According to the Legislative Budget Board (LBB), SB 1592 is projected to result in a net positive fiscal impact to the state. Over the biennium ending August 31, 2027, it would generate an estimated $524,000 in General Revenue. This positive trend is expected to continue, with the Legislative Budget Board projecting $5.95 million in net revenue gains by the end of the 2028–2029 biennium. These gains stem from centralizing and formalizing the collection of hotel occupancy taxes from accommodations intermediaries, such as online travel platforms, who currently may not fully remit state and local taxes under consistent standards.

To achieve this, the bill requires the Texas Comptroller to take on a significant administrative role. The agency must develop standardized tax reporting forms, compile and publish tax rate data from local jurisdictions, and manage a network of trust accounts for remitting local tax revenues back to municipalities and counties. In return, the state will retain 1% of the local hotel occupancy taxes it collects as a service charge, which contributes to the projected revenue gain.

On the expenditure side, the Comptroller’s Office estimates it will need four additional full-time employees to administer the new system and address issues such as overpayments, reconciliation, and taxpayer support. There is also a significant one-time technology cost of $2.2 million to build the systems necessary to handle tax reporting and remittance across various jurisdictions. These upfront costs result in a short-term negative fiscal impact in FY 2026 (-$2.26 million), but the investment quickly turns net positive in subsequent years.

At the local level, municipalities and counties are likely to benefit from a more consistent and comprehensive collection of hotel occupancy taxes. Although the state will retain 1% of those collections for administrative costs, the net effect is anticipated to be positive for local revenue, particularly in jurisdictions that have struggled with compliance from digital platforms. Overall, the bill represents a long-term revenue enhancement measure for both state and local governments with manageable upfront administrative costs.

As originally filed and passed by the Senate, Texas Policy Research recommends that lawmakers vote NO on this bill, based on principled concerns regarding the expansion of government authority and the further entrenchment of a tax, Hotel Occupancy Tax (HOT), that we oppose on policy grounds. However, since that time, we have been reliably informed by stakeholders in the industry and others familiar with the compliance landscape that the bill addresses significant inefficiencies and burdens placed on small-scale operators and property owners.

Under current law, many short-term rental hosts and small hotels are required to submit up to three separate HOT filings monthly (state, county, and municipal), and may be subjected to multiple redundant audits for the same transaction. SB 1592 simplifies this system by shifting the compliance and remittance responsibility to the accommodations intermediary, the platform facilitating the payment, freeing up small business owners and individuals to focus on their work, not bureaucracy.

While the bill does extend the Comptroller’s administrative role, it does so in a way that reduces total compliance and enforcement burdens statewide, especially for thousands of small operators. From a practical liberty standpoint, this bill minimizes government friction for individual taxpayers, centralizes reporting to one office instead of hundreds, and reduces unnecessary audits and paperwork.

We remain mindful of the concern that the bill could create advantages for large, established platforms if not properly scoped. For that reason, we recommend amending the bill to:

• Include protections for small or new market entrants, such as simplified compliance pathways or de minimis exemptions
• Ensure that existing agreements with jurisdictions are subject to periodic review to avoid permanent carve-outs

Although we initially opposed this legislation due to its implications for tax entrenchment and centralized authority, further engagement with stakeholders has revealed that SB 1592 would alleviate significant burdens on Texas taxpayers, particularly small businesses and property owners. With targeted amendments, this bill can achieve its goal of simplification without undermining competitive fairness in the lodging market. As such, Texas Policy Research recommends that lawmakers vote YES on SB 1592 while also strongly recommending that they consider amendments as described above to ensure its proper scope.

• Individual Liberty: The bill enhances individual liberty in a practical sense by relieving thousands of short-term rental hosts and small hoteliers from the need to file multiple hotel occupancy tax returns each month with different taxing jurisdictions. For those who operate exclusively through platforms like Airbnb or Vrbo, the responsibility to collect and remit taxes shifts to the intermediary, significantly reducing exposure to state and local audits. This allows individuals to spend less time entangled in bureaucracy and more time on their business or property. While the state gains oversight at the platform level, the average Texan enjoys less direct regulatory friction as a result.
• Personal Responsibility: By assigning tax collection duties to the entity that actually handles the money and transaction (the intermediary), the bill aligns tax remittance with control and responsibility. This corrects a misalignment in current law where individuals were held liable for taxes even if the platform was the one receiving and processing payments. This shift supports the principle of responsibility residing with the party best positioned to act, reducing confusion and enhancing compliance without coercion.
• Free Enterprise: The bill may benefit established platforms that already have legal teams and tax infrastructure in place. By centralizing reporting and remittance, the compliance model becomes standardized, but potentially difficult for small or emerging intermediaries to meet if they lack capacity. While this could promote entry by reducing fragmentation, it could also consolidate market power if the regulatory load becomes too high for new entrants. Amendments that include de minimis exemptions or phased onboarding for small platforms would help ensure continued competition and innovation in the market.
• Private Property Rights: The bill does not restrict how property is used, nor does it regulate the act of renting a property itself. In fact, by simplifying the tax burden makes it easier for property owners to engage in lawful short-term rentals without dealing with complex tax filings or multiple audits. This supports peaceful, voluntary use of property with fewer regulatory hassles. However, because the HOT itself remains in place, and intermediaries act as agents of the state to collect it, some property owners may feel coerced into a tax system they philosophically oppose. Still, this bill does not expand that obligation—it streamlines how it's handled.
• Limited Government: The bill represents a tradeoff: it expands the state Comptroller’s authority by consolidating the administration of local taxes at the state level. That’s a form of centralization. However, it simultaneously reduces overall government inefficiency by eliminating thousands of duplicative filings and audits. This may be considered a strategic consolidation, not a raw expansion of power, particularly if viewed through the lens of reducing waste, duplication, and taxpayer burden. Still, vigilance is needed to ensure that this centralization doesn’t evolve into regulatory overreach or make the tax itself harder to reform in the future.

• HB 2433 (Same As)