HB2742

Regular Session

Relating to the split-payment of ad valorem taxes.

ModeratePlan for compliance

Low Cost

Effective:2026-01-01

Enforcing Agencies

Local Taxing Units • County Tax Assessor-Collectors

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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Legislative Timeline

This bill's path through the Texas Legislature

TopicsTaxation Taxation--property-assessment & Collection

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 2742

By: Vasut

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Under state law, the governing body of a taxing unit that collects its own taxes may allow a person who pays one-half of the unit's taxes before December 1 to pay the remaining one-half of the taxes before July 1 without incurring penalty and interest. The bill author has informed the committee that sometimes there are delays that affect when property tax bills are mailed, which may result in a small, or even nonexistent, time frame between a property owner receiving the tax bill and the December 1 deadline to pay the first half of that bill. H.B. 2742 seeks to provide applicable property owners additional time to pay tax bills that were mailed after November 30.

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. 2742 amends the Tax Code to require a person, with respect to a taxing unit that has adopted the split-payment option for the payment of property taxes and mails its tax bills after November 30, to pay the first one-half of the taxing unit's taxes before the first day of the next month following the first full calendar month following the date the tax bills are mailed. The bill reflects that payment deadline in the provision establishing that paying through a split-payment method by the applicable deadline complies with the requirement to pay under protest taxes on property subject to appeal by judicial review before the delinquency date to avoid forfeiting the right to proceed to a final determination of the appeal.

H.B. 2742 applies only to property taxes imposed for a property tax year that begins on or after the bill's effective date.

EFFECTIVE DATE

January 1, 2026.

House Authors

Rep. Cody VasutRepublican · Primary Author

Coauthors (3)

Senate Sponsor

Sen. Angela PaxtonRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 2742

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the split-payment of ad valorem taxes.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 31.03, Tax Code, is amended by amending
	Subsection (a) and adding Subsection (a-1) to read as follows:
	(a) The governing body of a taxing unit that collects its
	own taxes may provide, in the manner required by law for official
	action by the body, that a person who pays one-half of the taxing
	unit's taxes before December 1 or, if applicable, the date provided
	by Subsection (a-1) may pay the remaining one-half of the taxes
	without penalty or interest before July 1 of the following year.
	(a-1) If a taxing unit that has adopted the split-payment
	option provided by Subsection (a) mails its tax bills after
	November 30, the first one-half of the taxing unit's taxes must be
	paid before the first day of the next month following the first full
	calendar month following the date the tax bills are mailed.
	SECTION 2. Section 31.04(c), Tax Code, is amended to read as
	follows:
	(c) A [~~payment option provided by Section 31.03 of this code~~
	~~or a~~] discount adopted under Section 31.05(b) [~~of this code~~] does
	not apply to taxes that are calculated too late for it to be
	available.
	SECTION 3. Section 42.08(c), Tax Code, is amended to read as
	follows:
	(c) A property owner that pays an amount of taxes greater
	than that required by Subsection (b) does not forfeit the property
	owner's right to a final determination of the appeal by making the
	payment. The property owner may pay an additional amount of taxes
	at any time. If the property owner files a timely appeal under this
	chapter, taxes paid on the property are considered paid under
	protest, even if paid before the appeal is filed. If the taxes are
	subject to the split-payment option provided by Section 31.03, the
	property owner may comply with Subsection (b) of this section by
	paying one-half of the amount otherwise required to be paid under
	that subsection before December 1 or, if applicable, the date
	provided by Section 31.03(a-1) and paying the remaining one-half of
	that amount before July 1 of the following year.
	SECTION 4. The changes in law made by this Act apply only to
	ad valorem taxes imposed for 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 30, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB2742 by Vasut (Relating to the split-payment of ad valorem taxes.), As Introduced

No fiscal implication to the State is anticipated.

The bill would allow a person whose taxing unit has adopted the split-payment option and mails its tax bill after November 30, to pay the first one-half of the taxing unit's taxes before the first day of the next month following the first full calendar month following the date the tax bills are mailed.

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

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Frequently Asked Questions

Common questions about HB2742

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.

Who authored HB2742?

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

When was HB2742 signed into law?

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

Which agencies enforce HB2742?

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

How urgent is compliance with HB2742?

The compliance urgency for HB2742 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

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.

What topics does HB2742 address?

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

Legislative data provided by LegiScanLast updated: November 25, 2025

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