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 new law taking effect only if a related constitutional amendment is approved by voters. The bill specifies that tax liabilities accrued before January 1, 2031, will remain in effect under the former law for collection and enforcement purposes. The committee is required to submit a report with findings and recommendations to the legislature by December 1, 2026, and will be dissolved on January 1, 2027.

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