The bill amends the Texas Tax Code to allow certain eligible coastal municipalities with populations of 5,000 or less, which have a ferry system as part of the state highway system, to increase their hotel occupancy tax rate beyond the standard limit of seven percent, up to a maximum of eight percent. This increase can only be implemented if approved by a majority of voters in the municipality during a designated election. The provision allowing this increase is set to expire on December 31, 2035.

Additionally, the bill stipulates that municipalities imposing a tax rate above seven percent may allocate part of the revenue for beautification projects and improvements to main streets, including enhancements for pedestrian safety and accessibility. However, the amount spent on these projects cannot exceed the total amount spent from other funding sources for similar purposes within a calendar year. This provision, along with the related subsections, will also expire on December 31, 2035. The bill is set to take effect immediately upon receiving a two-thirds vote from both houses or on September 1, 2025, if that vote is not achieved.

Statutes affected:
Introduced: Tax Code 351.003, Tax Code 351.105 (Tax Code 351)