H.B. No. 246 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 implementation of the abolition.

Additionally, the bill includes a repeal of Title 1 of the Tax Code, stating that neither the state nor its political subdivisions may impose ad valorem taxes, with the exception that tax liabilities accruing before January 1, 2031, will remain in effect for collection and enforcement purposes. The bill's provisions will only take effect if a proposed constitutional amendment to abolish ad valorem taxes is approved by voters in the 2025 election. If the amendment is not approved, the bill will have no effect.

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