BILL ANALYSIS C.S.H.B. 255 By: Guillen Ways & Means Committee Report (Substituted) BACKGROUND AND PURPOSE State law provides a property tax exemption for farm products in the hands of the producer. However, the author has informed the committee that definitions governing the exemption have been unclear, leading to inconsistencies in tax treatment. C.S.H.B. 255 seeks to ensure a consistent application of the exemption by clarifying the definitions of "farm products" and "in the hands of the producer" for purposes of the exemption. CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.H.B. 255 amends the Tax Code to revise the definition of "farm products" for purposes of the property tax exemption for farm products in the hands of the producer by doing the following: removing the provision specifying that the definition includes livestock, poultry, and timber; establishing that the definition instead has the meaning assigned by Uniform Commercial CodeSecured Transactions, which means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are the following: o crops grown, growing, or to be grown, including crops produced on trees, vines, and bushes, and aquatic goods produced in aquacultural operations; o livestock, born or unborn, including aquatic goods produced in aquacultural operations; o supplies used or produced in a farming operation; and o products of such crops in their unmanufactured states; and specifying that the revised definition includes poultry, eggs, and timber, including standing timber. C.S.H.B. 255 clarifies that "in the hands of the producer," with respect to farm products other than timber, applies to such farm products under the ownership of the person who is using or financially providing for the physical requirements of the products on January 1 of the tax year. C.S.H.B. 255 applies only to a tax year beginning on or after January 1, 2026. EFFECTIVE DATE January 1, 2026, if the constitutional amendment authorizing the legislature to define certain terms for purposes of the exemption from property taxation of farm products in the hands of the producer is approved by the voters. COMPARISON OF INTRODUCED AND SUBSTITUTE While C.S.H.B. 255 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill. The substitute includes a specification absent from the introduced that the revised definition of "farm products" includes eggs.
BILL ANALYSIS
# BILL ANALYSIS
C.S.H.B. 255
By: Guillen
Ways & Means
Committee Report (Substituted)
C.S.H.B. 255
By: Guillen
Ways & Means
Committee Report (Substituted)
BACKGROUND AND PURPOSE State law provides a property tax exemption for farm products in the hands of the producer. However, the author has informed the committee that definitions governing the exemption have been unclear, leading to inconsistencies in tax treatment. C.S.H.B. 255 seeks to ensure a consistent application of the exemption by clarifying the definitions of "farm products" and "in the hands of the producer" for purposes of the exemption.
CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS C.S.H.B. 255 amends the Tax Code to revise the definition of "farm products" for purposes of the property tax exemption for farm products in the hands of the producer by doing the following: removing the provision specifying that the definition includes livestock, poultry, and timber; establishing that the definition instead has the meaning assigned by Uniform Commercial CodeSecured Transactions, which means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are the following: o crops grown, growing, or to be grown, including crops produced on trees, vines, and bushes, and aquatic goods produced in aquacultural operations; o livestock, born or unborn, including aquatic goods produced in aquacultural operations; o supplies used or produced in a farming operation; and o products of such crops in their unmanufactured states; and specifying that the revised definition includes poultry, eggs, and timber, including standing timber. C.S.H.B. 255 clarifies that "in the hands of the producer," with respect to farm products other than timber, applies to such farm products under the ownership of the person who is using or financially providing for the physical requirements of the products on January 1 of the tax year. C.S.H.B. 255 applies only to a tax year beginning on or after January 1, 2026.
EFFECTIVE DATE January 1, 2026, if the constitutional amendment authorizing the legislature to define certain terms for purposes of the exemption from property taxation of farm products in the hands of the producer is approved by the voters.
COMPARISON OF INTRODUCED AND SUBSTITUTE While C.S.H.B. 255 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill. The substitute includes a specification absent from the introduced that the revised definition of "farm products" includes eggs.
BACKGROUND AND PURPOSE
State law provides a property tax exemption for farm products in the hands of the producer. However, the author has informed the committee that definitions governing the exemption have been unclear, leading to inconsistencies in tax treatment. C.S.H.B. 255 seeks to ensure a consistent application of the exemption by clarifying the definitions of "farm products" and "in the hands of the producer" for purposes of the exemption.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
C.S.H.B. 255 amends the Tax Code to revise the definition of "farm products" for purposes of the property tax exemption for farm products in the hands of the producer by doing the following:
removing the provision specifying that the definition includes livestock, poultry, and timber;
establishing that the definition instead has the meaning assigned by Uniform Commercial CodeSecured Transactions, which means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are the following:
o crops grown, growing, or to be grown, including crops produced on trees, vines, and bushes, and aquatic goods produced in aquacultural operations;
o livestock, born or unborn, including aquatic goods produced in aquacultural operations;
o supplies used or produced in a farming operation; and
o products of such crops in their unmanufactured states; and
specifying that the revised definition includes poultry, eggs, and timber, including standing timber.
C.S.H.B. 255 clarifies that "in the hands of the producer," with respect to farm products other than timber, applies to such farm products under the ownership of the person who is using or financially providing for the physical requirements of the products on January 1 of the tax year.
C.S.H.B. 255 applies only to a tax year beginning on or after January 1, 2026.
EFFECTIVE DATE
January 1, 2026, if the constitutional amendment authorizing the legislature to define certain terms for purposes of the exemption from property taxation of farm products in the hands of the producer is approved by the voters.
COMPARISON OF INTRODUCED AND SUBSTITUTE
While C.S.H.B. 255 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.
The substitute includes a specification absent from the introduced that the revised definition of "farm products" includes eggs.