H.B. No. 130 proposes significant changes to the taxation structure in Texas, particularly concerning state and local taxes, including the repeal of school district maintenance and operations ad valorem taxes. The bill introduces a state value added tax (VAT) of 6.72% on services and property supplied in the ordinary course of business, with specific exemptions for small businesses, governmental entities, and certain organizations. Local subdivisions are prohibited from imposing sales or use taxes but may implement local value added taxes, which will be administered similarly to the state VAT. The bill also allows school districts to adopt a school district enrichment value added tax, capped at 0.5%, to fund enrichment activities, while ensuring that maintenance and operations ad valorem taxes are phased out by January 1, 2030, contingent upon voter approval of a constitutional amendment.

Additionally, the bill outlines the repeal of various provisions in the Tax Code and Education Code that are no longer applicable under the new tax structure. It mandates the comptroller to prepare a report on necessary changes to implement the act and provides for state assistance to school districts transitioning to the new funding model. The effective dates for various sections of the bill are set for January 1, 2030, with some provisions taking effect earlier on September 1, 2025. Overall, H.B. No. 130 aims to reform school finance and taxation in Texas, shifting the burden from property taxes to a value added tax system.

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 Education Code 6, The following provisions of the Tax Code 6)