The Texas Senate Committee on Economic Development took up Hotel Occupancy Tax (HOT) collection, reporting, and use during its September 22 interim hearing, with short-term rental tax collection becoming an important part of the discussion.
The hearing was part of the Senate’s interim study of whether the current HOT framework is operating as intended and whether additional measures are needed to improve collection, reporting, and accountability. The committee took invited testimony only regarding the interim charges, with no legislation considered or voted on. (Bill filing for the 90th legislative session opens November 9th, 2026).
STR tax collection gets lawmakers’ attention
Testimony from the Texas Comptroller’s Office spotlighted the distinction between state HOT and local HOT.
Texas’ 6% state HOT is administered by the Comptroller, while cities and counties that levy local HOT generally administer and receive their own local tax revenue. Texas law includes short-term rentals such as Airbnb and HomeAway within the lodging subject to HOT.
Sen. Royce West specifically questioned the Comptroller about short-term-rental tax collection, including who is responsible for collecting local HOT, how platform agreements work, and how enforcement is handled. The Comptroller indicated that the state does not currently have a reliable estimate of how much local HOT may be going uncollected.
A familiar issue returns to the Capitol
The hearing also revisited SB 1592, legislation considered during the 2025 session that would have required accommodations intermediaries—including online booking platforms—to collect and remit state and local HOT through a Comptroller-administered system.
The bill passed the Senate but did not advance through the House. Its proposed approach included centralized reporting and distribution of local HOT revenue to the appropriate jurisdictions.
The renewed discussion suggests that lawmakers may continue examining whether a more standardized platform-based collection system could improve compliance while reducing the administrative burden associated with multiple local tax filings.
Broader questions about HOT accountability
The committee’s discussion went beyond STRs.
Lawmakers also examined how much local HOT revenue remains unspent and how local governments demonstrate that HOT-funded programs and projects are producing the tourism and economic-development outcomes contemplated by state law. The Comptroller reported approximately $633 million in local HOT revenue as unspent in the data discussed during the hearing.
For the Texas tourism industry, this creates a broader conversation about both sides of the HOT equation:
How should lodging taxes be collected—and how should those dollars be used and measured once they are collected?
What STR operators should watch
The discussion puts several issues on the radar for the 90th legislative session convening in 2027:
- Potential statewide collection of local HOT by Airbnb, Vrbo, and other booking platforms;
- A possible expanded role for the Texas Comptroller in collecting and distributing local HOT;
- Standardized reporting and compliance requirements;
- How platform and service fees are treated for HOT purposes;
- Greater transparency around local HOT collections and expenditures; and
- Potential changes to the rules governing how local HOT revenue may be used.
TXSTRA will continue to track these developments as legislation for the 90th Texas Legislature takes shape.