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.

ModeratePlan for compliance

Low Cost

Effective:2026-01-01

Enforcing Agencies

Texas Comptroller of Public Accounts • County Appraisal Districts (Local)

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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Legislative Timeline

This bill's path through the Texas Legislature

TopicsAgriculture Animals Property Interests Property Interests--personal Property Taxation Taxation--property-appraisals & Appraisal Districts Taxation--property-exemptions

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 1399

By: Harris

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Under current law, animal feed is typically exempt from taxation at each location or transaction during its life cycle, from the field where it's harvested to the purchase of the feed by a farmer or rancher, except for when the feed is sitting in a store as inventory. H.B. 1399 seeks to address this inconsistency by exempting tangible personal property consisting of animal feed from property taxation if the property is held by the owner for sale at retail.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 1399 amends the Tax Code to entitle the owner of tangible personal property consisting of animal feed that is exempted from sales and use taxes and held by the owner for sale at retail to an exemption from property taxation of the tangible personal property's appraised value. The bill applies only to property taxes imposed for a tax year beginning on or after the bill's effective date.

EFFECTIVE DATE

January 1, 2026, if the constitutional amendment authorizing the legislature to exempt from property taxation tangible personal property consisting of animal feed held by the owner of the property for sale at retail is approved by the voters.

House Authors

Rep. Cody HarrisRepublican · Primary Author

Coauthors (7)

Senate Sponsors

Sen. Robert NicholsRepublican · Primary Sponsor

Cosponsors (1)

Royce West (D)

Bill Text(with markup)

H.B. No. 1399

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	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.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
	adding Section 11.162 to read as follows:
	Sec. 11.162. ANIMAL FEED HELD FOR SALE AT RETAIL. The owner
	of tangible personal property consisting of animal feed exempted
	from sales and use taxes under Section 151.316(a)(3) or (4) is
	entitled to an exemption from ad valorem taxation of the appraised
	value of the tangible personal property if the property is held by
	the owner for sale at retail.
	SECTION 2. This Act applies only to ad valorem taxes imposed
	for a tax year beginning on or after the effective date of this Act.
	SECTION 3. This Act takes effect January 1, 2026, but only
	if the constitutional amendment proposed by the 89th Legislature,
	Regular Session, 2025, authorizing the legislature to exempt from
	ad valorem taxation tangible personal property consisting of animal
	feed held by the owner of the property for sale at retail is
	approved by the voters. If that amendment is not approved by the
	voters, this Act has no effect.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 14, 2025

TO:	Honorable Morgan Meyer, Chair, House Committee on Ways & Means

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB1399 by Harris (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.), As Introduced

No significant fiscal implication to the State is anticipated.

Contingent on the passage of HJR 99, the bill would provide a property tax exemption for certain animal feed held for sale at retail – feed for farm and ranch animals, and for animals held for sale in the regular course of business, exempted from sales and use tax under Section 151.316, Tax Code.

The exemption proposed by the bill would reduce taxable value and the associated property tax revenue for school districts. As a result, state costs would increase through the operation of the school finance formula. However, these costs are not expected to be significant.

Local Government Impact

Contingent upon passage of a constitutional amendment authorizing the exemption, passage of the bill would exempt the value of certain animal feed from the property tax. As a result, taxable property values for local governments could be reduced. However, the no-new-revenue and voter-approval tax rates as provided by Section 26.04, Tax Code could be higher as a consequence of the reduced taxable value. If cities, counties, and special districts did not adopt higher rates, local levies would be reduced. If those jurisdictions adopted higher tax rates, the initial revenue loss from the exemption would be offset by increased tax levies from owners of non-exempt property and slightly reduced tax savings from owners of exempt property.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, KK, SD, BRI

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Frequently Asked Questions

Common questions about HB1399

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. Implementation Timeline Effective Date: January 1, 2026 (Contingent upon voter approval of HJR 99 in November 2025).

Who authored HB1399?

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

When was HB1399 signed into law?

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

Which agencies enforce HB1399?

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

How urgent is compliance with HB1399?

The compliance urgency for HB1399 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

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.

What topics does HB1399 address?

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

Legislative data provided by LegiScanLast updated: November 25, 2025

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