In a big move for business owners, the Texas House gave its initial approval to a significant property tax relief plan on Wednesday. The proposal, led by State Rep. Morgan Meyer (R-Dallas), would increase the business personal property tax exemption from $2,500 to $250,000—a staggering 100-fold jump. If passed, this would be one of the most substantial tax breaks for small businesses in the country.
But what does this mean for businesses, taxpayers, and the state budget? Let’s break it down.
What’s in the Proposal?
The tax exemption applies to business personal property, which includes inventory, equipment, and other assets—but not the land or buildings businesses operate from.
Under House Joint Resolution (HJR) 1 and House Bill (HB) 9, businesses would see a major tax exemption increase, effectively eliminating taxes on a large chunk of their assets.
This change isn’t just a minor adjustment—it’s a $566 million decision. Over the next two years, the state would no longer collect that amount in tax revenue. The goal, according to Meyer, is to provide relief primarily to small businesses, which often struggle with property tax burdens.
How Does the Senate’s Plan Compare?
Both the House and Senate are on board with spending the same amount of money on business tax breaks, but they differ on the method:
The House plan increases the exemption to $250,000 upfront by reducing taxable appraisals.
The Senate plan proposes a more modest increase to $25,000 but includes a 20% inventory tax credit (which works like a rebate).
While the difference in approach is notable, both chambers are clearly set on delivering property tax relief, meaning a compromise is likely.
Attempts to Increase the Exemption Further
During the House debate, State Rep. Wes Virdell (R-Brady) pushed for even bigger exemptions:
One amendment would have raised the exemption to $1 million.
Another would have set it at $500,000.
However, both amendments were tabled at Meyer’s request. His reasoning? Raising the exemption higher would complicate budget negotiations with the Senate.
Despite the rejection, 42 members—mostly conservative Republicans—supported Virdell’s push for a bigger exemption.
In the end, the House passed the proposal 132-13, with all opposition votes coming from Democrats.
What Happens Next?
If the Legislature gives final approval, Texas voters will have the final say in November, when the measure will appear on the statewide ballot.
Meanwhile, another major tax proposal—HB 8, also by Meyer—was not included in this week’s vote. That bill focuses on compressing school district property tax rates, offering additional tax relief.
Additionally, on Wednesday, the House approved HB 22, a bill by State Rep. Candy Noble (R-Lucas) to eliminate the last remaining taxes on intangible personal property—things like stocks and copyrights.
While some lawmakers questioned whether this tax change was even necessary (since it only applies to about $400,000 of taxable property), the measure still moved forward.
Looking Ahead: The Budget Battle
Next week, the House will tackle the state budget, which includes $6 billion in new property tax relief. Lawmakers have until Monday at 9 a.m. to submit amendments to the proposed budget.
One major tax-related measure—the constitutional prohibition of a death tax—has been postponed until April 15. That delay gives lawmakers time to focus on budget night, which will be a critical moment for tax and spending decisions.
Final Thoughts
This week’s vote marks a major step toward significant business tax relief in Texas. With both chambers largely in agreement on providing tax breaks, it’s likely that some form of relief will pass. The final details—such as the method of implementation—will be ironed out in negotiations between the House and Senate.
For business owners, this could mean a huge reduction in tax liability, making Texas an even more attractive place to operate. For the state, it’s a $566 million decision that will need to be balanced within the broader budget.
