Bill Text: TX HB3424 | 2025-2026 | 89th Legislature | Enrolled

---

Bill Title: Relating to the ad valorem taxation of certain dealer's heavy equipment inventory.

Sponsorship: Partisan Bill (Republican 2)

Status: (Passed) 2025-06-20 - Effective on 1/1/26 [HB3424 Detail]

Download: Texas-2025-HB3424-Enrolled.html

---

H.B. No. 3424

AN ACT
relating to the ad valorem taxation of certain dealer's heavy
equipment inventory.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 23.1242, Tax Code, is amended by
amending Subsections (b), (e), (f), (g), and (k) and adding
Subsections (b-1) and (f-1) to read as follows:
(b) Except for an item of heavy equipment sold to a dealer,
an item of heavy equipment included in a fleet transaction, an item
of heavy equipment that is the subject of a subsequent sale, or an
item of heavy equipment that is subject to a lease or rental, an
owner or a person who has agreed by contract to pay the owner's
current year property taxes levied against the owner's heavy
equipment inventory shall assign a unit property tax to each item of
heavy equipment sold from a dealer's heavy equipment inventory. In
the case of a lease or rental, the owner shall assign a unit
property tax to each item of heavy equipment leased or rented. The
unit property tax of each item of heavy equipment is determined by
multiplying the sales price of the item or the monthly lease or
rental payment received for the item, as applicable, by the unit
property tax factor. If the transaction is a lease or rental, the
owner shall collect the unit property tax from the lessee or renter
at the time the lessee or renter submits payment for the lease or
rental. The owner of the equipment shall state the amount of the
unit property tax assigned as a separate line item on an invoice.
On or before the 20th day of the month following each calendar
quarter [month] the owner shall, together with the statement filed
by the owner as required by this section, deposit with the collector
an amount equal to the total of unit property tax assigned to all
items of heavy equipment sold, leased, or rented from the dealer's
heavy equipment inventory in the preceding calendar quarter [month]
to which a unit property tax was assigned. The money shall be
deposited by the collector to the credit of the owner's escrow
account for prepayment of property taxes as provided by this
section. An escrow account required by this section is used to pay
property taxes levied against the dealer's heavy equipment
inventory, and the owner shall fund the escrow account as provided
by this subsection.
(b-1) Not later than December 15 of each year, the collector
shall provide written notice to each owner for whom the collector
maintains an escrow account under Subsection (c) of the unit
property tax factor for the following tax year for each location in
which the owner's heavy equipment inventory is located.
(e) The comptroller by rule shall adopt a dealer's heavy
equipment inventory tax statement form. Each calendar quarter
[month], a dealer shall complete the form regardless of whether an
item of heavy equipment is sold, leased, or rented. A dealer may
use no other form for that purpose. The statement may include the
information the comptroller considers appropriate but shall
include at least the following:
(1) a description of each item of heavy equipment
sold, leased, or rented including any unique identification or
serial number affixed to the item by the manufacturer;
(2) the aggregate amount received by the dealer
attributable to the sales price of or lease or rental payments
[payment] received for the items [item] of heavy equipment
described by Subdivision (1) [, as applicable]; and
(3) the total amount of unit property tax assigned by
the dealer to the items [of the item] of heavy equipment described
by Subdivision (1) [, if any; and
[(4) the reason no unit property tax is assigned if no
unit property tax is assigned].
(f) On or before the 20th day of the month following each
calendar quarter [month], a dealer shall file with the collector
the statement completed by the dealer covering the sale, lease, or
rental of each item of heavy equipment sold, leased, or rented by
the dealer in the preceding calendar quarter [month]. On or before
the 20th day of the [a] month following a calendar quarter [month]
in which a dealer does not sell, lease, or rent an item of heavy
equipment, the dealer must file the statement with the collector
and indicate that no sales, leases, or rentals were made in the
preceding calendar quarter [prior month].
(f-1) A dealer shall [file a copy of the statement with the
chief appraiser and] retain complete and accurate records
documenting [documentation relating to] the disposition of each
item of heavy equipment sold, leased, or rented by the dealer for at
least four years from the date of disposition of the item [and the
lease or rental of each item of heavy equipment]. A chief appraiser
or collector may examine records [documents] held by a dealer as
required [provided] by this subsection in the same manner, and
subject to the same conditions, as provided by Section 23.1241(g).
(g) Except as provided by this subsection, Subsection (f)
applies to any dealer, regardless of whether a dealer owes heavy
equipment inventory tax for the current year. A dealer who owes no
heavy equipment inventory tax for the current year because the
dealer was not in business on January 1:
(1) shall file the statement required by this section
showing the information required by this section for each calendar
quarter [month] that the dealer is in business; and
(2) may not assign a unit property tax to an item of
heavy equipment sold by the dealer or remit money with the statement
except in compliance with the terms of a contract as provided by
Subsection (k).
(k) A person who acquires the business or assets of an owner
may, by contract, agree to pay the current year heavy equipment
inventory taxes owed by the owner. The person who acquires the
business or assets of the owner may use the same unit property tax
factor that the owner who owes the current year tax would use when
paying the current year tax. The owner who owes the current year
tax and the person who acquires the business or assets of the owner
shall jointly notify the chief appraiser and the collector of the
terms of the agreement and of the fact that the other person has
agreed to pay the current year heavy equipment inventory taxes owed
by the dealer. The chief appraiser and the collector shall adjust
their records accordingly. Notwithstanding Section 23.1241, a
person who agrees to pay current year heavy equipment inventory
taxes as provided by this subsection is not required to file a
declaration until the year following the acquisition. This
subsection does not relieve the selling owner of the tax liability.
SECTION 2. This Act applies only to ad valorem taxes imposed
for an ad valorem tax year that begins on or after the effective
date of this Act.
SECTION 3. This Act takes effect January 1, 2026.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3424 was passed by the House on May
15, 2025, by the following vote: Yeas 141, Nays 1, 2 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3424 was passed by the Senate on May
23, 2025, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor