Texas 2025 - 89th Regular

Texas Senate Bill SB32 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Bettencourt, et al. S.B. No. 32
2		-
3		-
	1	+	By: Bettencourt, Hagenbuch, Parker S.B. No. 32
	2	+	(In the Senate - Filed March 14, 2025; March 17, 2025, read
	3	+	first time and referred to Committee on Local Government;
	4	+	March 31, 2025, reported adversely, with favorable Committee
	5	+	Substitute by the following vote: Yeas 5, Nays 0; March 31, 2025,
	6	+	sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR S.B. No. 32 By: Paxton
4	9
5	10
6	11		A BILL TO BE ENTITLED
7	12		AN ACT
8	13		relating to an exemption from ad valorem taxation of a portion of
9	14		the appraised value of tangible personal property that is held or
10	15		used for the production of income and a franchise tax credit for the
11	16		payment of certain related ad valorem taxes.
12	17		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	18		ARTICLE 1. INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY AD VALOREM
14	19		TAX EXEMPTION
15	20		SECTION 1.01. Section 11.145, Tax Code, is amended to read
16	21		as follows:
17	22		Sec. 11.145. INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY
18	23		[HAVING VALUE OF LESS THAN $2,500]. (a) In this section:
19	24		(1) "Inventory" has the meaning assigned by Section
20	25		171.701.
21	26		(2) "Related business entity" means a business entity
22	27		that:
23	28		(A) engages in a common business enterprise with
24	29		at least one other business entity; and
25	30		(B) owns tangible personal property that:
26	31		(i) is held or used for the production of
27	32		income as part of the common business enterprise; and
28	33		(ii) is located at the same physical
29	34		address that tangible personal property owned by at least one other
30	35		business entity engaged in the common business enterprise is
31	36		located.
32	37		(3) "Unified business enterprise" means a common
33	38		business enterprise composed of more than one related business
34	39		entity.
35	40		(b) Subject to Subsection (f) and except as provided by
36	41		Subsection (d), a [A] person is entitled to an exemption from
37	42		taxation by a taxing unit of $25,000 of the appraised value of the
38	43		tangible personal property the person owns that is held or used for
39	44		the production of income and has taxable situs at the same location
40	45		in the taxing unit [if that property has a taxable value of less
41	46		than $2,500].
42	47		(c) [(b)] The exemption provided by Subsection (b) [(a)]
43	48		applies to each separate location in a taxing unit in which a person
44	49		holds or uses tangible personal property for the production of
45	50		income, and, for the purposes of Subsection (b) [(a)], all property
46	51		that has taxable situs in each separate location in the taxing unit
47	52		is aggregated to determine taxable value.
48	53		(d) A person who leases tangible personal property is
49	54		entitled to an exemption from taxation by a taxing unit of $25,000
50	55		of the total appraised value of all the tangible personal property
51	56		the person owns that is held or used for the production of income
52	57		and is subject to a lease, regardless of where the property is
53	58		located in the taxing unit.
54	59		(e) The exemption provided by Subsection (d) applies to each
55	60		separate taxing unit in which a person holds or uses tangible
56	61		personal property for the production of income.
57	62		(f) For the purposes of Subsection (b), if a person is a
58	63		related business entity, all property described by that subsection
59	64		that has taxable situs at the same location in a taxing unit and
60	65		that is owned by the person is aggregated with the property
61	66		described by that subsection that has taxable situs at the same
62	67		location in the taxing unit and that is owned by each other related
63	68		business entity that composes the same unified business enterprise
64	69		to determine taxable value for the entity.
65	70		(g) A chief appraiser may investigate a business entity to
66	71		determine whether the entity:
67	72		(1) is a related business entity; and
68	73		(2) has aggregated tangible personal property as
69	74		provided by Subsection (f).
70	75		(h) When calculating an exemption to which the person is
71	76		entitled under this section, a taxing unit shall apply the amount of
72	77		the exemption to tangible personal property other than inventory
73	78		that the person owns and is held or used for the production of
74	79		income before applying the exemption to inventory owned by the
75	80		person.
76	81		SECTION 1.02. Section 22.01, Tax Code, is amended by
77	82		amending Subsection (c-1) and adding Subsections (j-1), (j-2),
78	83		(j-3), and (n) to read as follows:
79	84		(c-1) In this section:
80	85		(1) "Related business entity" and "unified business
81	86		enterprise" have the meanings assigned by Section 11.145.
82	87		(2) "Secured party" has the meaning assigned by
83	88		Section 9.102, Business & Commerce Code.
84	89		(3) [(2)] "Security interest" has the meaning
85	90		assigned by Section 1.201, Business & Commerce Code.
86	91		(j-1) Notwithstanding Subsections (a) and (b), a person is
87	92		required to render tangible personal property the person owns that
88	93		is held or used for the production of income only if, in the
89	94		person's opinion and as applicable:
90	95		(1) the aggregate market value of the property that
91	96		has taxable situs in the same location in at least one taxing unit
92	97		that participates in the appraisal district is greater than the
93	98		amount exempted under Section 11.145(b); or
94	99		(2) the aggregate market value of the property in at
95	100		least one taxing unit that participates in the appraisal district
96	101		is greater than the amount exempted under Section 11.145(d).
97	102		(j-2) A person required to render property for taxation
98	103		under Subsection (j-1) must render all tangible personal property
99	104		the person owns that is held or used for the production of income
100	105		and has taxable situs in the appraisal district. This subsection
101	106		does not apply to property exempt from taxation under a provision of
102	107		law other than Section 11.145.
103	108		(j-3) A person who elects not to render property for
104	109		taxation as authorized by Subsection (j-1) must file a rendition
105	110		statement or property report that includes a certification that the
106	111		person reasonably believes that the value of the property is not
107	112		more than the amount exempted under Section 11.145(b) or (d), as
108	113		applicable. The election takes effect beginning with the tax year
109	114		following the tax year in which the rendition statement or property
110	115		report is filed and continues in effect until the ownership of the
111	116		person changes. Notwithstanding Subsection (j-1), a person
112	117		described by that subsection must render property for taxation if
113	118		required by the chief appraiser.
114	119		(n) A rendition statement of a related business entity must
115	120		contain the information required by Subsection (a) or (f), as
116	121		applicable, stated for each related business entity that composes
117	122		the unified business enterprise of which the related business
118	123		entity that is the subject of the rendition is a part.
119	124		SECTION 1.03. Section 22.24(c), Tax Code, is amended to
120	125		read as follows:
121	126		(c) The comptroller may prescribe or approve different
122	127		forms for different kinds of property but shall ensure that each
123	128		form requires a property owner to furnish the information necessary
124	129		to identify the property and to determine its ownership,
125	130		taxability, and situs. Each form must include a box that the
126	131		property owner may check to permit the property owner to affirm that
127	132		the information contained in the most recent rendition statement
128	133		filed by the property owner in a prior tax year is accurate with
129	134		respect to the current tax year in accordance with Section
130		-	22.01(l). Each form must include a box that a property owner that
131		-	is a related business entity, as defined by Section 11.145, must
132		-	~~check~~ to identify the owner as a related business entity. Each form
133		-	~~must~~ include a box that a property owner who elects not to render
134		-	~~the~~ property for taxation as authorized by Section 22.01(j-1) must
	135	+	22.01(l). Each form must include a box that a property owner that is
	136	+	a related business entity, as defined by Section 11.145, must check
	137	+	to identify the owner as a related business entity. Each form must
	138	+	include a box that a property owner who elects not to render the
	139	+	property for taxation as authorized by Section 22.01(j-1) must
135	140		check to certify that the owner reasonably believes that the value
136	141		of the property is not more than the amount exempted under Section
137	142		11.145(b) or (d), as applicable. A form may not require but may
138	143		permit a property owner to furnish information not specifically
139	144		required by this chapter to be reported. In addition, a form
140	145		prescribed or approved under this subsection must contain the
141	146		following statement in bold type: "If you make a false statement on
142	147		this form, you could be found guilty of a Class A misdemeanor or a
143	148		state jail felony under Section 37.10, Penal Code."
144	149		SECTION 1.04. Chapter 25, Tax Code, is amended by adding
145	150		Section 25.14 to read as follows:
146	151		Sec. 25.14. INVENTORY AND TANGIBLE PERSONAL PROPERTY. (a)
147	152		In this section, "inventory" means:
148	153		(1) a finished good held for sale, resale, lease, or
149	154		rental;
150	155		(2) a raw or finished material held to be incorporated
151	156		into or attached to tangible personal property to create a finished
152	157		good; or
153	158		(3) a material or supply, including fuel or a spare
154	159		part, being held for future use.
155	160		(b) For purposes of this section, the term "inventory" does
156	161		not include:
157	162		(1) a dealer's motor vehicle inventory, as defined by
158	163		Section 23.121;
159	164		(2) a dealer's vessel and outboard motor inventory, as
160	165		defined by Section 23.124;
161	166		(3) a dealer's heavy equipment inventory, as defined
162	167		by Section 23.1241; or
163	168		(4) retail manufactured housing inventory, as defined
164	169		by Section 23.127.
165	170		(c) Except as provided by Subsection (d), a person's
166	171		inventory shall be listed separately from any other tangible
167	172		personal property the person holds or uses for the production of
168	173		income.
169	174		(d) This section does not apply to tangible personal
170	175		property for which a person is required to file a rendition
171	176		statement under Section 22.01(j-3) but that the person is not
172	177		required to render for taxation under any other provision of that
173	178		section.
174	179		SECTION 1.05. Section 31.01, Tax Code, is amended by
175	180		amending Subsection (c) and adding Subsection (c-3) to read as
176	181		follows:
177	182		(c) The tax bill or a separate statement accompanying the
178	183		tax bill shall:
179	184		(1) identify the property subject to the tax;
180	185		(2) state the appraised value, assessed value, and
181	186		taxable value of the property;
182	187		(3) if the property is land appraised as provided by
183	188		Subchapter C, D, E, or H, Chapter 23, state the market value and the
184	189		taxable value for purposes of deferred or additional taxation as
185	190		provided by Section 23.46, 23.55, 23.76, or 23.9807, as applicable;
186	191		(4) state the assessment ratio for the taxing unit;
187	192		(5) state the type and amount of any partial exemption
188	193		applicable to the property, indicating whether it applies to
189	194		appraised or assessed value;
190	195		(6) state the total tax rate for the taxing unit;
191	196		(7) state the amount of tax due, the due date, and the
192	197		delinquency date;
193	198		(8) explain the payment option and discounts provided
194	199		by Sections 31.03 and 31.05, if available to the taxing unit's
195	200		taxpayers, and state the date on which each of the discount periods
196	201		provided by Section 31.05 concludes, if the discounts are
197	202		available;
198	203		(9) state the rates of penalty and interest imposed
199	204		for delinquent payment of the tax;
200	205		(10) include the name and telephone number of the
201	206		assessor for the taxing unit and, if different, of the collector for
202	207		the taxing unit;
203	208		(11) for real property, state for the current tax year
204	209		and each of the preceding five tax years:
205	210		(A) the appraised value and taxable value of the
206	211		property;
207	212		(B) the total tax rate for the taxing unit;
208	213		(C) the amount of taxes imposed on the property
209	214		by the taxing unit; and
210	215		(D) the difference, expressed as a percent
211	216		increase or decrease, as applicable, in the amount of taxes imposed
212	217		on the property by the taxing unit compared to the amount imposed
213	218		for the preceding tax year; [and]
214	219		(12) for real property, state the differences,
215	220		expressed as a percent increase or decrease, as applicable, in the
216	221		following for the current tax year as compared to the fifth tax year
217	222		before that tax year:
218	223		(A) the appraised value and taxable value of the
219	224		property;
220	225		(B) the total tax rate for the taxing unit; and
221	226		(C) the amount of taxes imposed on the property
222	227		by the taxing unit; and
223	228		(13) for tangible personal property, state separately
224	229		the amount of taxes imposed on a person's inventory from the amount
225	230		of taxes imposed on any other tangible personal property the person
226	231		held or used for the production of income.
227	232		(c-3) For purposes of Subsection (c), "inventory" has the
228	233		meaning assigned by Section 25.14.
229	234		SECTION 1.06. This article applies only to ad valorem taxes
230	235		imposed for a tax year that begins on or after the effective date of
231	236		this article.
232	237		SECTION 1.07. This article takes effect January 1, 2026,
233	238		but only if the constitutional amendment proposed by the 89th
234	239		Legislature, Regular Session, 2025, to authorize the legislature to
235	240		exempt from ad valorem taxation a portion of the market value of
236	241		tangible personal property a person owns that is held or used for
237	242		the production of income is approved by the voters. If that
238	243		amendment is not approved by the voters, this article has no effect.
239	244		ARTICLE 2. FRANCHISE TAX CREDIT FOR INVENTORY AD VALOREM TAX
240	245		LIABILITY
241	246		SECTION 2.01. Chapter 171, Tax Code, is amended by adding
242	247		Subchapter N to read as follows:
243	248		SUBCHAPTER N. TAX CREDIT FOR INVENTORY TAX LIABILITY
244	249		Sec. 171.701. DEFINITION. (a) In this subchapter,
245	250		"inventory" means:
246	251		(1) a finished good held for sale, resale, lease, or
247	252		rental, including:
248	253		(A) a dealer's vessel and outboard motor
249	254		inventory, as defined by Section 23.124;
250	255		(B) a dealer's heavy equipment inventory, as
251	256		defined by Section 23.1241; or
252	257		(C) retail manufactured housing inventory, as
253	258		defined by Section 23.127;
254	259		(2) a raw or finished material held to be incorporated
255	260		into or attached to tangible personal property to create a finished
256	261		good; or
257	262		(3) a material or supply, including fuel or a spare
258	263		part, being held for future use.
259	264		(b) Notwithstanding Subsection (a) and for purposes of this
260	265		subchapter, the term "inventory" does not include a dealer's motor
261	266		vehicle inventory, as defined by Section 23.121.
262	267		Sec. 171.702. ELIGIBILITY FOR CREDIT. A taxable entity is
263	268		entitled to apply for a credit against the tax imposed under this
264	269		chapter in the amount and under the conditions provided by this
265	270		subchapter.
266	271		Sec. 171.703. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
267	272		to Subsections (b) and (c), the amount of a taxable entity's credit
268	273		for a report is equal to the lesser of:
269	274		(1) the total franchise tax due for the report after
270	275		applying all other applicable credits; or
271	276		(2) 20 percent of the aggregate amount of ad valorem
272	277		taxes imposed by each taxing unit during the ad valorem tax year
273	278		preceding the year in which the report is originally due on property
274	279		owned by the taxable entity that were derived from the taxable value
275	280		of inventory owned by the taxable entity and located in this state.
276	281		(b) The total amount of credits that may be awarded under
277	282		this subchapter for all reports originally due in a year may not
278	283		exceed $500 million.
279	284		(c) The comptroller by rule shall prescribe procedures by
280	285		which the comptroller will allocate credits under this subchapter.
281	286		The procedures must provide that if the total amount of credits for
282	287		which taxable entities apply under Subsection (a) exceeds the limit
283	288		under Subsection (b) for a calendar year, the comptroller shall:
284	289		(1) for each taxable entity that applied for the
285	290		credit, reduce the amount under Subsection (a)(2) to a pro rata
286	291		share of $500 million based on the amount of ad valorem taxes
287	292		described by Subsection (a)(2) imposed on property of the taxable
288	293		entity and on property of all taxable entities that applied for the
289	294		credit;
290	295		(2) after making the reductions under Subdivision (1),
291	296		determine the amount by which each taxable entity's pro rata share
292	297		under Subdivision (1) exceeds the amount provided by Subsection
293	298		(a)(1) for the taxable entity, if any, and the sum of those amounts
294	299		for all taxable entities; and
295	300		(3) allocate the sum determined under Subdivision (2)
296	301		to other taxable entities that applied for the credit on a pro rata
297	302		basis to partly or wholly restore the amount reduced under
298	303		Subdivision (1).
299	304		(d) For purposes of Subsection (a)(2), the aggregate amount
300	305		of ad valorem taxes imposed on property owned by the taxable entity
301	306		that were derived from the taxable value of inventory does not
302	307		include, and a taxable entity is not entitled to a credit for any
303	308		taxes imposed on, the taxable value of any inventory for which the
304	309		taxable entity was exempt from taxation under Section 11.145.
305	310		(e) For purposes of calculating the amount of the credit
306	311		under this subchapter in connection with the 2025 ad valorem tax
307	312		year, a taxable entity may make a good faith estimate of the portion
308	313		of the ad valorem taxes imposed on the taxable entity's property
309	314		that were derived from inventory owned by the taxable entity and
310	315		located in this state. For purposes of this subsection, "good
311	316		faith" means honesty in fact and intention and requires the absence
312	317		of an intent to mislead or deceive. This subsection expires January
313	318		1, 2028.
314	319		Sec. 171.704. APPLICATION FOR CREDIT. (a) A taxable entity
315	320		must apply for the credit under this subchapter on or with the
316	321		originally filed report for the period for which the credit is
317	322		claimed.
318	323		(b) The comptroller shall prescribe the form and method for
319	324		applying for a credit under this subchapter. A taxable entity must
320	325		use the form in applying for the credit and submit the form
321	326		electronically with the report for the period for which the credit
322	327		is claimed.
323	328		(c) The comptroller may require the taxable entity to
324	329		include any other information the comptroller determines is
325	330		necessary to demonstrate:
326	331		(1) whether the entity is eligible for the credit; and
327	332		(2) the amount of the credit.
328	333		(d) The burden of establishing eligibility for and the
329	334		amount of the credit is on the taxable entity.
330	335		(e) The comptroller may request permission to examine the
331	336		books and records of a taxable entity as necessary to determine
332	337		whether the entity is entitled to a credit under this subchapter and
333	338		the amount of the credit. The comptroller may disallow the credit
334	339		if the taxable entity refuses to allow the comptroller to examine
335	340		the books and records.
336	341		Sec. 171.705. ADMINISTRATION OF CREDIT; REFUND. (a) The
337	342		comptroller may require a taxable entity that applies for a credit
338	343		under this subchapter to submit with the report a payment for all or
339	344		part of the taxes to which the credit applies. As soon as
340	345		practicable after determining the amount of the credit under
341	346		Section 171.703, the comptroller shall issue a warrant for any
342	347		portion of the credit for which payment was made.
343	348		(b) The amount of a warrant issued by the comptroller under
344	349		Subsection (a) does not accrue interest under Section 111.064.
345	350		Sec. 171.706. SALE, ASSIGNMENT, OR CARRYFORWARD
346	351		PROHIBITED. A taxable entity that receives a credit under this
347	352		subchapter may not sell, assign, or carry forward any part of the
348	353		credit.
349	354		Sec. 171.707. RULES. The comptroller shall adopt rules as
350	355		necessary to implement and administer this subchapter.
351	356		SECTION 2.02. Subchapter N, Chapter 171, Tax Code, as added
352	357		by this article, applies only to a report originally due on or after
353	358		the effective date of this article.
354	359		SECTION 2.03. This article takes effect January 1, 2026.
	360	+	* * * * *