The bill, S.B. No. 1639, proposes the establishment of a new tax on the generation of electricity by certain electric generators in Texas, specifically targeting those that use energy sources other than natural gas or coal. This tax is intended to generate revenue that will be allocated exclusively for teacher pay raises in school districts and open-enrollment charter schools. The bill introduces Chapter 165 to the Tax Code, which includes definitions of key terms such as "electric generator," "affiliated power generation company," and "electric cooperative." It outlines the imposition and collection of the tax, detailing the responsibilities of electric generators to report their electricity production and remit tax payments to the comptroller.

Additionally, the bill specifies that the comptroller will determine the tax rate annually based on previous revenue from a related tax and the amount of natural gas produced in the state. The proceeds from this tax will be deposited into the general revenue fund, with a stipulation that these funds can only be used for teacher salary increases. The first tax payment and report are due on March 25, 2026, and the law is set to take effect on January 1, 2026.

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