The textile industry is global, and most brands export their products to many different markets with different infrastructures, logistics, and regulations. A textile waste recovery system that works in one country may fail in another. European Union legislation (Directive (EU) 2018/851) mandates that post-consumer textile waste must be separately collected in all associated countries. This directive has also stated that, in January 2025, the rate of textile waste recycling in Europe should be increased. Local governments will be under pressure to improve the collection, sorting, and recycling of textiles. Supporting local governments could be part of a more long-term approach to managing high-value textile waste by implementing Extended Producer Responsibility, which would increase the recycling rate of textile companies. This would enable reuse of over 60% of recovered clothes, recycling into fibers of 35%, and only throwing away 5%. Today, most textile waste (85%) is disposed of as solid waste and must be disposed of through municipal or local waste management systems that either landfill or incinerate the waste. To increase reuse and recycling efficiency, textile waste should be collected and sorted according to the relevant input requirements. The dominant form of textile waste sorting is manual sorting. Sorting centers could be a future solution for intensifying the recycling of textile waste. Advances in textile waste management will require digitization processes, which will facilitate the collection, sorting, and recycling of textiles. It is very important that digitization will help to guide used products to recycling and encourage manufacturers to participate in the use and collection of product data. Currently, both the digitization of textile waste management and fiber recycling technologies are at the level of laboratory research and have not been implemented. The aim of this publication is to analyze the state of textile waste management, especially the various forms of recycling that involve a local governments and the textile industry.