Bill > HB165

This bill establishes a joint interim committee to study the elimination of ad valorem taxes (property taxes) in Texas, with significant long-term implications. The committee will be composed of ten members (five from the House of Representatives and five from the Senate), appointed by the House Speaker and Lieutenant Governor by November 1, 2025. The committee's primary responsibility is to conduct a comprehensive study exploring alternative taxation methods to replace the local tax revenue that would be lost by eliminating ad valorem taxes. For each potential alternative tax method, the committee must analyze critical details such as the potential tax rates, authority of political subdivisions to impose the new tax, possible tax revenue redistribution mechanisms, and other implementation challenges. The committee is required to submit a written report with its findings and recommendations to the legislature by November 1, 2026, after which the committee will be dissolved. Critically, the bill includes a provision to completely repeal Title 1 of the Tax Code and prohibit ad valorem taxes statewide, with this specific provision scheduled to take effect on January 1, 2035, giving a decade of preparation for this significant tax system transformation. The overall bill will take effect on September 1, 2025, except for the ad valorem tax elimination section.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB165