HB22

Regular Session

Relating to the exemption from ad valorem taxation of intangible personal property.

LowStandard timeline

Low Cost

Effective:2026-01-01

Enforcing Agencies

Texas Comptroller of Public Accounts • County Appraisal Districts

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: January 1, 2026
Compliance Deadline: April 15, 2026 (Deadline for filing 2026 Business Personal Property Renditions excluding intangibles).
Agency Rulemaking: The Texas Comptroller is expected to update the *Property Classification Guide* by Q4 2025. While no formal rulemaking is mandated, guidance is necessary to distinguish between "embedded software" (tangible) and "proprietary software" (intangible).

Immediate Action Plan

1. Purge 2026 Renditions: Immediately flag all intangible assets in your tax software to ensure they are not rendered for the 2026 tax year.
2. Segregate Hybrid Assets: For equipment where software exceeds 15% of the value, separate the hardware cost from the software license cost in your fixed asset ledger.
3. Update Deal Docs: Instruct outside counsel to revise standard property tax representations in Asset Purchase Agreements to reflect the total exemption effective 2026.
4. Monitor Comptroller: Assign a tax officer to track updates to the *Texas Property Tax Assistance Property Classification Guide* in late 2025.

Operational Changes Required

Contracts

M&A Agreements: For transactions closing on or after Jan 1, 2026, amend tax proration clauses to explicitly exclude intangible assets from property tax liability calculations.
Net Leases: Review pass-through tax provisions in commercial leases. Tenants must ensure landlords do not pass through tax costs based on valuations that improperly bundle intangible value (e.g., brand value of a location) with tangible real property.

Hiring/Training

Tax Compliance Staff: Direct internal tax teams and external consultants to cease rendering intangible assets for the 2026 tax cycle.
Asset Management: Instruct accounting staff to strictly segregate "Intangible Assets" from "Tangible Personal Property" in fixed asset ledgers to facilitate clean reporting.

Reporting & Record-Keeping

Rendition Modification: The 2026 Business Personal Property (BPP) rendition must exclude all intangible value.
Audit Defense: Maintain original purchase agreements and licensing contracts. You must be prepared to prove that specific high-value assets (e.g., software licenses, customer lists) are legally classified as intangible should a County Appraisal District (CAD) attempt to reclassify them as tangible property.

Fees & Costs

Tax Reduction: Elimination of property tax liability on previously taxed intangibles for Insurance and Savings & Loan sectors.
Consulting Costs: Potential short-term increase in valuation consulting fees to unbundle "hybrid" assets (machinery with significant software components) before the 2026 rendition.

Strategic Ambiguities & Considerations

The "Bundling" Risk:

While the law explicitly exempts intangibles, it does not define the boundary between a tangible machine and the intangible software that runs it.

Risk: Aggressive Appraisal Districts, facing revenue loss, may attempt to value high-tech equipment based on the *total acquisition cost*, effectively taxing the intangible software component.
Watch For: Comptroller guidance on "embedded vs. non-embedded" software. If the Comptroller does not provide clear separation rules, businesses must establish their own defensible methodology for stripping intangible value from hardware costs.

Need Help Understanding Implementation?

Our government affairs experts can walk you through this bill's specific impact on your operations.

Schedule Consultation

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.

Legislative Timeline

This bill's path through the Texas Legislature

TopicsProperty 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. 22

By: Noble

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

According to a study by the Tax Foundation, Texas remains one of only eight states that tax intangible personal property, which may include goodwill, stocks, or intellectual property rights like patents, copyrights, and trademarks. Although intangible personal property is generally exempt from taxation under state law, several exceptions still exist, resulting in certain intangible assets being taxable. Any tax on intangible personal property, regardless of the amount taxed, could be detrimental to certain businesses in Texas that are subject to intangible personal property taxation, which can discourage in-state investment. H.B. 22 seeks to address this issue by eliminating all taxation of intangible personal property in Texas.

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. 22 amends the Tax Code to make all intangible personal property exempt from property taxation. The bill repeals provisions relating to the state's jurisdiction to tax qualifying intangible personal property owned by certain insurance companies and certain savings and loan associations, the procedures for appraising and determining the taxable situs of intangible personal property owned by these companies and associations, and the jurisdiction of taxing units to tax intangible personal property generally.

H.B. 22 repeals the following provisions of the Tax Code:

·Sections 11.02(b) and (c);

·Section 21.06;

·Section 21.07;

·Section 21.08;

·Section 23.15; and

·Section 23.16.

H.B. 22 applies only to a property tax year that begins on or after the bill's effective date.

EFFECTIVE DATE

January 1, 2026.

Bill Text(with markup)

H.B. No. 22

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the exemption from ad valorem taxation of intangible
	personal property.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 11.02(a), Tax Code, is amended to read as
	follows:
	(a) Intangible [~~Except as provided by Subsection (b) of this~~
	~~section, intangible~~] personal property is not taxable.
	SECTION 2. Section 42.05, Tax Code, is amended to read as
	follows:
	Sec. 42.05. COMPTROLLER AS PARTY. The comptroller is an
	opposing party in an appeal by[:
	[~~(1)~~ ~~a property owner of an order of the comptroller~~
	~~determining a protest of the appraisal, interstate allocation, or~~
	~~intrastate apportionment of transportation business intangibles;~~
	or
	[~~(2)~~] a county or a property owner of an order of the
	comptroller apportioning among the counties the appraised value of
	railroad rolling stock.
	SECTION 3. The following provisions of the Tax Code are
	repealed:
	(1) Sections 11.02(b) and (c);
	(2) Section 21.06;
	(3) Section 21.07;
	(4) Section 21.08;
	(5) Section 23.15; and
	(6) Section 23.16.
	SECTION 4. The changes in law made by this Act apply only to
	an ad valorem tax year that begins on or after the effective date of
	this Act.
	SECTION 5. This Act takes effect January 1, 2026.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 2, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB22 by Noble (Relating to the exemption from ad valorem taxation of intangible personal property.), As Introduced

No significant fiscal implication to the State is anticipated.

The bill would exempt all intangible personal property from the property tax. Under current law, only certain intangible personal property owned by certain savings and loan corporations and insurance companies are subject to the property tax. According to the Comptroller of Public Accounts, in preliminary tax year 2024 appraisal district data provided to the Comptroller's office there is only one intangible personal property record reported, with a taxable value of $142,450. Any costs associated with implementing the provisions of the bill are not anticipated to be significant.

Local Government Impact

No significant fiscal implication to units of local government is anticipated

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, KK, SD, BRI

Related Legislation

Explore more bills from this author and on related topics

Frequently Asked Questions

Common questions about HB22

What does Texas HB22 do?

HB22 enacts a total statutory prohibition on the ad valorem taxation of intangible personal property in Texas, repealing previous exceptions that allowed taxation of insurance companies and savings and loan associations. Effective January 1, 2026, this legislation codifies that assets such as goodwill, proprietary data, and capital stock are non-taxable, requiring businesses to modify asset reporting protocols to prevent inadvertent over-assessment. Implementation Timeline Effective Date: January 1, 2026 Compliance Deadline: April 15, 2026 (Deadline for filing 2026 Business Personal Property Renditions excluding intangibles).

Who authored HB22?

HB22 was authored by Texas Representative Candy Noble during the Regular Session.

When was HB22 signed into law?

HB22 was signed into law by Governor Greg Abbott on May 24, 2025.

Which agencies enforce HB22?

HB22 is enforced by Texas Comptroller of Public Accounts and County Appraisal Districts.

How urgent is compliance with HB22?

The compliance urgency for HB22 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB22?

The cost impact of HB22 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB22 address?

HB22 addresses topics including property interests, property interests--personal property, taxation, taxation--property-appraisals & appraisal districts and taxation--property-exemptions.

Legislative data provided by LegiScanLast updated: November 25, 2025

Need Strategic Guidance on This Bill?

Need help with Government Relations, Lobbying, or compliance? JD Key Consulting has the expertise you're looking for.