H.B. No. 106 proposes the abolition of ad valorem taxes in Texas and establishes a joint interim committee to study the implications of this change. The committee will consist of ten members, with five appointed by the Speaker of the House and five by the Lieutenant Governor, and is tasked with conducting a comprehensive study on how to replace the lost local tax revenue with local sales and use tax revenue. The committee will also explore the authority of political subdivisions to impose sales and use taxes, determine necessary tax rates, evaluate the effects of broadening sales tax applications, and identify any issues that need to be addressed for the successful implementation of the abolition of ad valorem taxes. A report with findings and recommendations is due to the legislature by December 1, 2026.

In addition to establishing the committee, the bill includes a repeal of Title 1 of the Tax Code, effectively prohibiting the imposition of ad valorem taxes by the state or its political subdivisions. However, it specifies that any tax liabilities accrued before January 1, 2031, will remain in effect under the former law for collection and enforcement purposes. The bill's provisions will only take effect if a related constitutional amendment to abolish ad valorem taxes is approved by voters, with the committee's operations commencing on January 1, 2026, and the repeal of ad valorem taxes taking effect on January 1, 2031.

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