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, while allowing local subdivisions to impose a local VAT, provided it does not exceed 2% in total. The bill also establishes a school district enrichment VAT, capped at 0.5%, which can be adopted or repealed through voter approval. The revenue generated from these taxes is designated for specific educational purposes, including funding for school enrichment facilities and activities.

Additionally, the bill includes provisions for the repeal of certain sections of the Tax Code and Education Code, which are rendered obsolete by the new tax structure. Notably, it prohibits school districts from imposing maintenance and operations ad valorem taxes starting January 1, 2030, contingent upon the approval of a constitutional amendment. The bill mandates the comptroller to prepare a report on necessary changes to implement these reforms and outlines the transition process for school districts to adapt to the new funding mechanisms. The effective dates for various sections of the bill are set for January 1, 2030, or September 1, 2025, depending on the specific provisions.

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)