Updated March 2026

Texas Property Tax Updates

This quarter, Texas saw a fresh round of legislative changes and court rulings shaping property tax law. Following the 2025 legislative session, meaningful reforms began on January 1, and simultaneously notable appellate decisions were released, both of which will impact property owners, businesses, and appraisal districts statewide. From exemption eligibility to valuation procedures, the Texas property tax landscape is shifting. Below are the top developments from the 2025 Legislative Session and the latest court opinions from early 2026.

1.   Business Personal Property Exemption Increase and Reporting Relief

This year’s legislative updates are all about making life easier for Texas businesses. Lawmakers have rolled out major changes to business personal property taxes: exemptions are bigger and reporting is simpler. House Bill 9 increases the business personal property exemption from $2,500 to $125,000 through its amendment of Section 11.145 of the Texas Property Tax code. And it relieves some small business owners from filing yearly rendition statements reporting the value of their personal property though its amendment of Section 22.01. This is a meaningful change.

In Texas, each year property owners are required to file yearly renditions reporting all personal property they use in the production of income. Now, under amended Section 22.01 an owner is only required to file yearly renditions if “in the person’s opinion . . . the aggregate market value of the property” is greater than $125,000. Tex. Tax Code § 22.01(j-1). If it is less, then the owner only is required to file one rendition statement that “includes a certification that the person reasonably believes that the value of the property” is not more than $125,000. Tex. Tax Code § 22.01(j-3). And importantly, once that certification is filed, no additional statement (or yearly report) is required until ownership changes, the chief appraiser requires it, or the owner subsequently acquires property that causes their aggregate property to be valued more than $125,000. Id. This is a huge administrative relief for small business owners.

Of course, these new rules aren’t without their quirks: there are still questions about how the expanded exemption applies. Specifically, the statute increases the exemption amount to $125,000. But what does that mean in the context of this statute? The statute states that the $125,000 applies “to each separate location in a taxing unit in which a person holds or uses tangible personal property for the production of income.” Tex. Tax § 11.145(c). And then goes on to state, “all property that has taxable situs in each separate location in the taxing unit is aggregated to determine taxable value.” Id. This raises an unresolved interpretive question that should be noted — does each separate business location receive its own $125,000 exemption; or is the exemption applied once per taxing unit?

For example, if a business owns and holds personal property at two separate addresses located within the taxing unit of Dallas Independent School District, does the business receive a $250,000 exemption — two $125,000 exemptions (one at each address) — or does the business receive one $125,000 exemption covering both addresses? Guidance on this topic has not been uniform between Texas Appraisal Districts, and further clarification may be necessary through litigation, but time will tell. Either way, this is a big, meaningful development in Texas.

2.   Business Personal Property Deadlines, Penalties, and Procedural Reforms

In addition to expanding exemptions and reducing reporting requirements, the Legislature also took aim at one of the most common—and costly—problems facing Texas businesses: harsh penalties tied to missed deadlines for personal property exemptions. For many taxpayers, particularly those with mobile or high‑value assets, the prior penalty structure could produce results that felt wildly out of proportion to a business’s actual tax liability.

Under prior law, if a business missed the deadline to apply for a Freeport or interstate allocation exemption, the penalty was calculated as 10 percent of the difference between the tax owed with the exemption and the tax owed without it. While this may sound reasonable at first glance, in practice it often led to extreme outcomes.

For example, consider an aircraft valued at $50 million. After applying the interstate allocation formula, only $250,000 of that value might be taxable in Texas. At a 2 percent tax rate, the correct tax bill with the allocation would be just $5,000. Without the allocation, however, the tax would be $1,000,000. Under the old penalty structure, the “difference” between those two numbers was $995,000, and a late‑filing penalty of 10 percent meant a penalty of $99,500—almost twenty times the amount of tax actually owed.

The Legislature corrected this disconnect through Senate Bill 1352. Under the new law, the penalty for filing a Freeport or interstate allocation exemption late is capped at 10 percent of the tax owed after the exemption is applied, not 10 percent of the tax savings. Using the same example, the penalty would now be $500, bringing the total tax bill to $5,500 instead of $104,500. This change dramatically reduces risk for businesses and ensures penalties remain tied to the actual tax liability, not a hypothetical one.

Senate Bill 1352 also simplified the filing process by aligning deadlines that previously required separate tracking. When a business requests—and receives—the standard extension to file its business personal property rendition until May 15, the deadlines for the Freeport exemption and interstate allocation application are now automatically extended to May 15 as well. Under prior law, businesses often assumed those deadlines moved together, only to learn too late that a separate extension request was required. This automatic alignment removes a common compliance trap and makes the process far more predictable.

Together, these changes substantially reduce the financial and administrative risk associated with filing business personal property exemptions. While businesses still need to be mindful of deadlines, the consequences of an honest mistake are no longer disproportionate, and the overall process is more forgiving and easier to manage.

 3.   Timely Payment and Jurisdiction in Tax Appeals

Two recent Houston‑area appellate decisions squarely address a real‑world problem in property tax appeals: what happens when a taxpayer timely puts a tax payment in the mail, but the envelope is postmarked after the February 1 delinquency date. In both cases—Harris Central Appraisal District v. LXMI Copper Cove Property Owner, LLC and Harris Central Appraisal District v. LXMI Ashford Pointe Property Owner, LLC—the appraisal district argued that the postmark date was controlling and established that the payments were untimely, depriving the trial court of jurisdiction over the appeal.

The underlying facts in the two cases were very similar. In each, the taxpayer hired a third‑party tax agent to handle payment. The agent submitted an affidavit swearing that the required tax payments were physically delivered to the post office and deposited in the mail on January 31, before the statutory delinquency date. In both cases, however, the tax office allegedly received the payments later. In the Ashford Pointe case, the envelope itself was postmarked February 1, while in Copper Cove the payment was not received until February 17. Both payments followed a period of severe winter weather affecting mail operations.

Harris Central Appraisal District (HCAD) took the position that the postmark date was dispositive—and that a postmark on or after February 1 automatically meant the payment was untimely. The courts rejected that argument. Instead, they focused on what the Tax Code actually requires: a taxpayer can establish timely payment by showing the payment was properly addressed, postage prepaid, and deposited in the mail before the deadline, even if the postmark reflects a later date.

In both cases, the courts held that the taxpayers met that burden. The affidavits from the tax agent, together with supporting documents such as check copies, payment records, and evidence of mail service delays, were sufficient to raise a fact issue that the payments were mailed on January 31.

Just as significant was a procedural lesson embedded in both decisions. HCAD attempted on appeal to challenge the affidavits and supporting evidence by arguing hearsay and lack of personal knowledge. The courts made clear that those objections are considered defects of form, not substance—and because HCAD did not timely object to the evidence in the trial court or obtain rulings on those objections, the arguments were waived. With controverting evidence of timely mailing in the record, dismissal for lack of jurisdiction was improper due to an unresolved fact issue.

The takeaway from these cases is practical and important. A late postmark is not automatically fatal to a property tax appeal. Taxpayers can carry their burden by proving that payment was actually deposited in the mail before February 1, even if the postmark shows otherwise. At the same time, appraisal districts that believe affidavits or documentary evidence are unreliable must raise those objections promptly in the trial court—waiting until appeal is too late.

 4.   Exemptions, Corrections, and Administrative Exhaustion

Two appellate decisions from the Corpus Christi court this quarter serve as an important reminder that how a taxpayer raises an issue can be just as important as what issue is raised. Both cases reinforce long‑standing principles in Texas property tax law: exemption claims must follow the proper administrative path, and courts will enforce those procedural requirements even where the underlying tax issue may be substantial.

In Molina v. QET Aircraft Services, LLC, the dispute centered on whether aircraft owned by the taxpayer were exempt from taxation. Rather than protesting the denial of the exemption through the traditional administrative process under Chapter 41 of the Tax Code, the taxpayer attempted to challenge the assessment through a motion to correct the appraisal roll under Tax Code § 25.25(c)(3). That provision allows limited corrections for clerical errors or property listed in the wrong form or location, but it is not a substitute for an exemption protest.

The court made clear that exemption determinations must be raised through timely Chapter 41 protests and decided by the appraisal review board before a court can review them. Because the taxpayer did not follow that process, the trial court lacked jurisdiction over most of the claims. The court also rejected an attempt to frame the dispute as an ultra vires action against the chief appraiser, explaining that determining whether property is taxable or exempt involves the exercise of statutory discretion—not conduct outside legal authority. In short, even if a taxpayer believes an exemption clearly applies, failure to exhaust administrative remedies will prevent judicial review.

By contrast, San Patricio County Appraisal District v. Vitol, Inc. addressed a substantive exemption issue that was properly presented. In that case, the appraisal district challenged a ruling holding crude oil inventories exempt from ad valorem taxation because they had entered the “stream of export.” The appellate court reaffirmed that property in the stream of export is constitutionally immune from state taxation under the Import–Export Clause. The appraisal district’s arguments focused largely on procedural and discovery complaints, but the court rejected those arguments as either waived or harmless and affirmed the exemption.

Taken together, these cases illustrate two sides of the same coin. On one hand, courts will strictly enforce procedural rules governing how exemption claims must be raised and preserved. Motions to correct appraisal rolls are narrow tools and cannot be used to sidestep the protest process. On the other hand, where exemption issues are properly presented, courts will not hesitate to enforce well‑established constitutional protections—even in cases involving high‑value inventory.

Kendal L. Carnley
Gray Winston & Hart
American Property Tax Counsel (APTC)

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Updated september 2024

Texas 1st Court of Appeals Provides an Important Reminder — the Filing Deadlines are Unforgiving

In Texas, fall is for football and escalating property tax protests. There are three different forums to escalate a Texas property tax protest that did not fall in your favor: (1) district court; (2) binding arbitration; and (3) State Office of Administrative Hearings. Each of these have unforgivably time sensitive deadlines and is highlighted by a recent case out of Texas’s 1st Court of Appeals.

In Harris Central Appraisal District v. Zheng, the property owner’s protest was denied and he decided to escalate by filing a lawsuit in district court. Section 42.21(a) of the Texas Property Tax Code establishes the time limit for this — 60 days after receiving the notice of the protest denial (known locally in Texas as a “board order”). Here, the property owner received the board order on September 5, 2020, making the lawsuit filing deadline November 4, 2020. But the property owner did not file until November 12, 2020. This is late and the district court dismissed his lawsuit.

To avoid the dismissal, the property owner attempted to argue that the intent of his pleadings must be considered in determining whether he complied with the 60-day deadline. Specifically, he intended to file the lawsuit timely but couldn’t because of extraordinary circumstances (Covid-19 and suffering a flesh wound on his left thumb). The 1st Court rejected this and recognized it as an acknowledgement that the property owner failed to file the lawsuit by the 60-day deadline and upheld the dismissal.

The takeaway from this quarterly blast is do not wait; file early if anything! The deadlines for escalating a protest that does not fall in your favor is unforgiving if missed, even by a day. This is true regardless of extraordinary circumstances, such as a global pandemic or serious injury (as shown by the above case). So, be vigilant in computing, knowing, and tracking deadlines.

To review the Opinion from Harris Cent. Appraisal Dist. v. Zheng, click the following link (or copy and paste): https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=82de247b-32b6-4bac-bc35-d051520e00cc&coa=coa01&DT=Opinion&MediaID=4bc8c61b-83a4-4d5e-abb5-61ac4a60328e.

Lee D. Winston
Michel Gray & Rogers LLP
American Property Tax Counsel (APTC)

Updated december 2023

End-of-Year Property Tax Reminders

The Texas property tax calendar remains active throughout the year, particularly in January. Two crucial dates are January 1st and January 31st. January 1st holds significance as the lien date in Texas, serving as the valuation date when an automatic tax lien is attached to all properties in the state. Property owners challenging the market value of their property reference January 1st as the valuation date. The automatic lien attachment implies that if taxes are unpaid, the government need not establish a lien; instead, it is automatically enforced. This connection leads to another vital deadline, January 31st, which marks the final day for paying property taxes for the previous year. Even if an owner has initiated a lawsuit, they must pay the uncontested tax amount by this date. Failure to do so results in accruing penalties and interest, and if a lawsuit is pending, the court loses jurisdiction. Additionally, January 31st is the deadline for filing a late protest, allowed under specific conditions such as "clerical error," "multiple appraisals," "incorrect ownership," "mismatched property details," or "property valued at 1/3 or more over market value." If a property falls under one of these categories and hasn't undergone the standard tax protest, the late protest will be considered.