House Bill No. 960 proposes significant changes to the taxation structure in Texas, particularly concerning state and local taxes, including the introduction of a state value-added tax (VAT) and the repeal of school district maintenance and operations ad valorem taxes. The bill establishes a state VAT of 6.72% on services and property supplied in the ordinary course of business, with exemptions for small businesses, governmental entities, and certain organizations. Local subdivisions may impose a local VAT, but they are prohibited from imposing sales or use taxes. Additionally, school districts may adopt a school district enrichment VAT, capped at 0.5%, to fund enrichment activities, while the bill prohibits the imposition of maintenance and operations ad valorem taxes starting January 1, 2030, contingent upon voter approval of a constitutional amendment.

The bill also includes provisions for the transition to this new tax structure, requiring the comptroller to assist school districts in moving from maintenance and operations tax revenue to state funding and enrichment VAT revenue. It mandates a report from the comptroller on necessary changes to implement the act and repeals several provisions from the Tax and Education Codes that are no longer applicable under the new framework. The effective date for most provisions is set for January 1, 2030, with some articles taking effect earlier on September 1, 2025.

Statutes affected:
Introduced: The following provisions of the Tax Code 6.01, The following provisions of the Education Code 6.02 (The following provisions of the Tax Code 6, The following provisions of the Education Code 6)