Bill > HB116

This bill proposes a comprehensive tax reform targeting school district property taxes and introducing a new state value-added tax (VAT), with implementation set for January 1, 2030, contingent upon voter approval of a constitutional amendment. Specifically, the bill prohibits school districts from levying maintenance and operations (M&O) ad valorem taxes starting in 2030 and replaces them with a state VAT set at an initial rate of 6.72%. All revenue generated from the state VAT will be deposited into the Foundation School Fund and used exclusively to fund public education. Additionally, the bill directs the state comptroller to conduct a comprehensive study by December 1, 2026, exploring the potential replacement of all local property taxes (including those levied by counties, municipalities, and special districts) with local value-added taxes. The study must examine revenue needs, tax rate structures, administrative models, economic impacts, and potential legal amendments required for such a transition. The legislature intends to use the comptroller's recommendations to draft legislation during the 90th Regular Legislative Session that would eliminate remaining local ad valorem taxes and replace them with local value-added taxes, with implementation also targeted for January 1, 2030.