On February 21, 2026, the Texas Legislature announced a new proposal for taxation reform in order to address the state's growing budget deficit. The proposal comes at a crucial time as the state is facing mounting financial challenges due to declining revenue streams and increased expenditures.One of the key components of the proposed reform is a restructuring of the state's sales tax system. Under the new plan, the sales tax rate would be increased by 1%, bringing the total rate to 7.5%. This increase is expected to generate an additional $1.5 billion in revenue annually, helping to close the budget gap and fund essential services and programs.In addition to the sales tax increase, the proposed reform also includes measures to streamline the state's tax code and eliminate outdated tax breaks and loopholes. This will ensure that all taxpayers, including corporations and high-income individuals, pay their fair share towards supporting the state's financial needs.Furthermore, the reform seeks to provide relief to low-income and middle-class taxpayers by expanding tax credits and deductions for essential expenses such as childcare, education, and healthcare. This will help to alleviate the burden of the increased sales tax on those who can least afford it.Governor Greg Abbott has expressed his support for the proposed taxation reform, stating that it is necessary to ensure the long-term financial stability of the state. "We must make tough decisions now to address our budget deficit and prevent further financial crisis in the future," he said in a press conference.The Texas Legislature is expected to debate and vote on the proposed taxation reform in the coming weeks. Lawmakers from both parties have indicated a willingness to work together to find a solution that is fair and equitable for all Texans.Overall, the proposed taxation reform represents a significant step towards addressing Texas' budget challenges and ensuring the state's fiscal health in the years to come. It remains to be seen how the reform will be received by the public and whether it will ultimately be implemented into law.