On June 12, 2025, Texas enacted legislation that increases the property tax exemption value of income-producing tangible personal property to $125,000 (from $2,500) of the market value. This change is dependent on state voters approving a constitutional amendment (HJR 1) in the November 2025 general election. The increased exemption value would apply to property taxes imposed in tax years beginning on or after January 1, 2026 (see H.B. 9).
Exemption Increased for Multiple Locations
Previously, the exemption applied to each taxing unit (jurisdiction) in which the taxpayer owned the property. Under the legislation, the increased exemption now generally applies to each location within the taxing unit. Thus, property owners can potentially claim multiple exemptions.
The legislation provides for a single exemption of $125,000 per taxing unit (regardless of where the property is located within a taxing unit):
- to lessors of the total appraised value of all the tangible personal property the lessor owns that is held or used for the production of income and is subject to a lease; and
- to the total appraised value of all the tangible personal property a person owns that is held for and used to produce income in the taxing unit if the property has a taxable situs within the unit at any location that is not owned or leased by the owner (i.e., easements).
For application purposes, a lessor will receive the exemption for all locations that are taxed within each taxing unit. As an example: Lessor A has 25 locations within Harris County, Texas, with an estimated value of $250,000. Fifteen of the locations are physically in Aldine Independent School District (ISD), with an estimated value of $175,000. The lessor will receive the $125,000 exemption applied to the Harris County value of $250,000, resulting in a taxable value of $125,000, and will also receive the $125,000 exemption applied to the Aldine ISD value of $175,000, resulting in a taxable value of $50,000.
Related Business Entity
The legislation requires the aggregation of all income-producing property of a related business entity that has a taxable situs at the same location within a taxing unit. A related business entity is defined as a business entity that a) engages in a common business enterprise with at least one other business entity and b) owns tangible personal property that is 1) held or used for the production of income as part of that enterprise and 2) located at the same physical address that tangible personal property is located, owned by at least one other business entity engaged in the enterprise.
Property Tax Rendition/Report
Under the legislation, the requirement to render income-producing property is generally limited to where the aggregate market value of the property that such person owns exceeds the applicable exemption thresholds. See Texas Tax Code § 22.01(j-1).
However, a person that elects not to render property must file a rendition statement or property report that certifies the person’s reasonable belief that the value of the property is not more than the amount allowed as an exemption. Furthermore, the legislation empowers the chief appraiser to mandate a person to render property for taxation, even if that person claims that rendition is not otherwise required pursuant to Texas Tax Code § 22.01.
Ryan’s Take and Action Steps
Although signed by the Governor in June, this legislation will only take effect if Texas voters approve Proposition 9, which authorizes the state to exempt up to $125,000 of the market value of income-producing property. Taxpayers with income-producing property within a single taxing jurisdiction, while benefitting from the increased exemption amount, may also benefit from the language, which applies the exemption to more than one location within such jurisdiction. Taxpayers should pay close attention to the rendition language: the exemption threshold is increasing, but taxpayers may still be required to submit personal property reports annually. Please contact the Ryan experts listed below to discuss your potential benefits from the increased exemption and how to apply it to your holdings.
TECHNICAL INFORMATION CONTACTS:
Corinne Krikstan
Principal
Ryan
410.568.0752
corinne.krikstan@ryan.com
Teresa Sharp
Principal
Ryan
713.629.0090
teresa.sharp@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.