Bill > HB2194

This bill proposes a comprehensive restructuring of Texas's tax system, primarily focusing on replacing local property taxes and sales taxes with a new value added tax (VAT) system. The bill introduces a state-level value added tax of 6.72% on services and property supplied by businesses, with provisions for input and output tax calculations that allow businesses to offset taxes paid on business inputs. The legislation includes exemptions for small businesses, governmental entities, and nonprofit organizations, and prohibits local sales and use taxes starting in 2030. School districts would be authorized to impose a separate enrichment value added tax of up to 0.5% through voter approval, with strict limitations on how these funds can be used. Critically, the bill would eliminate school district maintenance and operations property taxes, contingent on a constitutional amendment, and requires the state to fully fund the Foundation School Program with a guaranteed basic allotment of at least $6,160 per student. The bill mandates a complex transition process, including requiring school districts to submit detailed transition reports and classifying existing school district bonds as either "foundational" (state-funded) or "enrichment" (district-responsible). The legislation is set to take effect in stages, with key provisions becoming active on January 1, 2030, and includes provisions for repealing various existing tax code and education code sections related to the current taxation system.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB2194