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HB 98

Relating to the repeal of or limitations on certain state and local taxes, including school district maintenance and operations ad valorem taxes, the enactment of state and local value added taxes, and related school finance reform; imposing taxes.

89th Legislature, 2nd Called Session (2025) Introduced by Helen Kerwin and 1 co-sponsor

HB 98 would replace school property taxes with new value-added taxes while reforming Texas school finance, shifting tax burden from real estate to consumption.

Referred to Ways & Means
#comptrollerofpublicaccounts(v2608) #education #commissionerof(v9954) #education--primary&secondary--finance(i0250) #foundationschoolprogram(s0541) #taxation--property-taxrate(i0794) #taxation--sales(i0800) #taxation--schooldistrict(i0785)
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Bill Summary · HB 98

Legislative bill overview

HB 98 proposes a major Texas tax reform that would repeal or limit school district property taxes (ad valorem taxes) while replacing lost revenue through new state and local value-added taxes (VAT). The bill also encompasses broader school finance reform tied to these tax changes.

Why is this important

School property taxes fund a significant portion of K-12 education in Texas, and this proposal would fundamentally restructure how schools are financed. The shift from property taxes to consumption-based VAT would redistribute the tax burden across different income groups and potentially affect business operations, making this consequential for both households and the economy.

Potential points of contention

  • Regressivity concerns: VAT is typically considered regressive since lower-income households spend a higher percentage of earnings on consumption, potentially shifting tax burden downward economically
  • Revenue adequacy: Whether VAT revenue would genuinely replace lost ad valorem tax revenue without creating school funding gaps or requiring higher overall tax rates
  • Implementation complexity: Establishing new state and local VAT systems involves significant administrative infrastructure, potential compliance issues, and cross-border transaction challenges
  • Property owner impact disparity: Current homeowners and businesses with established property tax bases face different transition effects than future purchasers
  • Business competitiveness: VAT could affect Texas's competitive position relative to neighboring states and impact business location decisions

Compiled from official sources — confirm details with the bill’s official record.

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