The bill, H.B. No. 265, proposes the elimination of ad valorem taxes in Texas and establishes a joint interim committee to explore alternative taxation methods to replace the revenue lost from this elimination. The committee will consist of ten members, with five appointed by the Speaker of the House and five by the Lieutenant Governor, and is required to convene by January 1, 2026. The committee's responsibilities include conducting a comprehensive study of potential alternative taxes, assessing their feasibility, and preparing a report with findings and recommendations by November 1, 2026. The committee will be dissolved, and the section will expire on January 1, 2027.

In addition to the establishment of the committee, the bill includes a significant change in the law by repealing Title 1 of the Tax Code, which effectively prohibits the imposition of ad valorem taxes by the state or its political subdivisions. This prohibition will take effect on January 1, 2035, but does not affect any tax liabilities that accrued before this date, allowing for the continued enforcement of prior tax laws for collection purposes. The bill also stipulates that it will take effect 91 days after the end of the legislative session, unless otherwise specified.

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