HB23

2nd Special Session

Relating to the exemption from ad valorem taxation of property owned by certain nonprofit corporations, located in a populous county, and used to promote agriculture, support youth, and provide educational support in the community.

ModeratePlan for compliance

Low Cost

Effective:2026-01-01

Enforcing Agencies

County Appraisal Districts (Specifically Harris Central Appraisal District due to the 3.3 million population bracket)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: January 1, 2026
Compliance Deadline: Corporate governance documents (Articles of Incorporation) must be amended by December 31, 2025, to meet eligibility criteria. The exemption application (Form 50-114) must be filed between January 1 and April 30, 2026.
Agency Rulemaking: The Comptroller will not issue new rules, but the Harris Central Appraisal District (HCAD) will establish internal verification standards. Expect strict scrutiny of the "scientific" purpose requirement during the Spring 2026 appraisal review.

Immediate Action Plan

Immediate Governance Audit: Review Articles of Incorporation. If the word "Scientific" is missing from your purpose clause, file amendments with the Secretary of State immediately.
Lease Portfolio Review: Identify all for-profit tenants. Issue notices clarifying that their leasehold tax liability remains distinct from the property's exemption status.
Asset Segregation: Map all real property. Identify any parcels not actively used for Ag/Youth/Education purposes and prepare for those specific parcels to remain on the tax rolls.
File Early: Do not wait for the April 2026 deadline. Submit exemption applications in January 2026 to allow time to cure any deficiencies flagged by HCAD.

Operational Changes Required

Contracts

Triple Net (NNN) Leases: Landlords must audit all commercial leases. While the underlying property becomes exempt, Section 1(n) mandates that for-profit leasehold interests remain taxable.
Lease Amendments: Revise standard lease templates to explicitly state that tenants are responsible for taxes assessed on their specific leasehold interest, even if the landlord’s fee simple interest is exempt.

Hiring/Training

Governance: Boards of Directors must vote to amend Bylaws and Articles of Incorporation to strictly align with the "Charitable, Educational, AND Scientific" statutory requirement.
Operations: Facility managers must be trained to log property usage. Only property *actively used* for the statutory purposes qualifies; mixed-use or investment-held land must be segregated in internal records.

Reporting & Record-Keeping

Form 50-114: Prepare to file the *Application for Charitable Organization Property Tax Exemption* with HCAD in Q1 2026.
Proof of Science: Compile curriculum or program data demonstrating the organization's "scientific" activities (e.g., agricultural science, STEM grants, livestock genetics) to substantiate the new governance clause.

Fees & Costs

Legal Costs: Immediate budget allocation required for corporate counsel to amend governance documents and review lease structures.
Insurance: With the elimination of property tax overhead, conduct a review of property insurance coverage to ensure replacement cost values are accurate, as the asset's financial profile will shift significantly.

Strategic Ambiguities & Considerations

"Scientific" Purpose: The statute does not define "scientific." HCAD is expected to interpret this narrowly to protect the tax base. Organizations that are primarily "social" or "educational" without a rigorous scientific component (research, formal agricultural science education) risk denial.
"Exclusively": The law requires the corporation to be organized *exclusively* for the listed purposes. If your Articles of Incorporation include a catch-all phrase like "any other legal purpose," you are technically ineligible until amended.

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

TopicsAgriculture Business & Commerce Business & Commerce--general Charitable & Nonprofit Organizations Education Education--general Taxation Taxation--property-appraisals & Appraisal Districts Taxation--property-exemptions Harris County

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 23

By: Harless

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that the Houston Livestock Show and Rodeo (HLSR) supports the Houston community and promotes agriculture through its ‎annual family-friendly experiences that educate and entertain the public, showcase western heritage, and support Texas youth.‎ The bill author has further informed the committee that HLSR would like to continue to develop its properties to supplement and enhance components of its annual show and to further the overall mission of the organization, but that current law lacks clarity as to how the property tax exemption for nonprofit organizations, such as HLSR, is applied when an organization develops its properties.‎ H.B. 23 seeks to add that clarity to the law and to promote agriculture, youth initiatives, and educational resources that benefit the state by codifying a property tax exemption for applicable organizations.

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. 23 amends the Tax Code to exempt from all property taxation all real and personal property in a county with a population of 3.3 million or more that is owned by a nonprofit corporation, as that term is defined by an applicable Business Organizations Code provision, organized exclusively for charitable, educational, and scientific purposes, and held for use in promoting agriculture, supporting youth, and providing educational support in the community. The bill establishes that this provision expressly does not exempt from property taxation any interest in real or personal property, including a leasehold or other possessory interest, of a for-profit lessee of property for which a nonprofit corporation is entitled to an exemption from taxation under this provision.

H.B. 23 applies only to a property tax year that begins on or after the bill's effective date.

EFFECTIVE DATE

January 1, 2026

House Authors

Rep. Sam HarlessRepublican · Primary Author

Joint Authors

Coauthors (3)

Senate Sponsors

Sen. Paul BettencourtRepublican · Primary Sponsor

Cosponsors (2)

Bill Text(with markup)

H.B. No. 23

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the exemption from ad valorem taxation of property
	owned by certain nonprofit corporations, located in a populous
	county, and used to promote agriculture, support youth, and provide
	educational support in the community.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 11.23, Tax Code, is amended by adding
	Subsection (n) to read as follows:
	(n) Promotion of Agriculture, Support of Youth, and
	Provision of Educational Support in Populous Counties. In a county
	with a population of 3.3 million or more, all real and personal
	property owned by a nonprofit corporation, as that term is defined
	by Section 22.001, Business Organizations Code, organized
	exclusively for charitable, educational, and scientific purposes,
	and held for use in promoting agriculture, supporting youth, and
	providing educational support in the community is exempt from all
	ad valorem taxation. This subsection does not exempt from ad
	valorem taxation any interest in real or personal property,
	including a leasehold or other possessory interest, of a for-profit
	lessee of property for which a nonprofit corporation is entitled to
	an exemption from taxation under this subsection.
	SECTION 2. This Act applies only to an ad valorem tax year
	that begins on or after the effective date of this Act.
	SECTION 3. This Act takes effect January 1, 2026.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATURE 2nd CALLED SESSION 2025


August 21, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB23 by Harless (Relating to the exemption from ad valorem taxation of property owned by certain nonprofit corporations, located in a populous county, and used to promote agriculture, support youth, and provide educational support in the community.), As Introduced

No significant fiscal implication to the State is anticipated.

The bill would exempt from property tax all real and personal property owned by a certain nonprofit corporation that is organized exclusively for charitable, educational, and scientific purposes, and is used for promoting agriculture, supporting Texas youth, and providing educational support within the community in a county with a population of more than 3.3 million.

The bill would not exempt any interest in real or personal property, including a leasehold or other possessory interest, of a for-profit lessee of property owned by a nonprofit corporation that would otherwise qualify for the exemption.

The bill would create a new property tax exemption for a nonprofit corporation promoting agriculture, supporting Texas youth, and providing educational support within Harris County. This exemption would be limited in geographical scope and would affect the respective units of local government. Passage of the bill would reduce taxable property value and associated property tax collections. Under provisions of the Education Code, the school district tax revenue loss is partially transferred to the state. However, it is unlikely to be significant.

Local Government Impact

Passage of the bill would create a new property tax exemption for a nonprofit corporation promoting agriculture, supporting Texas youth, and providing educational support within Harris County, which would reduce taxable value. However, the no-new-revenue and voter-approval tax rates as provided by Section 26.04, Tax Code would be higher as a consequence of the reduced taxable property value proposed by the bill.

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 HB23

What does Texas HB23 do?

HB23 establishes a total ad valorem tax exemption for nonprofit corporations in Harris County organized exclusively for charitable, educational, and scientific purposes that promote agriculture and youth support. While the law targets property owners, it explicitly excludes for-profit leasehold interests, creating immediate contract review obligations for landlords and commercial tenants to define tax liabilities starting in the 2026 tax year. Implementation Timeline Effective Date: January 1, 2026 Compliance Deadline: Corporate governance documents (Articles of Incorporation) must be amended by December 31, 2025, to meet eligibility criteria.

Who authored HB23?

HB23 was authored by Texas Representative Sam Harless during the 2nd Special Session.

When was HB23 signed into law?

HB23 was signed into law by Governor Greg Abbott on September 17, 2025.

Which agencies enforce HB23?

HB23 is enforced by County Appraisal Districts (Specifically Harris Central Appraisal District due to the 3.3 million population bracket).

How urgent is compliance with HB23?

The compliance urgency for HB23 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB23?

The cost impact of HB23 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB23 address?

HB23 addresses topics including agriculture, business & commerce, business & commerce--general, charitable & nonprofit organizations and education.

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.