Overall Vote Recommendation

Yes

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

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

Morgan Meyer

Greg Bonnen

Hillary Hickland

Trey Martinez Fischer

Diego Bernal

Co-Author

Daniel Alders

Trent Ashby

Jeffrey Barry

Cecil Bell, Jr.

Keith Bell

Bradley Buckley

Ben Bumgarner

Angie Chen Button

Giovanni Capriglione

David Cook

Philip Cortez

Tom Craddick

Charles Cunningham

Pat Curry

Aicha Davis

Jay Dean

Mano DeAyala

Mark Dorazio

Paul Dyson

Caroline Fairly

James Frank

Cassandra Garcia Hernandez

Gary Gates

Stan Gerdes

Charlie Geren

Ryan Guillen

Sam Harless

Cody Harris

Caroline Harris Davila

Richard Hayes

Cole Hefner

Lacey Hull

Carrie Isaac

Helen Kerwin

Stan Kitzman

Stan Lambert

Brooks Landgraf

Jeff Leach

Terri Leo-Wilson

Janie Lopez

Ray Lopez

John Lujan

Shelley Luther

Armando Martinez

John McQueeney

William Metcalf

Brent Money

Matt Morgan

Sergio Munoz, Jr.

Candy Noble

Tom Oliverson

Angelia Orr

Jared Patterson

Dennis Paul

Katrina Pierson

Mihaela Plesa

Richard Raymond

Keresa Richardson

Michael Schofield

Matthew Shaheen

Joanne Shofner

Shelby Slawson

David Spiller

Valoree Swanson

Carl Tepper

Tony Tinderholt

Ellen Troxclair

Gary Vandeaver

Cody Vasut

Trey Wharton

Terry Wilson

Sponsor

Paul Bettencourt

Co-Sponsor

Carol Alvarado

Brian Birdwell

Brandon Creighton

Roland Gutierrez

Adam Hinojosa

Bryan Hughes

Phil King

Lois Kolkhorst

Mayes Middleton

Angela Paxton

Kevin Sparks

Royce West

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.

Related Legislation

HJR 1 (Enabling for)

View Bill Text and Status