The bill, H.B. No. 4968, introduces a new chapter to the Texas Tax Code, specifically Chapter 328, which allows certain counties to substitute a county sales and use tax for all or a portion of property taxes. This chapter applies exclusively to counties with populations of 2.1 million or more that contain at least two municipalities, each with populations of 350,000 or more. The bill authorizes these counties to adopt or abolish a one percent sales and use tax through an election, with the tax rate not being considered in determining the combined local tax rate. The revenue generated from this tax is designated as additional sales and use tax revenue for specific purposes.

Additionally, the bill amends existing sections of the Tax Code to include references to the new Chapter 328, replacing the term "city" with "municipality" in relevant contexts. It specifies that the tax bill for municipalities or counties imposing this additional sales and use tax must indicate the amount of ad valorem taxes that would have been imposed if the additional tax had been levied. The provisions of the bill will take effect on September 1, 2025, with certain amendments applying to ad valorem taxes imposed for tax years beginning on or after January 1, 2026.

Statutes affected:
Introduced: Tax Code 26.012, Tax Code 31.01 (Tax Code 31, Tax Code 26)