Approximately three dozen new Texas laws are scheduled to take effect Jan. 1, impacting how artificial intelligence is used in state government, when local officials can raise taxes after natural disasters and how much of businesses' inventory is taxed.

Texas’s biennial legislative session ended in early June. Gov. Greg Abbott signed over 1,100 laws passed by state lawmakers, many of which took effect in mid-June or on Sept. 1. About a dozen other bills became law Dec. 4, following two special legislative sessions this summer during which legislators approved new congressional boundaries, responded to the deadly July 4 floods and made changes to Texas’s school assessment system.

Other measures could not become law until they received voter approval in November.

Keep reading for details about some of the bills becoming law in the new year. The following list is not comprehensive; more information about the new laws is available from Texas Legislature Online.

Cities, counties face limits on disaster-related tax hikes

House Bill 30 will tighten regulations on counties and cities' ability to raise tax rates after natural disasters, Community Impact previously reported.

Beginning Jan. 1, the new law will amend Section 26.042 of the state tax code, which was previously adjusted in 2021 to give local governments the freedom to utilize voter-approved tax rates after a disaster. HB 30 provides city and county governments with two new ways to calculate tax rates after state- and federally-declared disasters, bill author Rep. Ellen Troxclair, R-Lakeway, told House lawmakers in April.

Troxclair said HB 30 would also:

• Give taxing entities the option to collect the voter-approved tax rate or charge a tax rate based on the federal standard for debris removal costs
• Bar entities from reusing a disaster declaration for tax adjustments if a different disaster was more recently used
• Limit how disaster-related tax rates can be used to calculate future rates

Some proponents of the law said in April that they were concerned about cities and counties “abusing the disaster tax loophole” to raise taxes, while some local government representatives said the previous natural disaster tax exception was a “critical safety net” for government agencies.

“We want to make sure that entities that are truly experiencing disasters and need help in recouping those expenses have the ability to do so, but that taxpayers have accountability in what that money is really going toward,” Troxclair said April 21.

Law seeks to place guardrails around AI

State lawmakers worked to regulate the fast-growing artificial intelligence industry during this year’s legislative session. The result is House Bill 149, which is designed to “protect public safety, individual rights and privacy while encouraging the safe advancement of AI technology in Texas,” according to a May 20 bill summary.

The new law will create a seven-member Texas Artificial Intelligence Council, which is tasked with:

• Tracking AI use in state government
• Flagging AI systems that could be unethical, harm public safety or “undermine individual freedoms”
• Determining if any state and local AI rules could stifle innovation
• Making recommendations to the legislature

HB 149 also requires disclosure when Texans interact with an AI system on a government website or when AI is used in health care treatments and services. Government agencies will also be barred from using AI to capture a person’s biometric data, such as fingerprints and facial scanning, without their consent.

Companies are prohibited from creating AI systems designed to manipulate human behavior, discriminate against certain groups of people or create sexual and deep fake content involving children, according to the legislation.

On Dec. 11, President Donald Trump signed an executive order aimed at ensuring there is a “minimally burdensome national standard” for AI rather than separate state laws. The order directs the U.S. Commerce Secretary to evaluate all existing state AI laws and allows the U.S. attorney general to challenge laws that conflict with federal regulations or “unconstitutionally regulate interstate commerce.”

Trump said his order and future federal policies should not preempt state-level child-safety protections and rules related to state government AI use, although it was not clear as of press time how Texas’ HB 149 would be impacted.

Tax breaks for businesses, surviving military spouses

Four property tax exemptions will take effect Jan. 1, after Texas voters approved them during the Nov. 4 election.

House Bill 9 will exempt up to $125,000 of businesses’ personal property, such as equipment, furniture and vehicles, from taxation by local government entities. Texas business owners previously received an exemption on property worth $2,500 or less.

State lawmakers estimated that the average small business owner will save about $2,500-$3,500 per year under HB 9, Community Impact reported, although the nonpartisan Texas Legislative Budget Board said local revenues are expected to fall by $442 million in fiscal year 2026-27 if cities, counties and special taxing districts do not adopt higher tax rates.

The other exemptions are as follows:

• House Bill 247 will exempt increases in a property’s value from taxation if the land is along the Texas-Mexico border and the value rises due to the installation of border security infrastructure.
• House Bill 1399 will create a property tax exemption for stores that sell animal feed.
• House Bill 2508 will establish a property tax exemption for the surviving spouse of a veteran who died from an illness related to their military service.