Texas 2025 - 89th Regular

Texas House Bill HB1485 Compare Versions

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Old	New	Differences
1	1	89R873 BEF/MEW/TJB-D
2	2	By: Leo Wilson H.B. No. 1485
3	3
4	4
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the repeal of or limitations on certain state and local
10	10	taxes, including school district maintenance and operations ad
11	11	valorem taxes, the enactment of state and local value added taxes,
12	12	and related school finance reform; imposing taxes.
13	13	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	14	ARTICLE 1. STATE VALUE ADDED TAX
15	15	SECTION 1.01. DEFINITIONS. In this article:
16	16	(1) "Input tax" means the aggregate amount of all
17	17	state and local value added taxes imposed under this Act that have
18	18	accrued with respect to services and property supplied to a
19	19	taxpayer during a calendar quarter and used or held for use by the
20	20	taxpayer in the ordinary course of the taxpayer's trade or
21	21	business.
22	22	(2) "Output tax" means the aggregate amount of all
23	23	state and local value added taxes imposed under this Act that have
24	24	accrued with respect to services and property supplied by a
25	25	taxpayer during a calendar quarter in the ordinary course of the
26	26	taxpayer's trade or business.
27	27	(3) "Taxpayer" means a person on whom the value added
28	28	tax is imposed.
29	29	(4) "Value added tax" means the tax imposed under
30	30	Section 1.02 of this article.
31	31	SECTION 1.02. VALUE ADDED TAX IMPOSED. A value added tax is
32	32	imposed on each person in this state who supplies any service or
33	33	property in the ordinary course of a trade or business in which the
34	34	person engages for profit.
35	35	SECTION 1.03. RATE OF TAX. The rate of the value added tax
36	36	is 6.72 percent of the taxpayer's taxable receipts from the supply
37	37	of services or property.
38	38	SECTION 1.04. DETERMINATION OF TAX PAYABLE. The total
39	39	amount of state and local value added taxes under this Act payable
40	40	by a taxpayer for a calendar quarter is the amount, if any, by which
41	41	the taxpayer's output tax exceeds the taxpayer's input tax.
42	42	SECTION 1.05. EXEMPTIONS. (a) The comptroller by rule
43	43	shall exempt from the value added tax:
44	44	(1) small businesses;
45	45	(2) governmental entities; and
46	46	(3) religious, educational, and public service
47	47	organizations.
48	48	(b) The comptroller shall refund the amount of any input tax
49	49	that has been accrued by an entity exempt under Subsection (a) of
50	50	this section.
51	51	SECTION 1.06. EXCLUSIONS. The comptroller by rule shall
52	52	exclude the following services and property from the value added
53	53	tax:
54	54	(1) monetary instruments, financial assets, and
55	55	investments;
56	56	(2) intercompany services;
57	57	(3) employment services;
58	58	(4) incidental transactions;
59	59	(5) transfers of common interests in property;
60	60	(6) services and property taxed by other law,
61	61	including Chapters 201 and 202, Tax Code; and
62	62	(7) services and property this state is prohibited
63	63	from taxing by federal law or the Texas Constitution.
64	64	SECTION 1.07. RULES. The comptroller shall adopt all rules
65	65	necessary to implement, administer, and enforce the state value
66	66	added tax and all local value added taxes under this Act.
67	67	SECTION 1.08. DISPOSITION OF REVENUE. All proceeds from
68	68	the collection of the value added tax shall be deposited to the
69	69	credit of the general revenue fund.
70	70	SECTION 1.09. EFFECTIVE DATE OF ARTICLE. This article
71	71	takes effect January 1, 2030.
72	72	ARTICLE 2. LOCAL VALUE ADDED TAXES
73	73	SECTION 2.01. LOCAL SALES AND USE TAXES PROHIBITED.
74	74	Notwithstanding any other law, a political subdivision may not
75	75	impose a sales or use tax on or after the effective date of this
76	76	article.
77	77	SECTION 2.02. LOCAL VALUE ADDED TAXES. (a) A political
78	78	subdivision that was authorized to impose a sales and use tax
79	79	immediately before the effective date of this article may impose a
80	80	local value added tax on and after the effective date of this
81	81	article.
82	82	(b) A local value added tax is administered, collected, and
83	83	enforced by the comptroller in the same manner as the state value
84	84	added tax. The tax applies to the supply of services or property in
85	85	the territory of the political subdivision.
86	86	(c) The comptroller shall allocate and remit to each
87	87	appropriate taxing jurisdiction proceeds from the collection of
88	88	local value added taxes by the comptroller.
89	89	SECTION 2.03. RATES OF LOCAL VALUE ADDED TAXES. (a) The
90	90	combined rate of all local value added taxes may not exceed two
91	91	percent at any location in the territory of a political
92	92	subdivision.
93	93	(b) The maximum combined rate provided by Subsection (a) of
94	94	this section does not apply to or include a school district
95	95	enrichment value added tax under Article 3 of this Act.
96	96	(c) On the effective date of this article, a political
97	97	subdivision may begin imposing the local value added tax at a rate
98	98	not to exceed the rate at which the political subdivision imposed a
99	99	sales and use tax immediately before the effective date of this
100	100	article. Subject to Subsection (a) of this section, the governing
101	101	body of a political subdivision that imposes a local value added tax
102	102	may adopt an order or ordinance changing the rate of or repealing
103	103	the tax imposed by the political subdivision.
104	104	SECTION 2.04. EFFECTIVE DATE OF ARTICLE. This article
105	105	takes effect January 1, 2030.
106	106	ARTICLE 3. SCHOOL DISTRICT ENRICHMENT VALUE ADDED TAX
107	107	SECTION 3.01. TAX AUTHORIZED. (a) A school district may
108	108	adopt or repeal a school district enrichment value added tax at an
109	109	election in which a majority of the qualified voters of the school
110	110	district approve the adoption or repeal of the tax.
111	111	(b) A school district enrichment value added tax is
112	112	administered, collected, and enforced by the comptroller in the
113	113	same manner as the state value added tax. The tax applies to the
114	114	supply of services or property in the territory of the school
115	115	district.
116	116	SECTION 3.02. MAXIMUM RATE. The rate of the school district
117	117	enrichment value added tax may not exceed 0.5 percent.
118	118	SECTION 3.03. USE OF TAX REVENUE BY SCHOOL DISTRICT. (a)
119	119	Revenue from the school district enrichment value added tax is for
120	120	the use and benefit of the school district. The revenue must be
121	121	used exclusively for school enrichment facilities and activities
122	122	and for the payment of the principal of and interest on debt
123	123	incurred to fund school enrichment facilities and activities.
124	124	(b) Revenue from the school district enrichment value added
125	125	tax may not be used for an expenditure or investment that is:
126	126	(1) necessary to comply with the legislature's duty
127	127	under Section 1, Article VII, Texas Constitution, to provide for
128	128	the general diffusion of knowledge and an efficient system of
129	129	public schools, including by providing funding for instructional
130	130	facilities; and
131	131	(2) eligible for funding through the Foundation School
132	132	Program.
133	133	SECTION 3.04. PLEDGE OF REVENUE. A school district may
134	134	pledge a portion of the revenue from the school district enrichment
135	135	value added tax for the payment of obligations issued to pay all or
136	136	part of the cost of a school enrichment project in the school
137	137	district.
138	138	SECTION 3.05. EFFECTIVE DATE OF ARTICLE. This article
139	139	takes effect January 1, 2030, but only if Section 4.01 of this Act
140	140	takes effect. If Section 4.01 of this Act does not take effect,
141	141	this article has no effect.
142	142	ARTICLE 4. SCHOOL DISTRICT MAINTENANCE AND OPERATIONS AD VALOREM
143	143	TAXES
144	144	SECTION 4.01. PROHIBITION ON IMPOSITION OF SCHOOL DISTRICT
145	145	MAINTENANCE AND OPERATIONS AD VALOREM TAXES. (a) Notwithstanding
146	146	any other law, a school district may not impose an ad valorem tax
147	147	for maintenance and operations purposes on or after January 1,
148	148	2030. To the extent of a conflict, this section controls over a
149	149	conflicting provision in a general or special law.
150	150	(b) The change in law made by this section does not affect
151	151	tax liability accruing before the effective date of this section.
152	152	(c) This section takes effect January 1, 2030, but only if
153	153	on or before that date a constitutional amendment to prohibit a
154	154	school district from imposing an ad valorem tax for maintenance and
155	155	operations purposes is approved by the voters. If such a
156	156	constitutional amendment is not approved by the voters on or before
157	157	that date, this section has no effect.
158	158	SECTION 4.02. REPORT. (a) The comptroller shall prepare a
159	159	report that recommends any change in constitutional or statutory
160	160	law needed to implement this Act.
161	161	(b) Not later than December 1, 2026, the comptroller shall
162	162	submit to the governor, lieutenant governor, speaker of the house
163	163	of representatives, and members of the legislature the report
164	164	required by Subsection (a) of this section.
165	165	(c) This section expires January 1, 2027.
166	166	SECTION 4.03. EFFECTIVE DATE OF ARTICLE. Except as
167	167	otherwise provided by this article, this article takes effect
168	168	September 1, 2025.
169	169	ARTICLE 5. SCHOOL FINANCE
170	170	SECTION 5.01. FOUNDATION SCHOOL PROGRAM FUNDING. (a)
171	171	Beginning with the 2030-2031 school year, the legislature shall
172	172	appropriate money to fund the Foundation School Program under
173	173	Chapter 48, Education Code, in an amount, excluding money collected
174	174	by a school district through the imposition of a tax, necessary to:
175	175	(1) comply with the legislature's duty under Section
176	176	1, Article VII, Texas Constitution, to provide for the general
177	177	diffusion of knowledge and an efficient system of public schools;
178	178	(2) achieve the state policy under Section 48.001,
179	179	Education Code, and the purposes of the Foundation School Program
180	180	under Section 48.002, Education Code;
181	181	(3) provide the basic allotment under Section 48.051,
182	182	Education Code, in an amount of at least $6,160 per student in
183	183	average daily attendance; and
184	184	(4) provide a minimal level of revenue to provide
185	185	school districts an opportunity to pursue locally funded enrichment
186	186	programs.
187	187	(b) This section takes effect January 1, 2030, but only if
188	188	Section 4.01 of this Act takes effect. If Section 4.01 of this Act
189	189	does not take effect, this section has no effect.
190	190	SECTION 5.02. EFFECT OF PROHIBITION ON SCHOOL DISTRICT
191	191	MAINTENANCE AND OPERATIONS TAX. (a) Article 4 of this Act does not
192	192	affect the authority of a school district to impose an enrichment
193	193	value added tax at a rate not to exceed 0.5 percent in accordance
194	194	with Article 3 of this Act for the purpose of providing additional
195	195	revenue to enrich the educational opportunities of students
196	196	enrolled in the district. The revenue attributable to the tax
197	197	described by this subsection is in addition to any money the
198	198	district receives from the state.
199	199	(b) A reference in the Education Code, the Tax Code, or any
200	200	other law to a school district's authority to impose a maintenance
201	201	tax or a maintenance and operations tax may not be construed in a
202	202	manner inconsistent with Article 4 of this Act or this section.
203	203	(c) This section takes effect January 1, 2030, but only if
204	204	Section 4.01 of this Act takes effect. If Section 4.01 of this Act
205	205	does not take effect, this section has no effect.
206	206	SECTION 5.03. STATE ASSISTANCE FOR TRANSITION TO SCHOOL
207	207	DISTRICT ENRICHMENT VALUE ADDED TAX. (a) For purposes of budgeting
208	208	for and funding of maintenance and operations and enrichment, the
209	209	commissioner of education shall assist school districts in
210	210	transitioning from the use of maintenance and operations tax
211	211	revenue to the use of state funding and enrichment value added tax
212	212	revenue.
213	213	(b) Not later than March 1, 2030, each school district shall
214	214	prepare and submit to the commissioner of education a transition
215	215	report certified by the comptroller that provides for the following
216	216	10 state fiscal years estimates regarding:
217	217	(1) budgets;
218	218	(2) sources of funding; and
219	219	(3) operating and capital expenditures.
220	220	(c) In the transition report prepared under Subsection (b)
221	221	of this section, a school district shall, in accordance with the
222	222	policy and purposes described by Sections 48.001 and 48.002,
223	223	Education Code, classify as "foundational" or "enrichment":
224	224	(1) each projected operating and capital expenditure
225	225	and the proportion of each current and projected debt; and
226	226	(2) the proportional amounts of current and projected
227	227	debts, based on the proposed uses for the revenue.
228	228	(d) Based on school districts' reports under Subsection (b)
229	229	of this section, the commissioner of education shall prepare and
230	230	present to the comptroller recommendations for refunding,
231	231	redeeming, or amending outstanding bonds for which school districts
232	232	pledged maintenance and operations tax revenue for payment.
233	233	(e) Notwithstanding any other law, the commissioner of
234	234	education shall provide state funding for the payment of any bonds
235	235	classified by a school district as a "foundational" bond under
236	236	Subsection (c) of this section. A school district assumes full
237	237	financial responsibility for any bond classified as an "enrichment"
238	238	bond.
239	239	(f) The commissioner of education shall annually prepare
240	240	and provide a report to the legislature and the comptroller
241	241	regarding funding under the Foundation School Program and the
242	242	transition by school districts to imposing a value added enrichment
243	243	tax. The report must include recommendations for legislative
244	244	action to facilitate the funding transitions required under this
245	245	Act while maintaining and improving the efficiency, quality, and
246	246	results of public education in this state.
247	247	(g) Subsection (e) of this section takes effect January 1,
248	248	2030, but only if Section 4.01 of this Act takes effect. If Section
249	249	4.01 of this Act does not take effect, Subsection (e) of this
250	250	section has no effect.
251	251	SECTION 5.04. EFFECTIVE DATE OF ARTICLE. Except as
252	252	otherwise provided by this article, this article takes effect
253	253	September 1, 2025.
254	254	ARTICLE 6. REPEALED PROVISIONS
255	255	SECTION 6.01. TAX CODE. (a) The following provisions of
256	256	the Tax Code are repealed:
257	257	(1) Chapter 142;
258	258	(2) Subtitles E, F, G, H, and J, Title 2; and
259	259	(3) Subtitle C, Title 3.
260	260	(b) The repeal of a provision by this section does not
261	261	affect tax liability accruing before the effective date of this
262	262	article. That liability continues in effect as if this article had
263	263	not been enacted, and the former law is continued in effect for the
264	264	collection of taxes due and for civil and criminal enforcement of
265	265	the liability for those taxes.
266	266	SECTION 6.02. EDUCATION CODE. (a) The following
267	267	provisions of the Education Code are repealed:
268	268	(1) Sections 45.0032, 48.255, 48.2551, 48.2552,
269	269	48.2553, 48.256, 48.257, and 48.275; and
270	270	(2) Chapter 49.
271	271	(b) This section takes effect only if Section 4.01 of this
272	272	Act takes effect. If Section 4.01 of this Act does not take effect,
273	273	this section has no effect.
274	274	SECTION 6.03. EFFECTIVE DATE OF ARTICLE. Except as
275	275	otherwise provided by this article, this article takes effect
276	276	January 1, 2030.