What is Texas State cost Recovery fee?

Texas has a unique tax system that imposes a margin tax on businesses operating within its borders. This tax applies to a wide range of companies, including hotel owners.

To offset the cost of this margin tax, hotel owners often pass the expense on to their guests. This is done through the implementation of a "State Cost-Recovery Fee" on guest room rates.

The current rate for the State Cost-Recovery Fee is 0.525% of the room rate. This percentage is added to the guest's final bill, in addition to any applicable state and local taxes.

The purpose of this fee is to ensure that the hotel owner is not burdened with the full cost of the margin tax. It allows the owner to recover a portion of the tax through the guest's payment.

While some guests may view this fee as an additional expense, it is important to note that it is a necessary measure to comply with Texas tax laws.