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Signed Into Law
Signed May 24, 2025Effective 2026-01-01
HB1399

Regular Session

Relating to an exemption from ad valorem taxation of tangible personal property consisting of animal feed held by the owner of the property for sale at retail.

Government Affairs & Regulatory Compliance Analysis

HB1399: Government Affairs Overview

HB1399 creates a contingent property tax exemption for retailers holding animal feed inventory intended for farm, ranch, or resale animals, effective January 1, 2026. This exemption is not automatic; it requires voter approval of a constitutional amendment in November 2025 and affirmative annual filings by business owners to claim the tax savings.

Rep. Cody Harris·House Bill·Regular Session

Moderate
Low Cost
Effective:2026-01-01
Business Impact

Who HB1399 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2026-01-01). Consider how these changes may affect your operations.

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Real Estate

Affected business types:

  • Property developers
  • Commercial landlords
  • Property managers
  • Real estate investors
View all real estate legislation

Key Operational Considerations

  • 1Leases: N/A. This applies to business personal property (inventory), not real property.
  • 2Inventory Management: Train inventory managers to distinguish between feed exempt under Tax Code Section 151.316 (farm/ranch/resale animals) and non-exempt feed (standard pets).
  • 3Accounting: Finance teams must understand the specific statutory definitions to defend the exemption during a CAD audit.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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HB1399
Relating to an exemption from ad valorem taxation of tangible personal property consisting of animal feed held by the owner of the property for sale a...
Moderate Urgency
Passed with Opposition
House Vote125 - 10
YEA
93% in favor135 voting
Senate Vote30 - 1
YEA
97% in favor31 voting
11
Total Opposition Votes
Cost Impact
Low
Effective
2026-01-01
Enforcing Agencies
County Appraisal DistrictsTexas Comptroller of Public Acco...
Primary Author: Rep. Cody Harris
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: January 1, 2026 (Contingent upon voter approval of HJR 99 in November 2025).
  • Compliance Deadline: April 30, 2026. You must file the exemption application with your local County Appraisal District (CAD) between Jan 1 and April 30 to claim the benefit for the 2026 tax year.
  • Agency Rulemaking: The Texas Comptroller must update property tax forms (likely Form 50-114) by late 2025. Expect local CADs to issue strict interpretation guidelines regarding "dual-use" feed (e.g., feed suitable for both pets and livestock) during the Q1 2026 appraisal period.

Immediate Action Plan

  • 1. Immediate: Direct your tax team to review Tax Code Section 151.316 and identify which SKUs in your current inventory qualify for the exemption.
  • 2. Q4 2025: If HJR 99 passes in November, immediately segregate inventory values in your asset ledger to ensure a clean "snapshot" on January 1, 2026.
  • 3. Q1 2026: Download the updated Comptroller exemption form and file with your local CAD before April 1 to avoid the April 30 rush.
  • 4. Ongoing: Ensure your Point-of-Sale (POS) tax codes match your property tax classifications to prevent audit discrepancies (e.g., claiming an item is exempt for property tax but charging sales tax on it at the register).

Operational Changes Required

Contracts

  • Loan Covenants: Review inventory financing agreements. If your borrowing base is calculated on "taxable inventory value," this exemption will technically lower that value. Ensure covenants allow for "market value" or "book value" calculations to avoid technical default.
  • Leases: N/A. This applies to business personal property (inventory), not real property.

Hiring/Training

  • Inventory Management: Train inventory managers to distinguish between feed exempt under Tax Code Section 151.316 (farm/ranch/resale animals) and non-exempt feed (standard pets).
  • Accounting: Finance teams must understand the specific statutory definitions to defend the exemption during a CAD audit.

Reporting & Record-Keeping

  • SKU Segmentation: You must modify your inventory tracking system immediately to segregate "Exempt Feed" from "Taxable Feed." You must be able to generate a report showing the specific value of qualifying feed on hand as of January 1.
  • Annual Filing: Add a recurring compliance task to file the exemption application annually before April 30. Late filing forfeits 10% of the exemption; failure to file forfeits it entirely.

Fees & Costs

  • No New Fees: There is no fee to file the exemption.
  • Administrative Cost: Budget for one-time IT/Accounting hours to re-code inventory SKUs and annual administrative time to prepare the filing.

Strategic Ambiguities & Considerations

  • "Dual-Use" Products: The law relies on Sales Tax Code definitions (Section 151.316). Products like rabbit pellets or general grains can be used for both pets (taxable) and livestock (exempt). Without clear Comptroller rules, CADs will likely classify ambiguous items as taxable. You must be prepared to prove the "primary marketing intent" of these items.
  • Internal Consumption: Feed used for animals kept by the business (e.g., guard dogs, demonstration animals) is not "held for sale" and remains taxable. Ensure these supplies are not commingled with retail inventory counts.

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JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Nov 19, 2024
Passed House
Apr 29, 2025
Passed Senate
May 9, 2025
Signed
May 24, 2025
Effective
Jan 1, 2026
TopicsAgricultureAnimalsProperty InterestsProperty Interests--personal PropertyTaxationTaxation--property-appraisals & Appraisal DistrictsTaxation--property-exemptions
03

House Authors

Rep. Cody HarrisRepublican · Primary Author
Coauthors (7)

Senate Sponsors

Sen. Robert NicholsRepublican · Primary Sponsor
Cosponsors (1)

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Rep. Cody Harris

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Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about HB1399

Q

What does Texas HB1399 do?

HB1399 creates a contingent property tax exemption for retailers holding animal feed inventory intended for farm, ranch, or resale animals, effective January 1, 2026. This exemption is not automatic; it requires voter approval of a constitutional amendment in November 2025 and affirmative annual filings by business owners to claim the tax savings.

Q

Who authored HB1399?

HB1399 was authored by Texas Representative Cody Harris during the Regular Session.

Q

When was HB1399 signed into law?

HB1399 was signed into law by Governor Greg Abbott on May 24, 2025.

Q

Which agencies enforce HB1399?

HB1399 is enforced by County Appraisal Districts (Local) and Texas Comptroller of Public Accounts.

Q

How significant are the changes in HB1399?

The regulatory priority for HB1399 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB1399?

The cost impact of HB1399 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB1399 address?

HB1399 addresses topics including agriculture, animals, property interests, property interests--personal property and taxation.

Q

What are the key dates for HB1399?

Key dates for HB1399: Effective date is 2026-01-01. Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by HB1399?

HB1399 primarily affects property owners and real estate professionals. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026