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Signed Into Law
Signed May 29, 2025Effective 2026-01-01
HB2742

Regular Session

Relating to the split-payment of ad valorem taxes.

Government Affairs & Regulatory Compliance Analysis

HB2742: Government Affairs Overview

HB 2742 fundamentally alters the compliance calendar for businesses utilizing the split-payment option for ad valorem taxes (paying 50% early to defer the remainder to July 1). The law replaces the static December 1 deadline with a floating deadline for any tax bill mailed after November 30. This protects businesses from administrative delays but shifts the burden of deadline calculation to the taxpayer; failure to calculate the new date correctly results in immediate forfeiture of the split-payment option and full tax liability.

Rep. Cody Vasut·House Bill·Regular Session

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

Who HB2742 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

  • 1Software Configuration: ERP and tax management software must be updated to allow for variable "First Installment" due dates based on input of the bill's mailing date.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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HB2742
Relating to the split-payment of ad valorem taxes.
Moderate Urgency
Unanimous Passage
House Vote146 - 0
YEA
100% in favor146 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
Cost Impact
Low
Effective
2026-01-01
Enforcing Agencies
County Tax Assessor-CollectorsLocal Taxing Units
Primary Author: Rep. Cody Vasut
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
  • Compliance Deadline: Q4 2026 (Applies to tax bills issued for the 2026 tax year).
  • Agency Rulemaking: No formal state rulemaking is required. However, local County Tax Assessor-Collectors must update their billing systems and delinquency triggers before the 2026 tax season.

Immediate Action Plan

  • 1. Update AP Protocols: Create a mandatory verification step for any tax bill received after December 1 to check the postmark date.
  • 2. Notify Tenants: Send an advisory to NNN tenants regarding the deadline change for the 2026 tax year to protect your property liens.
  • 3. Archive Evidence: Implement a strict "scan-and-save" policy for the physical envelopes of all tax bills.
  • 4. Adjust Cash Flow Forecasts: For the 2026 budget, account for the possibility of deferred tax outflows into Q1 2027 if local appraisal districts are delayed.

Operational Changes Required

Contracts

  • Triple Net (NNN) Leases: Review lease language regarding tax payment obligations. If tenants are responsible for payments "prior to delinquency," you must issue guidance on how to calculate the new deadline for late-mailed bills to prevent accidental forfeiture of the split-payment option.
  • Tax Consultant MSAs: Update Master Service Agreements with third-party tax consultants. Explicitly require them to verify mailing dates and indemnify your company against penalties resulting from miscalculation of the floating deadline.

Hiring/Training

  • Accounts Payable Training: Staff must be retrained to stop treating "December 1" as a hard deadline for split payments. They must learn the new formula: *Date Mailed + First Full Calendar Month + First Day of Next Month.*
  • Software Configuration: ERP and tax management software must be updated to allow for variable "First Installment" due dates based on input of the bill's mailing date.

Reporting & Record-Keeping

  • Evidence Retention: Do not discard envelopes. The statutory deadline is triggered by the *mailing date*, not the receipt date. The postmark is your primary defense in a dispute.
  • Digital Metadata: For electronically delivered bills, archive the transmission headers/metadata to prove the date of delivery.

Fees & Costs

  • No New Statutory Fees: The bill does not impose new costs.
  • Penalty Risk: Miscalculating the new deadline carries a high cost: immediate acceleration of the full tax balance, plus standard penalties and interest (P&I) for delinquency.

Strategic Ambiguities & Considerations

  • Definition of "Mailed": The statute relies on the date the taxing unit mails the bill, not when you receive it. Taxing units often use bulk mail permits where the "batch date" in their system may differ from the physical postmark. In the event of a dispute, the Tax Assessor's internal record of the "mail date" will likely be the default unless you possess physical evidence (the postmark) to prove otherwise.
  • Batch Processing Delays: If a bill is generated on November 29 but not physically mailed until December 2, the new extended deadline applies. However, the county system may default to the generation date. Businesses must vigilantly audit late bills for this discrepancy.

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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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 12, 2025
Passed House
Apr 29, 2025
Passed Senate
May 16, 2025
Signed
May 29, 2025
Effective
Jan 1, 2026
TopicsTaxationTaxation--property-assessment & Collection
03

House Authors

Rep. Cody VasutRepublican · Primary Author
Coauthors (3)

Senate Sponsor

Sen. Angela PaxtonRepublican · Primary Sponsor

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 Vasut

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Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about HB2742

Q

What does Texas HB2742 do?

HB 2742 fundamentally alters the compliance calendar for businesses utilizing the split-payment option for ad valorem taxes (paying 50% early to defer the remainder to July 1). The law replaces the static December 1 deadline with a floating deadline for any tax bill mailed after November 30. This protects businesses from administrative delays but shifts the burden of deadline calculation to the taxpayer; failure to calculate the new date correctly results in immediate forfeiture of the split-payment option and full tax liability.

Q

Who authored HB2742?

HB2742 was authored by Texas Representative Cody Vasut during the Regular Session.

Q

When was HB2742 signed into law?

HB2742 was signed into law by Governor Greg Abbott on May 29, 2025.

Q

Which agencies enforce HB2742?

HB2742 is enforced by County Tax Assessor-Collectors and Local Taxing Units.

Q

How significant are the changes in HB2742?

The regulatory priority for HB2742 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB2742?

The cost impact of HB2742 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB2742 address?

HB2742 addresses topics including taxation and taxation--property-assessment & collection.

Q

What are the key dates for HB2742?

Key dates for HB2742: Effective date is 2026-01-01. Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by HB2742?

HB2742 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