AUSTIN, Texas — Texas lawmakers have introduced legislation aimed at eliminating credit card swipe fees charged on sales taxes and tips, a move that supporters say will save businesses more than $1 billion annually.
Senate Bill 2026 and House Bill 4124, filed by Sen. Donna Campbell and Rep. Drew Darby, would prevent credit card companies from applying processing fees to amounts merchants collect for the government or as tips for employees. The bills have received support from Texans Against Hidden Credit Card Fees, a coalition of small businesses, retailers, and consumers advocating for financial fairness in transactions.
- Texas lawmakers introduced SB 2026 / HB 4124 to eliminate swipe fees on taxes and tips.
- Businesses in Texas paid over $1 billion in swipe fees on sales taxes in 2023.
- Small businesses and consumers are expected to benefit from the legislation.
What lawmakers are saying
“I am proud to introduce House Bill 4124 to eliminate the outrageous phantom tax loophole that has unfairly burdened our small businesses and hardworking consumers for far too long,” Darby said in a statement.
Darby argued that swipe fees on taxes and tips increase the cost of everyday goods and services, saying the bill builds on former President Donald Trump’s No Tax on Tips initiative.
The coalition backing the measure contends that credit card swipe fees, which range from 2% to 5% of a transaction, have become a significant financial strain on small and mid-sized businesses.
John McCord, executive director of the Texas Retailers Association, described the proposed legislation as a “basic issue of fairness” and said that retailers across Texas are paying some of the highest transaction fees in the country.
“Swipe fees are among the highest operating expenses for retailers of all sizes across Texas, driving up costs on every consumer,” McCord said.
How this bill could save Texans money
According to the coalition, Texas businesses paid over $1 billion in swipe fees on collected sales taxes in 2023 alone, funds that ultimately went to large financial institutions. The proposed bills would redirect that money back into local businesses and communities.
Jeff Burdett, state director of NFIB Texas, emphasized that the financial burden extends beyond large retailers, disproportionately affecting small businesses already struggling with inflation and tight profit margins.
“Small businesses lose money every day collecting taxes for the government and tips for employees,” Burdett said. “By removing swipe fees from taxes and tips, our state legislators can once again affirm that Texas is the best state to operate a small business because we help entrepreneurs remain competitive and reinvest in their communities.”
The coalition is urging lawmakers to prioritize the passage of SB 2026 and HB 4124 to support Texas businesses and consumers.
