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Signed Into Law
Signed June 20, 2025Effective 2025-09-01
SB1902

Regular Session

Relating to the administration of the dealer-issued license plates database and to the removal and transfer of license plates.

Government Affairs & Regulatory Compliance Analysis

SB1902: Government Affairs Overview

SB 1902 mandates that dealers remove license plates immediately upon taking a vehicle into inventory, effectively reversing the "plate follows vehicle" model previously anticipated under HB 718. This legislation imposes strict 10-day disposal deadlines for non-transferred plates and grants TxDMV aggressive new authority to revoke dealer access to the license plate database for fraudulent use, creating an immediate operational risk for General Distinguishing Number (GDN) holders.

Sen. Robert Nichols·Senate Bill·Regular Session

Critical
Low Cost
Effective:2025-09-01
Business Impact

Who SB1902 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-09-01). Review with your legal and compliance teams to understand implications.

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Transportation

Affected business types:

  • Trucking companies
  • Towing operators
  • Fleet operators
  • Logistics providers
View all transportation legislation

Key Operational Considerations

  • 1Intake Staff (Trade-ins/Auctions): Train staff to physically remove plates *immediately* upon possession. The practice of leaving plates on inventory vehicles must end.
  • 2Title Clerks: Retrain staff on the "Transfer Logic." Plates can only be transferred if:

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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SB1902
Critical
Relating to the administration of the dealer-issued license plates database and to the removal and transfer of license plates.
Critical Compliance Urgency
Requires immediate attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
Texas Department of Motor Vehicles
Primary Author: Sen. Robert Nichols
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025 (Assuming standard majority vote; monitor for July 1, 2025, if supermajority is achieved).
  • Compliance Deadline: Immediate upon Effective Date. Procedures for plate removal and database security must be active on Day 1.
  • Agency Rulemaking: TxDMV must adopt rules regarding plate disposal by October 1, 2025.
  • *Regulatory Gap Warning:* Between the Effective Date and October 1, the law requires disposal "in a manner prescribed by the department," yet rules may not exist. You must adopt a conservative destruction policy (e.g., shredding) during this interim period.

Immediate Action Plan

  • 1. Immediate Policy Update: Draft a "Plate Removal & Destruction Policy" requiring removal upon intake and destruction within 10 days if not transferred.
  • 2. Audit Database Access: Review current user permissions for the TxDMV database. Remove access for former employees or non-essential staff immediately.
  • 3. Update DMS Defaults: Contact your software vendor to ensure fee calculation defaults switch from "Transfer" to "New Issue" effective September 1, 2025.
  • 4. Secure Destruction Vendor: If you handle high volumes, contract with a shredding service to handle plate disposal to ensure a certifiable audit trail.

Operational Changes Required

Contracts

  • Purchase Orders/Buyer's Orders: Update line items for "Registration/Title Fees." Because transfers are now restricted to specific scenarios (same dealer/same customer), the default transaction will shift to new plate issuance. Ensure your software defaults to charging for new metal plates rather than transfers.
  • Employee Agreements: Amend employment contracts and handbooks to explicitly define "unauthorized use of TxDMV databases" as gross misconduct. Because TxDMV can revoke the dealership’s ability to issue tags based on employee fraud, this must be a termination-level offense.

Hiring/Training

  • Intake Staff (Trade-ins/Auctions): Train staff to physically remove plates *immediately* upon possession. The practice of leaving plates on inventory vehicles must end.
  • Title Clerks: Retrain staff on the "Transfer Logic." Plates can only be transferred if:
  • 1. The customer buys the new vehicle from *your* dealership.
  • 2. The plates match the vehicle class (e.g., Passenger to Passenger).
  • Inventory Management: Prepare for a higher volume of physical inventory. The Fiscal Note projects 1.2 million additional new plate issuances annually; ensure your supply chain for metal plates and temporary tag paper is robust.

Reporting & Record-Keeping

  • Plate Disposal Log: You must document the destruction of removed plates. Create a log tracking:
  • VIN of source vehicle.
  • Plate Number.
  • Date Removed.
  • Date Destroyed (Must be within 10 days of removal).
  • Method of Destruction.
  • Database Access Log: Maintain a strict audit trail of which employee accesses the dealer-issued plate database and for which specific transaction/VIN.

Fees & Costs

  • Inventory Costs: While there are no new statutory fees, dealers will incur increased costs for stocking physical plates due to the reduction in transfers.
  • IT Compliance: Budget for potential IT upgrades to track the 10-day disposal window automatically within your DMS (Dealer Management System).

Strategic Ambiguities & Considerations

  • "Fraudulently Using": The statute allows TxDMV to deny database access for "fraudulently using" the system but does not define the threshold for fraud versus clerical error. Until rules are clarified, treat *any* database error as a potential license-revocation event.
  • "Appropriate for the Class": The law allows transfers if plates are "appropriate for the class." It is unclear if TxDMV will allow cross-class transfers (e.g., SUV to Light Truck) or strictly enforce exact matches. Expect rejections at the tax office until this is defined.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 4, 2025
Passed Senate
Mar 19, 2025
Passed House
May 23, 2025
Signed
Jun 20, 2025
Effective
Sep 1, 2025
TopicsVehicles & TrafficVehicles & Traffic--generalVehicles & Traffic--vehicle RegistrationLicense PlatesMotor Vehicle DealersMotor Vehicles, Texas Department of
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Senate Authors

Sen. Robert NicholsRepublican · Primary Author
Coauthors (3)

House Sponsor

Rep. John McQueeneyRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Sen. Robert Nichols

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Related by Topic

View more Vehicles & Traffic legislation
Quick Reference

Frequently Asked Questions

Common questions about SB1902

Q

What does Texas SB1902 do?

SB 1902 mandates that dealers remove license plates immediately upon taking a vehicle into inventory, effectively reversing the "plate follows vehicle" model previously anticipated under HB 718. This legislation imposes strict 10-day disposal deadlines for non-transferred plates and grants TxDMV aggressive new authority to revoke dealer access to the license plate database for fraudulent use, creating an immediate operational risk for General Distinguishing Number (GDN) holders.

Q

Who authored SB1902?

SB1902 was authored by Texas Senator Robert Nichols during the Regular Session.

Q

When was SB1902 signed into law?

SB1902 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce SB1902?

SB1902 is enforced by Texas Department of Motor Vehicles.

Q

How significant are the changes in SB1902?

The regulatory priority for SB1902 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB1902?

The cost impact of SB1902 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB1902 address?

SB1902 addresses topics including vehicles & traffic, vehicles & traffic--general, vehicles & traffic--vehicle registration, license plates and motor vehicle dealers.

Q

What are the key dates for SB1902?

Key dates for SB1902: Effective date is 2025-09-01. Rulemaking: Adopt rules necessary to implement the act, specifically prescribing the manner of disposal for license plates not transferred to a new vehicle. (2025-10-01). Consult with legal counsel regarding applicability.

Q

What are the penalties under SB1902?

SB1902 establishes the following penalties: administrative penalty of Denial of access to dealer-issued license plate database for Fraudulently obtaining license plates, fraudulently using the database, or prior denial of access to the temporary tag database.. Consult with legal counsel for specific applicability to your situation.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026