HB4226

Regular Session

Relating to exemptions from the taxes imposed on the sale, use, or rental of a motor vehicle for a vehicle purchased, used, or rented by a nonprofit food bank or a provider of housing and related services.

ModeratePlan for compliance

Low Cost

Effective:2025-06-20

Enforcing Agencies

Texas Comptroller of Public Accounts • County Tax Assessor-Collectors

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: June 20, 2025 (Passed with supermajority; immediate effect overrides standard September 1 date).
Compliance Deadline: June 20, 2025. Transactions occurring on or after this date are exempt; no retroactive refunds for prior purchases.
Agency Rulemaking: The Texas Comptroller must update exemption forms (likely Form 14-317). Expect a "regulatory gray zone" between June 20 and August 2025 where standard forms must be annotated manually with the HB4226 citation.

Immediate Action Plan

1. Halt Procurement: Delay any pending vehicle purchase closings until June 20, 2025, to capture the 6.25% savings.
2. Verify Eligibility: Housing providers must verify they meet the specific "chronic homelessness" criteria in the bill; general affordable housing providers likely do not qualify.
3. Update Vendor Accounts: Submit exemption certificates to rental car agencies immediately to update corporate profiles.
4. Implement Logging: Distribute new mileage log templates to all fleet drivers effective June 20.

Operational Changes Required

Contracts

Vehicle Leases: Renegotiate open lease terms for execution on or after June 20. Ensure capitalized cost calculations exclude the 6.25% tax. Existing leases are generally not affected unless refinanced.
Rental Agreements: Update Master Service Agreements (MSAs) with vendors like Enterprise or Hertz. File tax-exemption certificates with their corporate tax departments immediately to prevent automatic tax charges at the counter.

Hiring/Training

Procurement Staff: Must be trained to flag all vehicle acquisitions as "Tax Exempt" and provide the dealer with proof of eligibility (Section 162.001 or 151.310(a) status).
Drivers/Fleet Managers: Must be trained to maintain specific mileage logs distinguishing "Qualifying Charitable Use" from "General Administrative Use" to satisfy the "primary use" statutory requirement.
Dealership F&I: Finance managers must update Dealership Management Systems (DMS) to accept tax-exempt codes for these specific nonprofit categories.

Reporting & Record-Keeping

Exemption Certificates: Purchasers must execute a Motor Vehicle Exemption Certificate at the time of sale.
Internal Affidavits: Create an internal "Affidavit of Primary Use" for every vehicle file, explicitly stating the vehicle's intended role in food distribution or housing services.
Audit Defense Logs: Maintain a rolling 48-month mileage log. If audited, you must prove >50% of mileage was for the specific exempt purpose, not general errands.

Fees & Costs

Cost Reduction: Direct savings of 6.25% on the purchase price or rental rate of motor vehicles.
Administrative Cost: Minimal increase in administrative overhead for maintaining mileage logs and exemption certificates.

Strategic Ambiguities & Considerations

Definition of "Primary Use": The statute requires the vehicle be used "primarily" for the exempt purpose but does not define a percentage. While Texas generally interprets "primary" as >50%, aggressive auditors may challenge vehicles with significant administrative usage. Guidance: Aim for 80% qualifying usage to ensure audit safety.
"Owned or Controlled" Location: For housing providers, the exemption applies to vehicles used to provide services at a location "owned or controlled" by the provider. It is unclear if transporting a resident to an off-site job interview or third-party medical clinic qualifies. Guidance: Until rulemaking clarifies, assume off-site transport is a "gray area" and document it carefully.

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

TopicsCharitable & Nonprofit Organizations Taxation Taxation--sales Vehicles & Traffic Vehicles & Traffic--general Food

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 4226

By: Morales Shaw

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that since 2022, Texas food banks have spent approximately $827,000 on vehicle sales taxes, money which could have provided an additional 2.84 million nutritious meals. The bill author has further informed the committee that state transportation-related fees are significantly impacting nonprofit food bank budgets, limiting their operational capacity and outreach efforts. H.B. 4226 seeks to address this issue by exempting nonprofit food banks from state vehicle sales taxes for vehicles used specifically for food distribution, including refrigerated trucks, meal delivery vans, and mobile pantries.

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. 4226 amends the Tax Code to exempt the sale, use, or rental of a motor vehicle that is purchased by a nonprofit food bank, defined by reference to statutory provisions governing motor fuel taxes, and used primarily by the nonprofit food bank for the food bank's purposes from taxes on the sale, use, or rental of a motor vehicle.

H.B. 4226 applies only to a sale, use, or rental of a motor vehicle that occurs on or after the bill's effective date.

EFFECTIVE DATE

September 1, 2025.

Senate Sponsors

Sen. Donna CampbellRepublican · Primary Sponsor

Cosponsors (5)

Bill Text(with markup)

H.B. No. 4226

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to exemptions from the taxes imposed on the sale, use, or
	rental of a motor vehicle for a vehicle purchased, used, or rented
	by a nonprofit food bank or a provider of housing and related
	services.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subchapter E, Chapter 152, Tax Code, is amended
	by adding Sections 152.094 and 152.095 to read as follows:
	Sec. 152.094. MOTOR VEHICLES USED BY NONPROFIT FOOD BANK.
	The taxes imposed by this chapter do not apply to the sale, use, or
	rental of a motor vehicle that is:
	(1) purchased, used, or rented by a nonprofit food
	bank, as defined by Section 162.001; and
	(2) used primarily by the nonprofit food bank for the
	food bank's purposes.
	Sec. 152.095. MOTOR VEHICLES USED BY PROVIDER OF HOUSING
	AND RELATED SERVICES. (a) The taxes imposed by this chapter do not
	apply to the sale, use, or rental of a motor vehicle that is:
	(1) purchased, used, or rented by a provider of
	housing and related services; and
	(2) used primarily to provide housing for individuals
	at a location owned or controlled by the provider.
	(b) In this section, "provider of housing and related
	services" means an entity that:
	(1) is described by Section 151.310(a); and
	(2) provides housing and related services to
	individuals who:
	(A) are experiencing homelessness and have a
	disabling condition; and
	(B) have continuously experienced homelessness
	for at least one year or had at least four episodes of homelessness
	in the preceding three years.
	SECTION 2. This Act applies only to a sale, use, or rental
	of a motor vehicle that occurs on or after the effective date of
	this Act.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 13, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB4226 by Morales Shaw (Relating to an exemption from the taxes imposed on the sale, use, or rental of a motor vehicle for a vehicle purchased, used, or rented by a nonprofit food bank.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB4226, As Introduced: a negative impact of ($571,000) through the biennium ending August 31, 2027.

Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($4,000) for the 2026-27 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.

General Revenue-Related Funds, Five- Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	($284,000)
2027	($287,000)
2028	($291,000)
2029	($294,000)
2030	($297,000)

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue (Loss) from General Revenue Fund 1	Probable Revenue (Loss) from Property Tax Relief Fund 304
2026	($284,000)	($2,000)
2027	($287,000)	($2,000)
2028	($291,000)	($2,000)
2029	($294,000)	($2,000)
2030	($297,000)	($2,000)

Fiscal Analysis

The bill would exempt vehicles purchased, used, or rented by a nonprofit food bank, as defined in statute, from the taxes imposed by this chapter.

The bill would require the exempted vehicles to be used primarily for the food bank's purposes.

The bill would take effect September 1, 2025.

Methodology

Annual estimates of state motor vehicle sales and use taxes and motor vehicle rental taxes were derived from data for a statewide network of food banks obtained from the Houston Food Bank regarding the (1) number of vehicles purchased, leased, and rented; (2) motor vehicle sales and use taxes paid; and (3) motor vehicle rental taxes paid by the 20 food banks across Texas that are affiliated with the organization Feed Texas. These annual estimates were forecast for fiscal 2026 to 2030 using the annual population change in Texas from the 2026-27 Biennial Revenue Estimateeconomic forecast.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, KK, SD

Related Legislation

Explore more bills from this author and on related topics

Frequently Asked Questions

Common questions about HB4226

What does Texas HB4226 do?

HB4226 eliminates the 6. 25% Motor Vehicle Sales, Use, and Rental Tax for qualifying nonprofit food banks and specialized providers of housing for the homeless. This creates immediate procurement savings for these entities but imposes a strict "primary use" verification requirement that, if undocumented, creates significant audit liability for the purchaser.

Who authored HB4226?

HB4226 was authored by Texas Representative Penny Morales Shaw during the Regular Session.

When was HB4226 signed into law?

HB4226 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB4226?

HB4226 is enforced by Texas Comptroller of Public Accounts and County Tax Assessor-Collectors.

How urgent is compliance with HB4226?

The compliance urgency for HB4226 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB4226?

The cost impact of HB4226 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB4226 address?

HB4226 addresses topics including charitable & nonprofit organizations, taxation, taxation--sales, vehicles & traffic and vehicles & traffic--general.

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.