Legislature Adopts Tax Reform for 2024


Following the 88th Legislature’s Regular Session that ended in May, the Governor called the Legislature back for two special sessions to address tax reform.  After weeks of debate and negotiations, the Texas House and Senate adopted the following measures which were signed by the Governor on July 22nd.  All of these reforms will be in place for the 2024 tax year, assuming the constitutional amendment provisions are approved by voters in November 2023.

S.B. 2 – Property Tax Reform
This legislation compresses the maximum school property tax rate by 10.7 cents per $100,000 valuation.  It increases residential homestead exemptions from $40,000 to $100,000 and caps increases to appraised value of existing non-residence homestead property at 20% over the preceding year.  The cap applies to property valued at $5 million or less in 2024.  The Comptroller will set future caps based on CPI.

S.B. 3 – Franchise Tax Reform
Increases from $1 million to $2.47 million the amount of the total revenue exemption for franchise tax.   The legislation also eliminates the requirement for a taxable entity that does not owe any franchise tax to file an informational report with the Comptroller.

H.J.R. 2 – Constitutional Amendment
This contains proposed amendments to the Texas Constitution to allow for the implementation of the property tax reforms contained in S.B. 2.  This proposition will be on the November 2023 ballot