H.B. No. 399 proposes an amendment to the Texas Tax Code by adding Section 11.144, which establishes an exemption from ad valorem taxation for income-producing tangible personal property owned by small businesses for a period of three years following their incorporation. This exemption applies specifically to small businesses as defined by Section 481.401(10) of the Government Code and to individuals who file a rendition statement under Section 22.01 of the Tax Code. The bill outlines that eligible property must be held or used for the production of income.

The act is set to take effect on January 1, 2026, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature during the Regular Session of 2025. If voters do not approve this amendment, the provisions of the act will not take effect. This legislation aims to support small businesses by alleviating their tax burden during the initial years of operation.

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