Highlights
- Texas Comptroller Don Huffines has signed a second executive order seeking to curtail the expansive application of sales and use tax to data-related services by the Comptroller's office, this time eliminating tax on electronic health record (EHR) and electronic medical record (EMR) systems, patient portals and related healthcare technology.
- The order instructs his office to amend 34 Texas Administrative Code Section 3.342, the rule governing information services.
- Healthcare providers, EHR/EMR vendors and patient portal operators should monitor the rulemaking process and consider whether the change affects historical tax positions and potential refund claims.
Two previous Holland & Knight alerts reported that newly appointed Texas Comptroller Don Huffines had signaled a willingness to revisit his office's aggressive data processing tax interpretations and that he had followed through with an executive order directing removal of marketplace and platform fees from the definition of "taxable data processing services" under Rule 3.330.
The Comptroller's office on October 6, 2026, announced a new action addressing the tax treatment of medical records and the healthcare technology systems used to maintain, access and share them. In announcing the change, Huffines noted that the underlying tax rules "were written before modern healthcare technology existed," observing that "doctors' offices weren't running cloud-based record systems and patients weren't logging into portals" when the relevant statutes and rules were adopted.
The Executive Order
The executive order directs the Comptroller's office to publish a proposed amendment to Rule 3.342 (Information Services). Under the proposed amendment, the following would no longer be subject to tax as information services or data processing services:
- electronic health record (EHR) systems
- electronic medical record (EMR) systems
- patient portals
- other healthcare technology systems used to maintain, access or share medical records
Huffines framed the action in terms consistent with prior pronouncements, stating that his office cannot "arbitrarily rewrite the Tax Code" and that if a tax is not authorized by law, it should not be imposed. The order is part of the Comptroller's ongoing Taxpayer First Project.
Next Steps
The executive order itself does not amend Rule 3.342. The Comptroller's office must still:
- file the proposed amendment with the Texas Secretary of State for publication in the Texas Register
- open a 30-day public comment period following publication
- finalize the rule after considering public comments
The current rule remains in effect until a final amendment is adopted. Healthcare providers, hospital systems, EHR/EMR software vendors and patient portal operators should:
- monitor the Texas Register for publication of the proposed amendment and the opening of the comment period
- consider submitting comments during the 30-day window, especially on whether the relief should apply retroactively and on digital services the order does not address
- evaluate refund opportunities and how ongoing audits or disputes involving tax on medical records and related systems may be affected
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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