H.B. No. 698 proposes the abolition of ad valorem taxes in Texas and establishes a joint interim committee to study the implications of this change. The committee will consist of ten members, with five appointed by the Speaker of the House and five by the Lieutenant Governor, and is tasked with conducting a comprehensive study on how to replace the lost local tax revenue with local sales and use tax revenue. The committee will also explore the authority of political subdivisions to impose sales and use taxes, determine necessary tax rates, evaluate the effects of broadening sales tax applications, and identify any issues that need to be addressed for the implementation of the abolition.

The bill includes a repeal of Title 1 of the Tax Code, effectively prohibiting the imposition of ad valorem taxes by the state or its political subdivisions. However, it stipulates that any tax liability accrued before January 1, 2031, remains in effect, allowing for the collection and enforcement of those taxes under the former law. The act will take effect only if a proposed constitutional amendment to abolish ad valorem taxes is approved by voters in the 2025 election, with different effective dates for various sections of the bill.

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