permits for March 1, 2026, through Feb. 28, 2027.

If you did not receive your packet, call us at 800-862-2260 to request one.

Non-retailers should review the preprinted information, make any corrections, sign the renewal form and return all pages of the packet (and any other documentation) with the applicable permit fee to our office by the date printed on the renewal form. You can also renew online by submitting your renewal and payment electronically through our Webfile system

A $50 late filing fee will be assessed on non-retailer renewals postmarked after Feb. 28, 2026.

The 2025 annual insurance premium and maintenance tax reports and payments for licensed insurance companies and miscellaneous organizations (such as HMOs) are due on or before March 1, 2026.

Annual insurance premium tax reports and payments for Texas licensed surplus lines agents and agencies, and entities required to report unauthorized insurance premium taxes, are also due on or before March 1, 2026.

As of January 2021, taxpayers no longer receive a paper tax report. Instead, the taxpayer receives an email reminder about the filing deadline. Email reminders were sent in January 2026.

For any questions regarding insurance tax reports, please contact us at insurance.tax@cpa.texas.gov.

Property and casualty insurance companies authorized by the Texas Department of Insurance to write automobile insurance as described in Insurance Code, Art. 5.01(e) must report and pay the Motor Vehicle Crime Prevention Authority Fee on or before March 1, 2026, for automobile policies effective from July 1, 2025, through Dec. 31, 2025. Companies licensed to write automobile coverage must file the form even if no fee is due. Refer to Form 25-107, Insurance Motor Vehicle Crime Prevention Authority Semiannual Fee Report - July through December (PDF).

During Texas’ annual sales tax holidays, certain taxable items are exempt from tax for a limited time. We know timing and planning are critical for retailers, so we encourage you to mark your 2026 calendar for this year’s four sales tax holidays:

Emergency Preparation Supplies

Saturday, April 25, through Monday, April 27, 2026.

Energy Star and Water-Efficient Products

Saturday, May 23, through Monday, May 25, 2026 (Memorial Day).

Clothing, Footwear, Backpacks and School Supplies

Friday, Aug. 7, through Sunday, Aug. 9, 2026.

Every January, the Comptroller’s office sets new fee rates by increasing the previous year’s rate by the greater of 3 percent or the rate of inflation as calculated using the Consumer Price Index for All Urban Consumers (CPI-U). The new computed rates take effect on Feb. 1, 2026, and are valid through Jan. 31, 2027.

Rates for Feb. 1, 2026, through Jan. 31, 2027 (statutory minimum increase):

• NSM or SPM (with credit amendment) – 4.35471 cents per cigarette stick or 0.09 ounces of cigarette tobacco product.
• SPM – 1.18767 cents per cigarette stick or 0.09 ounces of cigarette tobacco product.

The Earned Income Tax Credit (EITC) is a federal program for working people with low to moderate income, even if they do not owe tax or are not required to file a tax return. The credit reduces the amount of tax owed and could provide a refund.

Information about the credit for 2026 is now available in both English and Spanish on our Earned Income Tax Credit (EITC) webpages. We also provide printable EITC posters for employers to share with their employees.

After the end of each fiscal year, the Comptroller’s office is required to determine the estimated average rate of local sales and use taxes imposed in the state during the preceding state fiscal year. This rate is published as the single local use tax rate for remote sellers in the next calendar year.

For the fiscal year ending August 2025 the rate was determined to be 1.75 percent. This rate will be the single local use tax rate for remote sellers in effect for the period of Jan. 1, 2026, to Dec. 31, 2026.

The Comptroller’s office proposed the following rules for public comment through the Texas Register:

Franchise Tax

Rule 3.586 – Margin: Nexus

Publication date – Nov. 14, 2025
Comment period end date – Dec. 14, 2025

The Comptroller’s office proposed an amendment to Rule 3.586 concerning margin: nexus. The proposed amendment clarifies the economic nexus provision. The amendment makes clear that a foreign taxable entity that apportions its margin using a method other than gross receipts must use gross receipts as sourced to Texas under subsections (e) and (f) of Rule 3.591, Margin: Apportionment to determine economic nexus.

The Comptroller’s office filed the following rules for adoption with the Secretary of State:

Sales Tax

Rule 3.344 – Telecommunications Services

Publication date – Jan. 2, 2026
Effective date – Jan. 5, 2026

The Comptroller's office adopted amendments to Rule 3.344 concerning telecommunication services. The amendments clarify provisions for determining local tax for mobile telecommunications services and hold harmless provisions if a service provider assigns an address to an incorrect taxing jurisdiction. A service provider will be held harmless if it exercised due diligence in determining the correct jurisdictions by methods including using all reasonably obtainable and usable data pertaining to changes in jurisdictional boundaries. This data includes the Comptroller's online Sales Tax Rate Locator and Publication 96-339, Jurisdictions that Impose Local Sales Tax on Telecommunications Services.

Franchise Tax

Rule 3.586 – Margin: Nexus

Publication date – Jan. 2, 2026
Effective date – Jan. 7, 2026

The Comptroller’s office adopted an amendment to Rule 3.586 concerning margin: nexus. The amendment was adopted without change to the proposed text. The amendment clarifies the economic nexus provision. The amendment makes clear that a foreign taxable entity that apportions its margin using a method other than gross receipts must use gross receipts as sourced to Texas under subsections (e) and (f) of Rule 3.591, Margin: Apportionment to determine economic nexus.

Motor Fuels Tax

Rule 3.434 – Liquefied Gas Tax Decal

Publication date – Oct. 24, 2025
Effective date – Oct. 28, 2025

The Comptroller’s office adopted the repeal of Rule 3.434 concerning liquefied gas tax decals. The tax on liquefied gas was repealed effective Sept. 1, 2015, by House Bill 1905, 84th Legislature, 2015. The last taxable period for liquefied gas is now outside the four-year statute of limitations for assessments and refund claims.

Rule 3.436 – Liquefied Gas Dealer Licenses

Publication date – Oct. 24, 2025
Effective date – Oct. 28, 2025

The Comptroller’s office adopted the repeal of Rule 3.436 concerning liquefied gas dealer licenses. The tax on liquefied gas was repealed effective Sept. 1, 2015, by House Bill 1905, 84th Legislature, 2015. The last taxable period for liquefied gas is now outside the four-year statute of limitations for assessments and refund claims.

To see the latest items added to our State Tax Automated Research (STAR) system, use the New Documents link on the STAR home page in the blue menu bar.

The Monthly Updates Search Form defaults to the current month and "All Taxes." Use the pull-down menu to choose a different month or a particular tax. Selecting "All Taxes" brings up the documents organized by tax type.

STAR Accession No. 202508025L

Tax Policy Division issued a private letter ruling related to the taxability of charges to fuel stops for being listed on a mobile application (app) that offers discounted fuel prices to truck drivers.

The taxpayer’s app displays a fuel stop’s location, discounted fuel price, and amenities such as showers, parking spots, and dining options. The app provides a dashboard to the fuel stops with detailed financial reporting that allows them to view and download transaction history.

When a truck driver arrives at a fuel stop that has partnered with the taxpayer, the driver opens the app and selects the fuel stop where they are purchasing fuel. The app generates a fuel code which the driver shows to the fuel stop clerk to receive the discounted fuel price. Once the fuel is pumped, the app charges the truck driver’s credit card on file. The taxpayer then transfers the appropriate proceeds to the fuel stop. The fuel stops pay the taxpayer a percentage-based fee on sales of fuel through the app.

The Comptroller’s office determined that the taxpayer’s activities to list a fuel stop’s information and to compile transaction data for a fuel stop involve data compilation, data manipulation, and information storage. The service was therefore determined to be a taxable data processing service.

STAR Accession No. 202509034L

Tax Policy Division responded to a private letter ruling request related to whether a taxpayer is a "ready mix concrete contractor." A “ready mix concrete contractor” is a person who manufactures or produces ready mixed concrete for construction purposes and incorporates the concrete into real property.

The taxpayer manufactures concrete at plants in Texas. Each of the plants has a separate phone number that contractors call to place concrete orders.

After receiving an order, the taxpayer prepares concrete aggregate, places it in a mixing truck, and delivers it to a job site. At the job site the taxpayer’s truck driver attaches a delivery chute to the truck. Once the contractor’s concrete finishers are ready, the taxpayer starts the concrete flow. The concrete finishers are responsible for preparing the concrete forms, smoothing out the concrete, and directing the concrete chute to areas where they want the concrete deposited. The taxpayer may also deliver concrete to a contractor's pumping truck and concrete finishers pump the concrete from the pumping truck to the desired final location at the job site.

The Comptroller’s office determined that the taxpayer does not both produce and incorporate concrete into real property. The taxpayer is therefore not a “ready mix concrete contractor” and is simply selling concrete. Concrete is tangible personal property, and the taxpayer is responsible for collecting Texas sales and use tax on its sales of this material.

Local sales taxes are generally sourced based on the place of business of the retailer that receives or fulfills orders. Sellers with more than one place of business source local sales tax to the place of business from which the seller fulfills the order.

The Comptroller’s office determined that each of the taxpayer’s plants receive and fulfill orders for concrete and each plant is therefore a place of business. The taxpayer is required to collect and remit local sales and use tax based on the location of the plant that fulfills an order.

STAR Accession No. 202511012L

Tax Policy Division issued a private letter ruling related to whether hydrogen qualifies for exemption under the sales tax exemptions provided for gas and electricity.

The sale of gas and electricity are taxable as the sale of tangible personal property unless an exemption applies. Texas Tax Code, Section 151.317, Gas and Electricity provides exemptions for various uses of gas and electricity. For example, Section 151.317(a)(9) provides an exemption for gas and electricity directly used by a data center or large data center project in the processing, storage, and distribution of data.

The Comptroller’s office has consistently interpreted “gas” under this Section 151.317 to mean natural gas. Since 1978, the administrative rules implementing the sales tax exemptions for “gas” and electricity have specifically referred to “natural gas.” The Comptroller’s current interpretation is found in Rule 3.295, Natural Gas and Electricity and is limited to natural gas.

Additionally, Section 151.317(e) specifically refers to natural gas when it explains how to calculate the predominant use of gas through a meter that is used for exempt and taxable purposes. This section was adopted by House Bill 3211 during the 76th legislative session in 1999 as a clarification of existing law after the Comptroller’s office adopted its administrative rule and policy guidance which are limited to natural gas.

The Comptroller’s office therefore determined that hydrogen is not a gas that is exempt under Section 151.317.

STAR Accession No. 202512001M

Tax Policy Division issued a memo providing guidance on how the Comptroller’s office will address the federal government’s decision to end production of the penny. The memo specifically discusses how the Comptroller’s office will handle cash payments it receives and the calculation of sales tax on cash transactions.

The Comptroller’s office will continue to accept pennies while they remain legal tender. When accepting cash payments if the office cannot make exact change, the total due is rounded to the next lowest nickel and accepted as payment in full.

When a taxpayer has a cash transaction and the sales price plus sales tax results in a total that cannot be collected without pennies, the taxpayer may round the transaction to the next lowest or next highest nickel, as it sees fit, and we will not adjust the sales price or recalculate tax due. However, if a taxpayer rounds past the next lowest or next highest nickel, we will adjust the sales price and recalculate the tax due.

These procedures are effective immediately and apply only to cash transactions.

STAR Accession No.202512012M

Tax Policy Division issued a memo to Audit Division providing guidance regarding the policy change on the conformity of the Texas franchise tax to the Internal Revenue Code (IRC). Historically a taxable entity was required to use the IRC in effect for the federal tax year beginning Jan. 1, 2007, to compute amounts taken from the applicable federal tax return.

Beginning with the 2026 franchise tax report, a taxable entity will determine amounts taken from the federal tax return under the federal tax law in effect for that federal tax year, unless the statute or rule references the IRC. This change applies to all components of the franchise tax.

A taxable entity that claims cost of goods sold (COGS) will include the depreciation reported on its federal tax return for each asset qualifying under Section 171.1012(c)(6), Determination of Cost of Goods Sold. This amount may include any federal bonus depreciation claimed on the federal tax return.

On its 2026 franchise tax report a taxable entity may also calculate a one-time net depreciation adjustment for each qualifying asset as an equitable remedy for any gain reported on the federal tax return in excess of what historically has been determined for franchise tax purposes. The net depreciation adjustment is based on the difference in depreciation claimed for federal income tax and the depreciation claimed for franchise tax COGS for a given asset. Qualifying assets are those placed in service prior to the accounting period on which the 2026 report is based, provided that the assets have not been disposed of prior to this date, and are associated with and necessary for the production of goods under Section 171.1012(c)(6).

Amendments to Rules 3.587, Margin: Total Revenue, and 3.588, Margin: Cost of Goods Sold, will incorporate the changes and are moving through the rulemaking process.

The Taxes webpage has links to:

• All Texas taxes and fees.
• Resources for taxpayers.
• Filing and paying taxes.
• Tax laws and rules.

Our Account Update Tools make it easy for you to:

• Change your address.
• Add a location.
• Close a location.
• Change return/email notifications.

The Comptroller’s office offers video tutorials on filing and paying sales tax through Webfile. View them on our Video Tutorials webpage.

Our office also offers virtual Sales and Use Tax Seminars conducted via Webex Events. New taxpayers are especially encouraged to attend these overviews of tax responsibilities for buyers, sellers, and service providers. For more information, visit the Taxpayer Seminars webpage.

Visit our Tax Training Resources webpage to:

• Find out more about our training resources.
• Register for upcoming webinars.
• View the Podcast and Webinar Archive sections for previous recordings.

The Practitioners’ Corner is a one-stop resource for information about filing and paying taxes, links to tax research sources and searchable databases.

• Tax Due Dates
• Holiday Schedule