Rep. Morgan Meyer, R-University Park, the bill author and committee chair, said lawmakers have made “a commitment to give the taxpayers their money back” through tax cuts.
State lawmakers have vowed this session to further cut taxes after passing an $18 billion property tax relief package in 2023—but the House and Senate have proposed different methods. On Feb. 13, senators unanimously passed legislation that would raise tax exemptions on Texans’ primary homes.
During his Feb. 2 State of the State address, Gov. Greg Abbott proposed spending $10 billion of Texas’ nearly $24 billion budget surplus on tax cuts.
The overview
Drafts of the 2026-27 state budget show both chambers plan to spend $3 billion to maintain revenue for school districts that reduced their tax rates as a result of state law.
Meyer’s House Bill 8 proposes spending $2.8 billion to “compress,” or reduce, school district maintenance and operations taxes by about $0.10 per $100 of taxable value. This includes $0.03 in the bill and $0.07 in budget drafts.
Maintenance and operations taxes make up about half of a homeowner’s full tax bill, according to the conservative Texas Public Policy Foundation. Under HB 8, schools would receive money from the state to ensure they do not lose revenue by reducing their tax rates.
A majority of Texans and groups testifying during the March 3 hearing said they believed compression was the most effective way to guarantee tax relief, as opposed to the Senate’s plan to cut taxes for homeowners.
“We strongly believe the best mechanism to provide tax relief is to ensure tax equity amongst all taxpayers by focusing on broad tax compression and lowering the tax rate paid by all taxpayers... including businesses, homeowners and renters,” said Robert Wood, a lobbyist representing the Texas Oil and Gas Association, the Texas Chemistry Council and the Texas Association of Manufacturers.
Meyer also proposed HB 9, which would exempt up to $250,000 of businesses’ personal property, such as equipment, furniture and vehicles, from taxation. Businesses currently receive a tax exemption on property worth $2,500 or less, Meyer said.
Under the bill, Texas would spend $700 million to help school districts cover the cost of raising the tax exemption. If approved by both chambers, the business tax cut would appear on Texas voters’ ballots in November.
Meyer’s bills were left pending in the committee March 3, though they may be sent to the House floor during a future hearing.
Zooming in
Glenn Hamer, president and CEO of the Texas Association of Business, told committee members HB 8 would provide “an immediate tax cut for all Texans.”
“When you're reducing taxation on those that are providing housing, including rental units, it should have a benefit all the way down,” Hamer said during the March 3 hearing. “It's fair to say that it's a more direct benefit for homeowners and it's a more direct benefit for businesses that own property. But when you're reducing property taxes, we would believe that you reduce pressures on increases in rent.”
Meyer added that landlords are less likely to lower rents if HB 8 does not pass.
“If we don't do this, there is absolutely no way the rent’s coming down, because the landlord doesn't have the relief from the state,” he said. “But if we do this, the renters can absolutely see a lower rent.”
Shannon Halbrook, a fiscal analyst for the progressive think tank Every Texan, said lawmakers should invest in health care, public education and other services before cutting property taxes, noting they may not always have a budget surplus to fall back on.
“I caution the legislature against sort of assuming that our huge carryover balance will continue by making these permanent tax cuts on the basis of temporary excess revenue,” Halbrook told the committee March 3.
Texans also urged the committee to consider cracking down on government entities’ ability to raise taxes after the legislature approves cuts.
“We must be mindful that previous tax relief has been quickly eroded through aggressive rate hikes, large bond elections and non-voter-approved debt,” said James Quintero, a policy director for TPPF. “To better protect the tax cuts that are proposed in HB 8 and in any other forthcoming vehicle, I want to strongly encourage this body to consider pairing tax relief with tax reform.”
Also of note
Diego Galicia, the chef and owner of the San Antonio restaurant Mixtli, encouraged lawmakers to expand exemptions on businesses’ equipment as proposed by HB 9.
Galicia noted that in 2024, over 40 independent San Antonio restaurants went out of business. Rising rent, food and equipment costs were partially to blame, he said.
“Every year—a lot of people don’t know this—we pay taxes on equipment that we use daily to operate the restaurant, that we paid sales taxes for when we purchased them,” Galicia said March 3. “I believe this places an undue burden on the independent restaurants [and] retailers, like barber shops, beauty salons, art shops and many other small businesses.”
Jeff Burdett, state director of the National Federation of Independent Businesses, said the personal property tax is the top concern small business owners bring up.
“It's an extra layer of tax that they really think is unnecessary and unfair. ... In addition to the cost, there's a substantial administrative burden associated,” Burdett said. “Many times, it's incumbent on that business owner to fight these appraisals and it's very time-consuming.”
