The $125,000 Business Personal Property Tax Exemption: What Texas Small Businesses Need to Do in 2026
Picture this: you’re finally stocked up for a busy season—shelves full, storeroom ready, tools humming—and then you get hit with a property tax bill on the stuff you haven’t even sold yet. That’s been reality for a lot of Texas businesses because Texas property taxes don’t stop at land and buildings—they can also apply to business personal property like inventory, furniture, fixtures, and equipment.¹
For tax year 2026, Texas dramatically expanded the small-business break for this kind of property. If you’ve heard people call it the “inventory tax exemption,” they’re usually talking about this new rule—but it’s bigger than inventory.
Here’s what changed, what it really covers, and exactly what to do so you don’t miss the benefit.
The big 2026 change (and why it matters)
Starting January 1, 2026, Texas law gives businesses an exemption of $125,000 of the appraised value of income‑producing tangible personal property (think: the business stuff used to make money).² ³
This new $125,000 amount exists because:
The Texas Legislature approved a constitutional change authorizing a $125,000 exemption for this type of property,⁴ and
Voters approved that amendment in the November 4, 2025 election (Proposition 9).⁵
Translation: Many small businesses will see their taxable value on qualifying business personal property drop sharply—often to zero.
First: what “business personal property” actually means in Texas
Texas property tax applies broadly to nonexempt property, and it’s local—set and collected by counties, school districts, cities, and special districts (Texas has no state property tax).¹ ⁶
For businesses, the key category here is tangible personal property held or used to produce income, which commonly includes:
Inventory held for sale
Furniture, fixtures, shelving
Computers, POS systems, office equipment
Machinery, tools, equipment
(Often) certain supplies used in the business
Your real estate (land/building) is separate—this exemption is about tangible personal property, not your building.³
How the $125,000 exemption actually works (this is the part that saves money)
It’s not “only if you’re under $125,000.”
HB 9 doesn’t just create a “threshold.” It creates a $125,000 exemption amount from taxation by a taxing unit.³
So:
If your qualifying business personal property at a location is $125,000 or less → the exemption can wipe out the taxable value (for that property).³
If it’s more than $125,000 → you still get the exemption; you’re generally taxed only on the value above $125,000.³
It’s per location (with an important rule)
The exemption applies to each separate location in a taxing unit, and the property at that location is aggregated to determine value for the exemption.³
Example:
You own a boutique with $90,000 of inventory + fixtures at one store location → potentially taxable value becomes $0 for that property after the exemption.³
A second store across town is its own location → it can also get its own $125,000 exemption (again, depending on taxing-unit/location rules).³
A warning for multi-entity setups
If you try to split one operation into multiple entities at the same physical address, HB 9 includes “related business entity / unified business enterprise” rules that can aggregate property values across related entities at the same location.³ ⁷
(Translation: one location generally doesn’t get to multiply the exemption by stacking LLCs.)³ ⁷
Special situations: leased property and property stored somewhere you don’t own/lease
HB 9 includes special rules that can matter a lot for certain business models:
Leased-out property (you own it, someone else leases it): The owner/lessor can receive a $125,000 exemption on the total appraised value of leased tangible personal property in the taxing unit, regardless of where it sits in that unit.³
Property located somewhere you don’t own or lease (e.g., stored at another business): There’s also a $125,000 exemption rule for that scenario.³
These details can be big for equipment lessors, consignors, or businesses using third-party storage/yard/warehouse arrangements.³
What you need to do in 2026 (the practical playbook)
This is where most “boring” articles get it wrong: for this exemption, the key compliance step in 2026 is usually about your rendition / certification—not an “exemption application.”
1) Know your key date: January 1, 2026
Texas business personal property is based on what you own/hold/use as of January 1 of the tax year (2026).² ³
Do a quick “January 1 snapshot” plan:
Inventory count method you can support
Fixed asset list (equipment/furniture)
Any major purchases placed in service late 2025
2) Decide whether you’re “over” or “under” (and be honest)
HB 9 changed when you must file a full rendition. In general terms, if in your opinion your aggregate market value is greater than the exempted amount, you’re required to render.³
3) File by April 15 (or request an extension)
The Texas Comptroller’s property tax deadlines calendar states the last day to file renditions and property reports on most property types is April 15, and the chief appraiser must extend the deadline to May 15 upon written request.⁸
4) Understand the “certification option” if you’re under $125,000
Multiple appraisal districts have published guidance explaining how this is expected to work in 2026:
Dallas CAD states the $125,000 exemption will be applied automatically and no application is required. It also explains that if market value is $125,000 or less, a business may elect not to render—but must file a rendition statement/property report with a certification by April 15 to make that election.⁹
Bexar CAD similarly explains that if a business believes it is under $125,000, it may choose not to render, but it must file a short certification stating it believes its value is under the exemption.¹⁰
Practical takeaway for 2026:
Even if you’re under $125,000, expect to complete the certification portion of the rendition packet your appraisal district provides (or whatever short form they publish), and submit it by the deadline. This creates a clean paper trail and aligns with how CADs are publicly instructing businesses to handle the new rule.⁹ ¹⁰
5) If you are required to render, don’t under‑report your scope
HB 9 adds a crucial rule: if you’re required to render because you’re over the threshold, you generally must render all income‑producing tangible personal property with taxable situs in the appraisal district (not just the one location you think is over).³
6) Don’t treat the form like a vibe-check
HB 9 also requires forms to include a warning that false statements can trigger criminal consequences (Penal Code § 37.10).³
So: estimate carefully, keep records, and if you’re unsure, work with your CPA/accountant.
A quick “how much can I save?” method
Your savings depends on your local combined tax rate, but the simple math is:
Estimated annual savings ≈ (exempted value) × (local tax rate)
If your appraised value is $125,000 or more, the exempted value is typically $125,000.³
If it’s less, the exempted value is your full value.³
Example (simple illustration only):
If your combined local rate is 2.0% and you get the full $125,000 exemption → $125,000 × 0.02 = $2,500 in annual savings.
Common mistakes to avoid in 2026
Calling it “inventory-only.” This exemption is for income-producing tangible personal property, which commonly includes inventory and equipment/furnishings.³
Missing April 15. Rendition/property report deadlines are real, and the Comptroller’s calendar specifically highlights April 15 for most renditions (with extension rules).⁸
Assuming each LLC at the same address gets a fresh $125,000. Related entities at the same location can be aggregated.³ ⁷ ⁹
Forgetting that property taxes are local. You deal with your county appraisal district, but the taxes are imposed by multiple local taxing units.¹ ⁶
Confusing this with Freeport / Goods-in-Transit. Those are different exemptions with their own application requirements and deadlines (and HB 9 was not the only 2026 change affecting BPP paperwork).¹⁰
Bottom line
For 2026, the $125,000 exemption is one of the most meaningful small-business property tax changes Texas has made in decades.³ ⁴ ⁵
Your job is simple—but time-sensitive:
Estimate your qualifying business personal property value as of Jan. 1, 2026.² ³
Watch for your appraisal district’s rendition packet.
File the proper rendition or the under‑$125k certification by April 15 (or request an extension).⁸ ⁹ ¹⁰
Keep records that support the number you reported/certified.³
If you want, I can also turn this into a shorter “blog + checklist + FAQ” format (or a more formal longform pillar post) while keeping the same citations and accuracy.
Sources
TEX. CONST. art. VIII, § 1(g) (as amended by H.J.R. 1, 89th Leg., R.S. (Tex. 2025)).
H.B. 9, 89th Leg., R.S. (Tex. 2025) (eff. Jan. 1, 2026) (codified at TEX. TAX CODE § 11.145; TEX. TAX CODE § 22.01; TEX. TAX CODE § 22.24).
TEX. TAX CODE § 11.145(b)–(g) (eff. Jan. 1, 2026) (exemption amount; per-location aggregation; leased property; related entities).
H.J.R. 1, 89th Leg., R.S. (Tex. 2025) (submitting amendment to voters; setting $125,000 authorization text).
Tex. Sec’y of State, Election Results (Nov. 4, 2025) (Prop. 9 (HJR 1) approved).
Tex. Comptroller of Pub. Accounts, Property Tax Assistance (Texas has no state property tax; local units set rates/collect).
TEX. TAX CODE § 11.145(a), (f)–(g) (eff. Jan. 1, 2026) (related business entity / unified business enterprise; investigation authority).
Tex. Comptroller of Pub. Accounts, Property Tax Law Deadlines (last day to file renditions Apr. 15; extension to May 15 upon written request).
Dallas Cent. Appraisal Dist., HB 9 – Business Personal Property Exemption (automatic exemption; certification election; April 15 filing).
Bexar Cent. Appraisal Dist., What’s New in Business Personal Property (BPP) – HB 9 (2026 changes; certification concept; location-based application).