The bill proposes the elimination of ad valorem taxes in Texas and establishes a joint interim committee to explore alternative taxation methods to replace the revenue lost from this elimination. The committee will consist of five members from the House of Representatives and five senators, appointed by the Speaker of the House and the Lieutenant Governor, respectively. They are tasked with conducting a comprehensive study on various alternative taxation methods, assessing their feasibility, potential tax rates, and implications for local tax revenue distribution. The committee is required to submit a report with their findings and recommendations to the legislature by November 1, 2026, and will be dissolved by January 1, 2027.

In addition to the establishment of the committee, the bill includes the repeal of Title 1 of the Tax Code, effectively prohibiting the imposition of ad valorem taxes by the state or its political subdivisions. This prohibition will take precedence over any conflicting laws and will not affect tax liabilities that accrued before the effective date of the bill, which is set for January 1, 2035. The overall act is scheduled to take effect on September 1, 2025, except for the provisions regarding the ad valorem tax elimination, which will take effect later.

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