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HB 9 Legislative Priority

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.
Overall Vote Recommendation
Yes
Principle Criteria
positive
Free Enterprise
positive
Property Rights
positive
Personal Responsibility
positive
Limited Government
positive
Individual Liberty
Digest
HB 9 increases the exemption from ad valorem taxation for tangible personal property used to generate income. It raises the exemption amount from the current threshold (previously under $2,500) to $250,000 of the appraised value. The bill also modifies the requirements for rendering personal property for taxation, exempting individuals from reporting if their property is valued below the new exemption amount. The implementation of this exemption is contingent upon the passage of a constitutional amendment. If the amendment is approved, the exemption will apply starting in the 2025 tax year​.
Author (5)
Morgan Meyer
Greg Bonnen
Hillary Hickland
Trey Martinez Fischer
Diego Bernal
Co-Author (71)
Sponsor (1)
Paul Bettencourt
Co-Sponsor (12)

Contact the Author

Rep. Morgan Meyer

Capitol Phone:
(512) 463-0367
Capitol Office:
CAP GN.8
E-Mail:
[email protected]
Visit Official Website
Fiscal Notes

HB 9 is projected to have a significant negative fiscal impact on Texas' General Revenue Related Funds, with an estimated loss of $566.35 million over the biennium ending August 31, 2027. The exemption of $250,000 in appraised value for income-producing tangible personal property replaces the current exemption of $2,500, resulting in a substantial reduction in taxable property value.

The five-year impact on the state's General Revenue Fund is as follows:

  • 2026: $235.95 million loss
  • 2027: $330.41 million loss
  • 2028: $308.70 million loss
  • 2029: $409.14 million loss
  • 2030: $538.35 million loss

The bill affects school finance formulas, shifting the burden to the state due to reduced local tax collections. The Foundation School Program (FSP) is expected to bear a significant portion of the cost, with estimated reductions in revenue for school districts ranging from $378.15 million in 2026 to $496.67 million in 2030. The state would also experience a decrease in recapture payments (funds collected from wealthier districts) by $91.7 million in 2026, increasing to $99.6 million in 2030.

For local governments, the bill would lower taxable values, potentially leading to higher tax rates under the no-new-revenue and voter-approval tax rate mechanisms. If cities, counties, and special districts do not raise tax rates, they will experience an estimated revenue loss of $452 million in 2026. However, if they do increase rates, the impact will be partially mitigated by shifting the tax burden to non-exempt property owners.

Overall, HB 9 reduces tax burdens on businesses and promotes economic growth, but it creates a fiscal challenge for state and local governments, particularly in funding public education.

Vote Recommendation Notes

HB 9 provides significant tax relief for businesses and individuals by increasing the ad valorem tax exemption for tangible personal property used in income production from $2,500 to $250,000. This measure reduces the financial burden on small businesses and entrepreneurs, enabling them to reinvest more in operations, expansion, and job creation. By lowering property tax obligations, the bill promotes free enterprise, fosters economic growth, and reinforces private property rights, aligning with the core principles of individual liberty and limited government.

From a fiscal standpoint, the bill does result in a revenue loss for state and local governments, particularly affecting school finance formulas. However, the economic benefits—stimulating business growth, job creation, and investment—can help offset some of the long-term revenue losses. Furthermore, Texas's strong economic position and commitment to pro-business policies suggest that reducing this tax burden will keep the state attractive for investment and entrepreneurship.

The Republican Party of Texas supports reducing property taxes and eliminating market-distorting fiscal policies, while the Libertarian Party of Texas champions lowering tax burdens to protect private property rights. While the Texas Democratic Party may raise concerns over school funding, the bill’s structure ensures that the impact on education is mitigated through state funding adjustments.

HB 9 strengthens economic freedom, private property rights, and business investment while limiting government overreach in taxation. Despite the short-term fiscal impact, the long-term benefits to economic development, job creation, and business competitiveness outweigh the costs. This bill aligns with Texas' commitment to low taxes, limited government, and economic prosperity. As such, Texas Policy Research recommends that lawmakers vote YES on HB 9.

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