Harrison Bill Abolishes Property Taxes, Starting January 1, 2031

The text as introduced · 666 words

By: Harrison
H.B. No. 698

A BILL TO BE ENTITLED

AN ACT

relating to the abolition of ad valorem taxes and the creation of a

joint interim committee on the abolition of those taxes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. (a) In this section, "committee" means the joint

interim committee on the abolition of ad valorem taxes.

(b) The joint interim committee on the abolition of ad

valorem taxes is composed of:

(1) five members of the house of representatives

appointed by the speaker of the house of representatives; and

(2) five senators appointed by the lieutenant

governor.

(c) The speaker of the house of representatives and the

lieutenant governor shall make the appointments under Subsection

(b) of this section not later than February 1, 2026.

(d) The speaker of the house of representatives and the

lieutenant governor shall each designate a co-chair from among the

committee members.

(e) The committee shall convene at the joint call of the

co-chairs.

(f) The committee has all other powers and duties provided

to a special or select committee by the rules of the senate and

house of representatives, by Subchapter B, Chapter 301, Government

Code, and by policies of the senate and house committees on

administration.

(g) The committee shall conduct a comprehensive study to

determine how to replace local tax revenue that will be lost when ad

valorem taxes are abolished with local sales and use tax revenue.

(h) The committee shall:

(1) consider whether political subdivisions that

currently impose ad valorem taxes would have the authority to

impose sales and use taxes;

(2) determine the average sales and use tax rate for

each type of political subdivision that would be necessary to

generate the same amount of tax revenue as the amount of tax revenue

lost as a result of the abolition of ad valorem taxes;

(3) determine, if appropriate, the effect that

broadening the application of sales and use taxes at the local level

would have on the tax rates identified under Subdivision (2) of this

subsection;

(4) identify whether tax revenue generated by sales

and use taxes would require redistribution to offset disparities in

available local tax revenue as a result of the abolition of ad

valorem taxes and, if so, evaluate the different mechanisms of

redistribution available; and

(5) identify and examine any other issue that would

need to be addressed to implement the abolition of ad valorem taxes.

(i) On request of the committee, a state agency or political

subdivision shall provide information for and assistance in

conducting the study under this section.

(j) Not later than December 1, 2026, the committee shall

prepare and submit to the legislature a written report containing

the results of the study and any recommendations for legislative or

other action.

(k) The committee is abolished and this section expires

January 1, 2027.

SECTION 2. (a) Title 1, Tax Code, is repealed.

(b) Notwithstanding any other law, this state or a political

subdivision of this state may not impose an ad valorem tax. To the

extent of a conflict, this section controls over a conflicting

provision in a general or special law.

(c) The change in law made by this section does not affect

tax liability accruing before January 1, 2031. That liability

continues in effect as if this section had not been enacted, and the

former law is continued in effect for the collection of taxes due

and for civil and criminal enforcement of the liability for those

taxes.

SECTION 3. (a) This Act takes effect as provided by

Subsections (b) and (c) of this section, but only if the

constitutional amendment proposed by the 89th Legislature, Regular

Session, 2025, to abolish ad valorem taxes is approved by the

voters. If that amendment is not approved by the voters, this Act

has no effect.

(b) This section and Section 1 of this Act take effect

January 1, 2026.

(c) Section 2 of this Act takes effect January 1, 2031.