Municipalities cannot ban or tightly license no-impact home-based businesses, but they can require compliance with laws and allow some limits on certain home-based businesses.
Sec. 229.902. AUTHORITY TO REGULATE HOME-BASED BUSINESSES. (a) In this section: (1) "Business" has the meaning assigned by Section 1.002, Business Organizations Code. (2) "Home-based business" means a business that is operated: (A) from a residential property; (B) by the owner or tenant of the property; and (C) for the purpose of: (i) manufacturing, providing, or selling a lawful good; or (ii) providing a lawful service. (3) "No-impact home-based business" means a home-based business that: (A) has at any time on the property where the business is operated a total number of employees and clients or patrons of the business that does not exceed the municipal occupancy limit for the property; (B) does not generate on-street parking or a substantial increase in traffic through the area; (C) operates in a manner in which none of its activities are visible from a street; and (D) does not substantially increase noise in the area or violate a municipal noise ordinance, regulation, or rule. (b) The governing body of a municipality may not adopt or enforce an ordinance, regulation, or other measure that: (1) prohibits the operation of a no-impact home-based business; (2) requires a person that operates a no-impact home-based business or that owns the property where the business is operated to obtain a license, permit, or other approval to operate the business; or (3) requires a person that operates a home-based business or that owns the property where the business is operated to: (A) rezone the property for a non-residential use; or (B) install a fire sprinkler protection system if the residence where the business is operated consists only of: (i) a single-family detached residential structure; or (ii) a multi-family residential structure with not more than two residential units. (c) Subject to Subsection (b), the governing body of a municipality may: (1) require that a home-based business be: (A) in compliance with federal, state, and local law, including: (i) a municipal fire and building code; and (ii) a municipal regulation related to: (a) health and sanitation; (b) transportation or traffic control; (c) solid or hazardous waste; or (d) pollution and noise control; (B) compatible with the residential use of the property where the business is located; and (C) secondary to the use of the property as a residential dwelling; and (2) limit or prohibit the operation of a home-based business that: (A) sells alcohol or illegal drugs; (B) is a structured sober living home; or (C) is a sexually oriented business as defined by Section 243.002. (d) This section does not prohibit: (1) a person from enforcing a rule or deed restriction imposed by a homeowners' association or by other private agreement; or (2) a municipality from adopting or enforcing an ordinance regulating the operation of a short-term rental unit. Added by Acts 2025, 89th Leg., R.S., Ch. 336 (H.B. 2464), Sec. 1, eff. June 12, 2025.