by Kelley Rendziperis & Will Ramirez, on Sep 18, 2025 7:00:00 AM
The 2025 Texas regular legislative session delivered notable wins for businesses, including significant property tax relief, sales tax exemptions, franchise tax credits, and new economic development programs. This blog highlights some of the more impactful measures from the regular session of the 89th Texas Legislature, as well as highlights some notable bills that ultimately did not pass.
Property Tax Updates
Property tax relief measures
Like the last legislative session in 2023, property tax relief was at the center of this regular session as mandated by Gov. Greg Abbott. The General Appropriations Act (SB 1) funds $51 billion of school property tax relief, consisting of: $41 billion being used to maintain property tax relief enacted by the 86th Legislature, $6.1 billion to maintain property tax relief passed by the 88th Legislature, and $3.9 billion for the following property tax relief measures:
1. Business personal property exemption increase
The passage of House Joint Resolution 1 will allow voters to approve a constitutional amendment at the statewide general election on November 4, 2025, to raise the business personal property exemption from $2,500 to $125,000 for each location within a single taxing unit. Since Texas has a relatively high property tax burden for businesses operating in the state, as compared to other states in the U.S., this increased exemption is a good step in the right direction. Notably, as of 2025, 38 states continue to impose a tax on business personal property. If the voters approve the measure in November, the exemption will become law under HB 9 and will be effective January 1, 2026. A property tax rendition is not required if the value of all business personal property at a single location is less than $125,000.
Other components of HB 9 include certain limitations for equipment lessors, property located within a taxing unit at locations not owned or leased by the business personal property owner, and aggregation rules for related business entities.
2. School district homestead exemptions
Pursuant to Senate Joint Resolutions 2 and 85, Texans will also be able to cast their vote at the statewide election in November to increase the school district general homestead exemption from $100,000 to $140,000 (SB 4) and the additional exemption for over-65 or disabled homeowners from $10,000 to $60,000 (SB 23). Notably, if voter approved, both these measures are effective beginning with the 2025 tax year.
In July, the Texas Taxpayers and Research Association released its Legislative Wrap-Up Report, which succinctly summarized the property tax relief package of the 89th Legislature as follows:
Source: Texas Taxpayers and Research Association (TTARA) “Tax, School Finance, and Public Education Bills that Passed and Failed in the Regular Session of the 89th Texas Legislature.”
Property tax bills that passed
Other significant property tax bills that passed this legislative session are summarized as follows:
1. Intangible personal property exemption
Nearly all intangible personal property is currently exempt from property tax in Texas; however, HB 22, effective January 1, 2026, further eliminates property tax for those intangibles previously excluded from the exemption under Texas Tax Code Section 11.02(b), specifically related to insurance companies and savings and loan institutions.
2. Gulf Coast tax rate adjustments
For counties with a population of less than 500,000 located on the Gulf Coast, approximately 14 counties, HB 3093 impacts how county tax rates are determined by accounting for the potential for large taxpayers to protest their appraised values—a very common practice.
County property tax rates are calculated annually based on the estimated tax revenue generated from all property in the jurisdiction. Thus, since the Gulf Coast particularly has very large taxpayers heavily concentrated in the oil, gas, and chemical industries, if a taxpayer successfully contests and lowers its appraised value after the rate is established, this could significantly impact a county’s tax revenue.
As an example, Nueces County has felt the impact of this, resulting in a budget shortfall of millions of dollars, which ultimately led to this bill to address the issue. HB 3093, effective immediately, requires a tax rate adjustment for anticipated substantial litigation by excluding the value of the contested property from the total value used to calculate tax rates. Substantial litigation would include properties among the 20 highest taxable values in the subject appraisal district in the prior year, with a current year value that exceeds 125% of the uncontested value. The onus to determine which taxpayers may be affected is on the taxing unit, which must notify the taxpayer that they must comply with specific requirements, including reporting to the taxing unit the amount of the uncontested taxable value and rendering the tax upon the undisputed amount.
Property tax bills that failed
While there were some significant strides made to lessen Texans’ property tax burden and increase transparency, a surprising number of bills did not pass. Perhaps the most notable were efforts to amend the Texas Jobs, Energy, Technology, and Innovation (JETI) Act, which was passed in the prior legislative session and replaced the controversial Chapter 313 program, which allowed school districts to offer tax incentives to attract major businesses.
1. Texas Jobs, Energy, Technology, and Innovation Act update
The JETI program allows for a 10-year, 50% appraised value limitation on a company's school district maintenance and operations taxes, provided they meet certain job and capital investment minimums. SB 2322 and HB 105 attempted to address multiple issues with the JETI program:
• Creating a new category of “priority projects,” those with at least a $750 million investment, and excluding them from job creation requirements.
• Excluding utility-related projects and “priority projects” from the “compelling factor” test.
• Revising the calculation of required wages, which currently yields unintended results and unsustainably high wage requirements.
Since neither of these bills passed, the effectiveness of and access to the JETI program remain questionable as an effective economic development tool.
Economic Development Update
Economic development bills that passed
A few notable enrolled bills related to economic development efforts were:
1. Film incentives
SB 22 overhauled the Texas Moving Image Industry Incentive Program by allocating $300 million per biennium, an increase from $200 million, through 2035 to provide grants to support film, TV, and digital media projects that portray Texas in a positive light and align with community values. The bill sets fixed awards based on spending and offers bonus payments for filming in rural areas, hiring veterans, promoting family or faith-based values, or highlighting historical sites.
2. Other new or expanded business incentives
• Small business and veteran-owned businesses: Effective September 1, 2025, HB 346 allows the Secretary of State to offer expedited business filings so Texas small businesses can establish themselves quickly. This law will also make the new veteran-owned business franchise tax exemption and business filing waiver permanent.
• Rural economic development: Effective September 1, 2025, HB 2765 expands and modernizes the Rural Economic Development and Investment Program to better support the growth of rural communities in Texas. It raises the population limit for eligible counties from 75,000 to 200,000. In addition, it adds public utilities and special districts as eligible recipients for funding and includes mineral extraction activities as an eligible project.
• Property tax abatements: HB 2027 grants the Brazoria County Commissioners Court authority to grant property tax abatements for property within the Port Freeport District.
Economic development bills that failed
HB 2027 and SB 878 tried to impose limitations on the ability of local jurisdictions to provide property tax abatements under Chapter 380 or 381; however, for the second consecutive session, these measures did not pass. HB 5169 and SB 2747 aimed to prohibit a municipality from poaching retailers from other Texas municipalities without a substantial purpose other than economic incentives. Finally, SB 1754 attempted to ban local governments from offering property tax benefits via Chapters 380, 381, or 312 for renewable energy facilities.
Sales Tax Updates
To continue the expansion of internet access throughout Texas, the passage of SB 1405 removed internet access services from the list of taxable services effective July 1, 2025. Conversely, two significant efforts that failed were related to overhauling local sales tax sourcing (HB 134) and the removal of real property repair and remodeling from the list of taxable services (SB 2020).
Franchise Tax Updates
There were several rather minor franchise tax updates, but perhaps the most relevant legislative change was the overhaul of the research and development (R&D) exemptions and credits.
1. Research and development tax credit
Effective January 1, 2026, SB 2206 repealed the sales and use tax exemption for depreciable tangible personal property used in qualified R&D activities and instead provides for a new enhanced R&D franchise tax credit. The Texas R&D franchise tax credit was set to expire at the end of 2026, and it is now permanently extended. In addition, the standard credit increased from 5% to 8.722%, with a higher rate of 10.903% for research conducted in partnership with Texas higher education institutions. Finally, unused credits may be carried forward for up to 20 years and the credit is now refundable for entities that do not owe franchise tax.
Conclusion
Although there were no significant new economic incentive programs or modifications to existing ones, property tax reform remains a top priority for the state legislature. It is unfortunate that one of the state’s marquee programs, JETI, was not altered to correct what are likely unintended consequences of extremely high wage standards. Since the Legislature only meets every two years, this will continue to be a disadvantage for Texas in competing for large capital projects.
If your business wants to maximize Texas tax exemptions and incentive opportunities, early planning can help secure significant savings. Please reach out to one of our economic incentive experts with any questions or to discuss your project’s eligibility.
