HB-9 – Relating to an exemption from ad valorem taxation of a portion of the appraised value of tangible personal property a person owns that is held or used for the production of income.

This bill has passed the committee and now has to go through the House, Senate and then signed by the governor. So a lot can happen between now and then (update: March 30, 2025).

This will require voter approval in November 2025

This is summery, read the entire bill here

This bill proposes changes to property tax laws in Texas, contingent on a constitutional amendment, to provide relief for owners of tangible personal property used to produce income (e.g., business equipment, machinery, tools).

Key Provisions:

1. Tax Exemption Increase (Article 1 – Contingent on Constitutional Amendment)
– Current Law: Only exempts income-producing personal property valued at less than $2,500.
– Proposed Change: Increases the exemption to $250,000 of the appraised value.
– Effective: Applies to tax years beginning January 1, 2025, but only if voters approve the constitutional amendment in November 2025.

2. Rendering Requirements (Reporting for Taxation)
– Taxpayers must report (render) their income-producing personal property only if the total market value exceeds the $250,000 exemption in any taxing unit.

3. Transition Rules for 2025 Tax Year (Article 2 – Not Contingent on Amendment)
– Provisional Tax Roll: Appraisal districts must prepare provisional tax rolls for 2025, assuming the exemption is in effect.
– Tax Bills:
– If the amendment passes, the provisional tax bill becomes final, reflecting the lower tax amount.
– If the amendment fails, taxpayers will receive a supplemental tax bill for the difference.
– Tax Rate Calculations: Local governments must calculate tax rates as if the exemption applies, ensuring transparency in potential tax relief.

4. Voter Approval & Effective Dates
– The bill’s main tax exemption (Article 1) only takes effect if voters approve the constitutional amendment in November 2025.
– The procedural provisions (Article 2) take effect immediately (if passed by a 2/3 legislative majority) or by September 1, 2025.

Impact:
– Small Businesses & Entrepreneurs: Significant tax relief for owners of equipment, tools, and other income-generating property.
– Local Governments: Must adjust tax rolls and billing processes to account for the potential exemption.
– Taxpayers: Will see lower 2025 tax bills if the amendment passes, but may owe supplemental taxes if it fails.

This bill aims to reduce the tax burden on businesses while ensuring a smooth transition for tax authorities. The ultimate effect depends on voter approval of the constitutional amendment.