🏛️ 2025 Texas Legislative Session Wrap-Up: Key Tax Legislation and Developments
The 89th Texas Legislature adjourned its regular session on June 2, 2025, after a whirlwind of policy debates and negotiations. One of the most impactful outcomes of this session was a series of sweeping changes to the state’s tax landscape, particularly in the areas of property taxes, business incentives, and severance tax allocations. Below is a detailed breakdown of the major tax bills passed and what they mean for Texas taxpayers—both individuals and businesses.
🏠 Property Tax Relief: Bigger Breaks for Homeowners and Businesses
SB4: Expanding the Homestead Exemption
Author: Sen. Paul Bettencourt (R-Houston)
SB4 provides a robust boost to the longstanding Texas homestead exemption. The bill raises the school district exemption from $100,000 to $140,000 for most homeowners and to $200,000 for seniors and those with disabilities. The average Texas homeowner could see a reduction in their property tax bill of roughly $363 per year.
This expansion builds on the reforms from the 88th Legislature and continues Texas’s commitment to easing the property tax burden on residents across the state.
HB9: Business Personal Property Tax Exemption Raised
Author: Rep. Morgan Meyer (R-Dallas)
Targeting relief for Texas businesses, HB9 raises the exemption for business personal property tax from $2,500 to $125,000. This significant change is expected to reduce administrative burdens and tax liabilities for tens of thousands of small and mid-sized businesses statewide.
🏢 Business Incentives: R&D Credit Extended and Streamlined
R&D Tax Credit Extension
The Legislature included an extension of the state’s Research & Development tax credit in its omnibus tax package. This move reaffirms Texas’s commitment to being a hub for innovation, especially in the tech, energy, and manufacturing sectors. Companies conducting qualified research within the state can continue to claim a credit against their franchise taxes, incentivizing continued investment in high-value sectors.
⛽ Severance Tax Revenue Reimagined
HB188 & HJR47: Creation of the Texas STRONG Defense Fund
Author: Rep. Brooks Landgraf (R-Odessa)
Oil and gas production continues to be a cornerstone of the Texas economy—and a point of pressure for infrastructure in producing regions. HB188, in conjunction with HJR47, creates the Texas Severance Tax Revenue and Oil and Natural Gas (Texas STRONG) Defense Fund.
Funded by a portion of severance tax collections, this initiative is designed to bolster infrastructure, emergency response, and public services in counties impacted by energy development. The move was widely praised by local officials and industry stakeholders as a long-overdue investment in Texas’s energy corridor.
📢 Truth in Taxation: Enhancing Transparency and Accountability
The 89th Legislature also advanced several Truth in Taxation reforms aimed at increasing fiscal transparency, improving public access to tax information, and ensuring greater taxpayer participation in local rate-setting processes.
SB2038: Uniform Tax Rate Notices
Author: Sen. Paul Bettencourt (R-Houston)
- Requires all taxing entities to use a standardized tax rate notice format.
- Enhances readability and ensures taxpayers can clearly see proposed rate changes, estimated tax amounts, and dates of public hearings.
- Notices must be posted online and mailed or emailed to property owners in advance of rate adoption hearings.
HB2381: Online Tax Transparency Portals
Author: Rep. Dustin Burrows (R-Lubbock)
- Mandates counties with populations over 500,000 to create and maintain an online portal displaying:
- Proposed and adopted tax rates
- Budget information
- Rollback and voter-approval rates
- Public hearing dates
- Empowers taxpayers to track and compare local taxing decisions in real-time.
HB2166: Enhanced Budget Disclosures
Author: Rep. Brian Harrison (R-Midlothian)
- Requires local taxing units to publish their proposed budgets at least 30 days before adoption.
- Budgets must include tax rate assumptions, debt service obligations, and explanations for proposed increases.
These changes collectively bolster Texas’s commitment to “truth in taxation” by making it easier for residents and businesses to understand—and influence—local tax policy decisions before they’re finalized.
🛍️ Other Notable Tax Developments
SB2529: Supermajority Requirement for Local Tax Increases
Author: Sen. Paul Bettencourt (R-Houston)
SB 2529 requires a supermajority vote from local taxing units before exceeding voter-approval tax rates or issuing tax-backed bonds. This measure is aimed at curbing rapid tax increases and promoting more deliberate fiscal decisions at the local level.
HB30: Disaster Tax Rate Adjustments
Author: Rep. Ellen Troxclair (R-Lakeway)
HB30 clarifies how tax rates should be calculated following a declared disaster, ensuring fairness for affected residents while preserving necessary revenue for recovery efforts.
🔍 Looking Ahead
The 89th Texas Legislative Session marked another strong step toward property tax reform and fiscal modernization. By increasing exemptions, reinforcing business incentives, and creating new frameworks for local accountability, lawmakers addressed many long-standing concerns from taxpayers and municipalities alike.
As these laws begin to take effect, it will be critical for businesses, property owners, and local governments to monitor implementation guidelines and deadlines from the Texas Comptroller’s Office and other regulatory agencies.
Stay tuned for further updates as administrative rules are finalized and real-world impacts begin to unfold.
To learn more, register for Advantous’ upcoming Texas Post-Legislative Session Update webinar. For questions, please email info@advantous.com.