Bill > HB698

This bill establishes a joint interim committee to study the potential abolition of ad valorem taxes (property taxes) in Texas, with significant implications for local government funding. The committee will be composed of five representatives from the House and five senators, appointed by the House Speaker and Lieutenant Governor by February 1, 2026. The committee's primary task is to conduct a comprehensive study on how to replace local tax revenue currently generated by property taxes with sales and use taxes. Specifically, they will investigate the feasibility of political subdivisions imposing sales taxes, determine appropriate tax rates to maintain current revenue levels, explore potential tax base broadening, and identify mechanisms to redistribute tax revenue to prevent disparities between different local jurisdictions. The committee is required to submit a detailed written report with findings and recommendations by December 1, 2026, and will be dissolved on January 1, 2027. The bill's implementation is contingent on voter approval of a constitutional amendment to abolish ad valorem taxes, with Section 2 of the bill (which repeals the current property tax code and prohibits ad valorem taxes) scheduled to take effect on January 1, 2031. Importantly, the bill specifies that existing tax liabilities before 2031 will remain in effect under current law.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB698