SB1902

Regular Session

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

CriticalImmediate action required

Low Cost

Effective:2025-09-01

Enforcing Agencies

Texas Department of Motor Vehicles

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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Legislative Timeline

This bill's path through the Texas Legislature

TopicsVehicles & Traffic Vehicles & Traffic--general Vehicles & Traffic--vehicle Registration License Plates Motor Vehicle Dealers Motor Vehicles, Texas Department of

Official Analysis

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BILL ANALYSIS

Senate Research Center	S.B. 1902
89R14963 AND-F	By: Nichols
	Transportation
	3/7/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

In 2023, the 88th Texas Legislature passed H.B. 718 to address concerns related to the fraudulent use of paper license plates. The new law and associated administrative rules, which will go into effect July 1, 2025, mandate significant operational changes for the Texas motor vehicle industry. The bill required all licensed dealers to issue metal license plates to buyers at the time of sale. This created an unintended consequence of requiring dealers to store hundreds to thousands of metal license plates in a secure place at the dealership.

S.B. 1902 would simply fix the unintended consequence that was created for dealers. The bill requires that when an individual sells or trades in a vehicle they keep each license plate or set of license plates issued to them. If the individual purchases or trades in a vehicle within 10 days, the dealers are to transfer the individual's plates to the new vehicle. However, a license plate removed that is not transferred to a new vehicle within 10 days must be disposed of by the dealer in a manner prescribed by the Texas Department of Motor Vehicles.

As proposed, S.B. 1902 amends current law relating to the administration of the dealer-issued license plates database and to the removal and transfer of license plates.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Department of Motor Vehicles in SECTION 3 of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 503.0633(f), Transportation Code, as effective July 1, 2025, as follows:

(f) Authorizes the Texas Department of Motor Vehicles (TxDMV), if TxDMV determines that a dealer is fraudulently obtaining license plates or sets of license plates or fraudulently using the database of dealer-issued license plates, or has been denied access to the temporary tag database under former Section 503.0632(f) (relating to TxDMV's authority to deny the dealer or converter access to a temporary tag database), after giving notice electronically and by certified mail to the dealer, to deny access to the database of dealer-issued license plates to the dealer.

SECTION 2. Amends Section 504.901, Transportation Code, as effective July 1, 2025, as follows:

Sec. 504.901. New heading: REMOVAL AND TRANSFER OF LICENSE PLATES.� (a) Requires a dealer who holds a general distinguishing number issued under Chapter 503 (Dealer's and Manufacturer's Vehicle License Plates) to transfer each removed license plate to a motor vehicle if that motor vehicle is purchased from the dealer and the license plates are appropriate for the class of vehicle to which the plates are being transferred. Deletes existing text requiring that each license plate issued for the motor vehicle be assigned to a subsequent purchaser of the motor vehicle at retail sale as required by Section 503.063 (Buyer's Temporary Tags).

(b) Requires the seller, on the sale or transfer of a motor vehicle to a person who does not hold a general distinguishing number issued under Chapter 503 to remove each license plate issued for the motor vehicle. Authorizes the removed license plates to be transferred to another vehicle titled in the seller's name if the license plates are appropriate for the class of vehicle to which the plates are being transferred and the seller obtains TxDMV's approval of an application to transfer the license plates and a new registration insignia for the motor vehicle. Deletes existing text requiring that each license plate remain with the motor vehicle.

(c) Creates this subsection from existing text. Requires that a license plate removed from a motor vehicle that is not transferred to another motor vehicle be disposed of in a manner prescribed by TxDMV not later than the 10th day after the date the license plate is removed from the motor vehicle.

Deletes existing text of Subsection (b-1) authorizing the purchaser of a motor vehicle to request replacement license plates under Section 504.007 (Replacement License Plates).

SECTION 3. Requires TxDMV, not later than October 1, 2025, to adopt rules as necessary to implement or administer the changes in law made by this Act.

SECTION 4. Effective date: July 1, 2025, or September 1, 2025.

Senate Authors

Sen. Robert NicholsRepublican · Primary Author

Coauthors (3)

House Sponsor

Rep. John McQueeneyRepublican · Primary Sponsor

Bill Text(with markup)

S.B. No. 1902

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the administration of the dealer-issued license plates
	database and to the removal and transfer of license plates.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 503.0633(f), Transportation Code, as
	effective July 1, 2025, is amended to read as follows:
	(f) If the department determines that a dealer is
	fraudulently obtaining license plates or sets of license plates or
	fraudulently using the database of dealer-issued license plates, or
	has been denied access to the temporary tag database under former
	Section 503.0632(f), the department may, after giving notice
	electronically and by certified mail to the dealer, deny access to
	the database of dealer-issued license plates to the dealer. A
	dealer denied access to the database of dealer-issued license
	plates under this subsection may request a hearing on the denial as
	provided by Subchapter O, Chapter 2301, Occupations Code.
	SECTION 2. Section 504.901, Transportation Code, as
	effective July 1, 2025, is amended to read as follows:
	Sec. 504.901. REMOVAL AND TRANSFER OF LICENSE PLATES. (a)
	On the sale or transfer of a motor vehicle to a dealer who holds a
	general distinguishing number issued under Chapter 503, the dealer
	shall remove each license plate issued for the motor vehicle. The
	dealer shall transfer each removed license plate to a motor vehicle
	if that motor vehicle is purchased from the dealer and the license
	plates are appropriate for the class of vehicle to which the plates
	are being transferred [~~Each license plate issued for the motor~~
	~~vehicle shall be assigned to a subsequent purchaser of the motor~~
	~~vehicle at retail sale as required by Section 503.063~~].
	(b) On the sale or transfer of a motor vehicle to a person
	who does not hold a general distinguishing number issued under
	Chapter 503, the seller shall remove each license plate issued for
	the motor vehicle. The removed license plates may be transferred to
	another vehicle titled in the seller's name if the license plates
	are appropriate for the class of vehicle to which the plates are
	being transferred and the seller obtains:
	(1) the department's approval of an application to
	transfer the license plates; and
	(2) a new registration insignia for [~~shall remain~~
	~~with~~] the motor vehicle.
	(c) A license plate removed from [~~(b-1) The purchaser of~~] a
	motor vehicle that is not transferred to another motor vehicle must
	be disposed of in a manner prescribed by the department not later
	than the 10th day after the date the license plate is removed from
	the motor vehicle [~~may request replacement license plates under~~
	~~Section 504.007~~].
	SECTION 3. Not later than October 1, 2025, the Texas
	Department of Motor Vehicles shall adopt rules as necessary to
	implement or administer the changes in law made by this Act.
	SECTION 4. This Act takes effect July 1, 2025, if this Act
	receives a vote of two-thirds of all the members elected to each
	house, as provided by Section 39, Article III, Texas Constitution.
	If this Act does not receive the vote necessary to take effect on
	that date, this Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 11, 2025

TO:	Honorable Robert Nichols, Chair, Senate Committee on Transportation

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB1902 by Nichols (Relating to the administration of the dealer-issued license plates database and to the removal and transfer of license plates.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for SB1902, As Introduced: an impact of $0 through the biennium ending August 31, 2027.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

General Revenue-Related Funds, Five- Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	$0
2027	$0
2028	$0
2029	$0
2030	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable Savings/(Cost) from Tx Dept of Motor Vehicles Fnd 10
2026	($4,610,520)
2027	($4,345,920)
2028	($4,345,920)
2029	($4,345,920)
2030	($4,345,920)

Fiscal Analysis

The bill would amend the Transportation Code to require a motor vehicle dealer who holds a general distinguishing number (GDN) to transfer each license plate it removes from a vehicle it obtains via a sale or a transfer to another vehicle if the other vehicle is purchased from the dealer and the license plates are appropriate for the class of vehicle to which the plates are to be transferred. On the sale or transfer of a vehicle to a person who does not hold a GDN, the bill would require the seller to remove license plates issued for the vehicle and authorize the removed license plates to be transferred to another vehicle titled in the seller's name if the plates are appropriate for the class of vehicle to which the plates are being transferred. The bill would require a license plate removed from a motor vehicle to be disposed of in a manner prescribed by the Texas Department of Motor Vehicles (TxDMV) if it is not transferred to a motor vehicle within 10 days of the date of removal.

The bill would take effect on July 1, 2025, if it receives a vote of two-thirds of all members elected to each house or, otherwise, on September 1, 2025.

Methodology

Under current law, each license plate issued for a motor vehicle sold or transferred to a GDN holder would be reassigned to a subsequent purchaser of the vehicle at retail sale or, for a vehicle sold or transferred to a person who does not hold a GDN, each license plate assigned to the vehicle would remain with the vehicle. The bill would amend current law to require license plates assigned to a vehicle to be removed at the time of sale or transfer of the vehicle and allow the license plates to be reassigned to another vehicle of the same class within 10 days after the license plates were removed from the original vehicle.

Analysis provided by TxDMV estimates that out of 3.7 million vehicle transactions conducted in fiscal year 2024, approximately 1.2 million vehicles would likely not have a set of license plates able to be assigned to the vehicle at the time of sale or transfer under the provisions of the bill. Based on this analysis, TxDMV estimates that 1.2 million vehicles sold or transferred each fiscal year would have a high probability to require the issuance of new license plates under the provisions of the bill beginning in fiscal year 2026. DMV estimates the annual cost to manufacture 2.4 million license plates (two plates per applicable vehicle) at a unit cost of $1.81 would be $4,345,920 from the Texas Department of Motor Vehicles Fund No. 10. It is assumed similar manufacturing costs would be incurred in each subsequent fiscal year.

Based on the analysis provided by TxDMV, it is assumed the agency would incur a one-time information technology cost of $264,600 out of the Fund 10 in fiscal year 2026 to make programming changes to the agency's automated systems to implement the provisions of the bill.

Technology

TxDMV would incur a one-time information technology cost of $264,600 out of the Texas Department of Motor Vehicles Fund 10 in fiscal year 2026 to make programming changes to the agency's automated systems to implement the provisions of the bill.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

608 Department of Motor Vehicles

LBB Staff:

JMc, AAL, GDZ, TG

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Frequently Asked Questions

Common questions about SB1902

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. Implementation Timeline Effective Date: September 1, 2025 (Assuming standard majority vote; monitor for July 1, 2025, if supermajority is achieved).

Who authored SB1902?

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

When was SB1902 signed into law?

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

Which agencies enforce SB1902?

SB1902 is enforced by Texas Department of Motor Vehicles.

How urgent is compliance with SB1902?

The compliance urgency for SB1902 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

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.

What topics does SB1902 address?

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

Legislative data provided by LegiScanLast updated: November 25, 2025

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