Potential property tax cuts have been all the buzz, but Texas business owners will be happy to know the bill to increase the Texas business personal property tax exemption from $2,500 to $125,000 (an almost 5,000% increase) has also passed and is heading to voters in November.
Texas is one of only nine states that taxes the inventory businesses keep in stock. The tax includes nearly everything under the roof: raw materials, work-in-progress, finished goods, and even supplies. Former National Federation of Independent Business (NFIB) State Director Annie Spilman once stated in an op-ed for the Dallas Morning News that “…our state’s inventory tax would make even the California legislature blush.”
While the bill has passed both state legislatures and the governor’s desk, because it affects the Texas Constitution, it will need to be placed on the November election ballot for voters. In the meantime, talk to an advisor about ways to avoid unnecessary business inventory taxes. This might include preventing late-payment and non-payment penalties, considering intangibles in valuations, taking advantage of manufacturing and special exemptions (including freeport and goods-in-transit exemptions), timing the purchase of inventory strategically, and filing simple renditions for low-value inventory or decreased value reports (which can include property damaged in floods, fires or other natural disasters).
Pay attention to additional bills that cleared the legislature affecting Texas small businesses, including SB 14 establishing a Texas Regulatory Efficiency Office, HB 5195 modernizing state agency systems, HB 346 allowing expedited business filings, HB 2464 preventing cities from imposing regulations on certain home-based businesses, and others. The NFIB summarizes several of the bills here, while the Office of the Texas Governor highlights others here.
“The Texas economy is better than ever before,” Governor Abbott states in a recent release. “This session, we took strategic steps to boost small businesses in Texas. Even the smallest of barriers can increase the cost of doing business. We want to make it easier and less costly for businesses in Texas, especially our small business owners.”
Whether you agree or not may depend on how you act on these potential new opportunities. Feel free to contact us with questions.
Publish date: July 22, 2025
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