Texas comptroller moves to end sales tax on EMRs, healthcare technology systems

Overview

On October 6, 2026, Texas Comptroller Don Huffines signed an executive order (EO) directing his office to propose an amendment to Rule 3.342 providing that electronic health record (EHR) systems, electronic medical record (EMR) systems, patient portals, and other healthcare technology systems used to maintain, access, or share medical records are not taxable information services or data processing services.

Relation to revenue cycle management and medical billing services

The proposed change makes perfect sense given that the services covered by the announcement often are purchased from vendors that sell medical billing services. For years, revenue cycle management companies have struggled with the taxability of their various service lines. However, as we have covered in the past (here and here), medical billing services are not data processing under Texas law nor subject to sales tax.

Texas taxes both information services (with certain exceptions) and data processing. The EO takes the position that neither basis applies. The EO explains that information maintained in an EHR or EMR system is gathered on behalf of a particular client and is proprietary to that client and therefore does not constitute a taxable information service under the existing structure of Rule 3.342.

The proposed amendment expressly applies to

EHR systems;

EMR systems;

patient portals; and

other healthcare technology systems used to maintain, access, or share medical records.

The EO also directs the comptroller’s office to review Rule 3.330, related rules, and agency guidance for any conforming changes necessary to ensure consistent treatment of medical records systems and related healthcare technology.

In a public announcement, Comptroller Huffines stated that “A Comptroller doesn’t get to arbitrarily rewrite the Tax Code. If it’s not authorized in the law, it’s not a tax.” He has also indicated that the comptroller’s office will continue reviewing the application of Texas’ information services and data processing taxes and may propose additional changes.

Next steps

The proposed amendment will be filed with the Texas secretary of state and published in the Texas Register, followed by a public comment period of at least 30 days.

Healthcare providers, technology companies, and other taxpayers should consider:

• Reviewing whether they are currently paying or collecting Texas sales and use tax on EHR, EMR, patient portal, medical billing, or related healthcare technology charges
• Reviewing prior audits or other proceedings in which they conceded or otherwise accepted the comptroller’s prior treatment
• Evaluating whether refund or other procedural avenues may be available for tax previously paid
• Monitoring the proposed rule and any conforming changes to Rule 3.330 or other comptroller guidance.