LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 8, 2025 TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB214 by West (Relating to a temporary exemption from sales and use taxes for certain residential heating, ventilation, and air conditioning systems and installation services.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB214, As Introduced: a negative impact of ($43,290,000) through the biennium ending August 31, 2027. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2026($14,340,000)2027($28,950,000)2028$02029$02030$0All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties & Special Districts2026($14,340,000)($2,620,000)($870,000)($650,000)2027($28,950,000)($5,300,000)($1,760,000)($1,310,000)2028$0$0$0$02029$0$0$0$02030$0$0$0$0 Fiscal AnalysisThis bill would create a temporary exemption from sales and use taxes for certain residential heating, ventilation, and air conditioning systems and installation services.The bill would exempt certain residential heating, ventilation, and air conditioning (HVAC) systems from sales tax for a specified period. HVAC units, as defined by the bill, sold between March 1, 2026 and September 1, 2027 would be exempt from sales and use taxes provided they are for use in the purchaser's primary single-family residence; have has a minimum Seasonal Energy Efficiency Rating (SEER) of 14; designated as an Energy Star qualified product under the Energy Star program; and installed by a qualified person as stipulated in the bill.The provisions of the bill would not apply to a rental or commercial property, or a structure or improvement that is constructed less than one year before the date of the sale.The bill would require the Texas Comptroller of Public Accounts (CPA), not later than November 1, 2025, to prescribe and make available on the CPA website an exemption certificate on which a person can certify and attest that a sale of a HVAC unit meets the criteria contained in the bill. This certificate would be presented to a seller at the time of purchase to receive the exemption.The provisions of the bill would expire on December 31, 2027.The bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2025.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 8, 2025
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB214 by West (Relating to a temporary exemption from sales and use taxes for certain residential heating, ventilation, and air conditioning systems and installation services.), As Introduced
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB214 by West (Relating to a temporary exemption from sales and use taxes for certain residential heating, ventilation, and air conditioning systems and installation services.), As Introduced
Honorable Joan Huffman, Chair, Senate Committee on Finance
Honorable Joan Huffman, Chair, Senate Committee on Finance
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB214 by West (Relating to a temporary exemption from sales and use taxes for certain residential heating, ventilation, and air conditioning systems and installation services.), As Introduced
SB214 by West (Relating to a temporary exemption from sales and use taxes for certain residential heating, ventilation, and air conditioning systems and installation services.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB214, As Introduced: a negative impact of ($43,290,000) through the biennium ending August 31, 2027.
Estimated Two-year Net Impact to General Revenue Related Funds for SB214, As Introduced: a negative impact of ($43,290,000) through the biennium ending August 31, 2027.
General Revenue-Related Funds, Five- Year Impact:
2026 ($14,340,000)
2027 ($28,950,000)
2028 $0
2029 $0
2030 $0
All Funds, Five-Year Impact:
2026 ($14,340,000) ($2,620,000) ($870,000) ($650,000)
2027 ($28,950,000) ($5,300,000) ($1,760,000) ($1,310,000)
2028 $0 $0 $0 $0
2029 $0 $0 $0 $0
2030 $0 $0 $0 $0
Fiscal Analysis
This bill would create a temporary exemption from sales and use taxes for certain residential heating, ventilation, and air conditioning systems and installation services.The bill would exempt certain residential heating, ventilation, and air conditioning (HVAC) systems from sales tax for a specified period. HVAC units, as defined by the bill, sold between March 1, 2026 and September 1, 2027 would be exempt from sales and use taxes provided they are for use in the purchaser's primary single-family residence; have has a minimum Seasonal Energy Efficiency Rating (SEER) of 14; designated as an Energy Star qualified product under the Energy Star program; and installed by a qualified person as stipulated in the bill.The provisions of the bill would not apply to a rental or commercial property, or a structure or improvement that is constructed less than one year before the date of the sale.The bill would require the Texas Comptroller of Public Accounts (CPA), not later than November 1, 2025, to prescribe and make available on the CPA website an exemption certificate on which a person can certify and attest that a sale of a HVAC unit meets the criteria contained in the bill. This certificate would be presented to a seller at the time of purchase to receive the exemption.The provisions of the bill would expire on December 31, 2027.The bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2025.
Methodology
Information from the United States Department of Energy regarding the number of units that meet the eligibility requirements of the bill were obtained, apportioned to Texas, multiplied by the average sales and price, and adjusted for the exemption period outlined in the bill.
Local Government Impact
There would be a corresponding loss of sales and use tax revenue from local taxing jurisdictions displayed in the above tables.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD
JMc, KK, SD