More Taxation news More news in Texas Find Taxation lawyers in Texas
On March 15, 2026, the Texas Legislature successfully passed a bill aimed at restructuring the state's tax system. The bill, known as the Texas Tax Reform Act of 2026, focuses on increasing the sales tax rate while simultaneously cutting property taxes for homeowners.Under the new legislation, the sales tax rate in Texas will be raised from 6.25% to 7.5%. This change is expected to generate an additional $3 billion in revenue annually for the state. Proponents of the bill argue that increasing the sales tax will help distribute the tax burden more evenly among residents and provide much-needed funding for essential services such as education and infrastructure.In order to offset the impact of the sales tax increase on lower-income residents, the bill includes provisions for expanding the state's Earned Income Tax Credit (EITC) program. This will effectively provide tax relief for working families who may be disproportionately affected by the higher sales tax rate.In addition to raising the sales tax, the Texas Tax Reform Act of 2026 also includes a reduction in property taxes for homeowners. The bill proposes a 10% cut in property tax rates, which is expected to provide relief for homeowners facing skyrocketing property values and tax bills.Governor Sarah Johnson hailed the passage of the bill as a significant step towards creating a fairer and more sustainable tax system in Texas. In a statement released after the bill's approval, Governor Johnson stated, "This legislation strikes the right balance between raising revenue for critical state services and providing relief for hardworking Texans. By increasing the sales tax and cutting property taxes, we are ensuring that everyone pays their fair share while also easing the burden on homeowners."Opponents of the bill have criticized the increase in the sales tax rate, arguing that it will disproportionately impact lower-income residents who spend a larger percentage of their income on goods and services subject to sales tax. Some lawmakers have also expressed concerns about the potential economic impact of the tax changes, particularly in industries that rely heavily on consumer spending.Overall, the passage of the Texas Tax Reform Act of 2026 represents a significant overhaul of the state's tax system. The bill's implementation is expected to begin in the coming months, with state agencies and taxpayers alike preparing for the changes ahead.