Bill > HB98

This bill proposes a comprehensive tax reform for Texas that would replace existing local sales taxes and school district property taxes with a new value-added tax (VAT) system starting January 1, 2030. The bill establishes a state-level value-added tax of 6.72 percent on businesses' taxable receipts, with specific provisions for calculating tax liability by comparing "input tax" (taxes paid on business inputs) and "output tax" (taxes collected on sales). The legislation would prohibit local sales taxes and school district maintenance and operations property taxes, replacing them with a local VAT with a combined rate cap of 2 percent and an optional school district enrichment VAT of up to 0.5 percent, which would require voter approval. The bill mandates that the state legislature fully fund the Foundation School Program with a basic allotment of at least $6,160 per student, ensuring educational funding continues even as local tax structures change. Certain entities like small businesses, governmental entities, and religious organizations would be exempted from the VAT, and specific types of transactions would be excluded from taxation. The bill also requires detailed transition reporting by school districts and provides state assistance for managing existing bond obligations during the tax system transformation, with the ultimate goal of maintaining educational funding while restructuring how schools are financially supported.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=892&Bill=HB98