Texas House Bill HB98

Texas 2025 - 89th 2nd C.S.

• Filed: 8/15/25

Caption

Relating to the repeal of or limitations on certain state and local taxes, including school district maintenance and operations ad valorem taxes, the enactment of state and local value added taxes, and related school finance reform; imposing taxes.

Impact

If passed, HB98 would reshape existing tax laws, especially those governing local taxation and school finance. The repeal of certain ad valorem taxes would likely affect school funding, prompting discussions on how schools will adjust to potential revenue shortfalls or changes in funding sources. On the other hand, the proposed VAT could create a more consistent and predictable tax revenue stream, significantly impacting how local governments and schools operate financially. This could lead to better financial planning and resource allocation at the state and local levels, fostering an environment for enhanced educational services.

Summary

House Bill 98 aims to address the existing structure of state and local taxes, focusing particularly on the repeal or limitation of certain taxes, including school district maintenance and operations ad valorem taxes. The bill also proposes the enactment of state and local value-added taxes (VAT), marking a significant shift in the state’s tax framework. Proponents of this bill believe that the introduction of a value-added tax could provide a more stable revenue source for schools and local governments, while reducing reliance on property taxes that can fluctuate significantly based on market conditions. This change is especially important given the current challenges in funding public education.

Contention

Debate around HB98 is anticipated to center on the implications of changing tax structures. Critics may express concern that limiting ad valorem taxes could undermine local control over education funding, leading to disparities in educational quality across regions. Additionally, there may be apprehension about how a VAT would be implemented and its potential effects on consumers. Stakeholders from various sectors, including education and local government, are likely to weigh in on the bill, emphasizing the importance of balancing revenue needs with equity and service delivery in education.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 142. Simplified Sales And Use Tax Administration Act
  • Section: New Section

Education Code

• Chapter 49. Options For Local Revenue Levels In Excess Of Entitlement
  • Section: New Section

• Chapter 48. Foundation School Program
  • Section: New Section