The 89th regular session of the Texas Legislature has voted to put some proposed constitutional amendments relating to state taxation on the ballot for the election on November 5, 2025. Let’s take a look.
No Death Taxes
HJR 2 would amend the constitution to prohibit the legislature from 1) imposing a tax on the property of a deceased individual because of the death of that individual; 2) imposing any new tax on the transfer of an estate, inheritance, legacy, succession, or gift from an individual, family, estate, or trust to another individual, family, estate, and 3) increasing the rate or expanding the applicability of any existing tax on the transfer of an estate, inheritance, legacy, succession, or gift that was in effect on January 1, 2025.
The amendment wouldn’t prevent the imposition or change in the rate or applicability of:
- a general business tax measured by business activity[1];
- a tax on the production of minerals[2];
- a tax on the issuance of title insurance[3];
- a tax applicable to the transfer of a motor vehicle by gift;[4]
- an ad valorem tax on property;[5] or
- a tax in existence on January 1, 2016.[6]
The legislature repealed the inheritance tax in 2015.[7] Even before repeal, however, the inheritance tax was largely a dead letter, since the tax was imposed based on the availability of a federal tax credit for state inheritance taxes that was eliminated beginning January 1, 2005.[8]
While acknowledging that there are currently no death taxes in Texas, supporters of the proposed amendment argue that it is needed prevent any such taxes from being enacted in the future.[9] They maintain “death taxes can burdensome and could lead to estate-planning and tax-avoidance strategies that are inefficient” and that “[t]he money that a person leaves at their death has already been taxed once, and the government should be limited in the number of times it can tax the same assets.”[10]
Opponents, on the other hand, note that there are no proposals before the legislature to create a death tax, constitutional amendments tie the hands of future legislatures, and, as such, “should be reserved for the most critical matters concerning the state. . . .”[11]
No Capital Gains Taxes
SJR 18 would amend the constitution to prohibit the legislature from imposing “a tax on the realized or unrealized capital gains of an individual, family, estate, or trust, including a tax on the sale or transfer of a capital asset that is payable by the individual, family, estate, or trust selling or transferring the asset.” However, the amendment wouldn’t affect the applicability of property tax or sales tax.
The Texas Constitution already prohibits the imposition of a individual income tax thanks to a constitutional amendment in 2019 and a wealth tax thanks to a constitutional amendment in 2023.[12]
Supporters of the amendment claim that it:
would encourage economic growth and contribute to Texas’ pro-business environment by prohibiting capital gains taxes in the state. While the state Constitution currently prohibits an income tax, it does not explicitly prohibit a tax on capital gains. Capital gains taxes can discourage investment, slow economic growth, and reduce job creation. If Texas were to impose a capital gains tax, many businesses may choose to relocate to a jurisdiction with more favorable tax policies. HJR 6 would provide long-term certainty in tax policy for businesses and investors and would give them confidence that Texas is committed to low taxes and a business-friendly environment.[13]
Opponents of the amendment claim that it is “unnecessary since there is currently no capital gains tax in Texas, and no bills have been filed this session proposing one. The bill also could restrict future legislatures from accessing this source of revenue for the state.”[14]
No Taxes on Certain Registered Securities Market Operators and Securities Transactions
HJR 4 would amend the constitution to prohibit the legislature from enacting a law that imposes an occupation tax on a registered securities market operator or a tax on a securities transaction conducted by a registered securities operator.
Supporters argue that the amendment would:
protect the earnings of Texas investors and boost the Texas economy by amending the state Constitution to prohibit taxes on securities transactions and occupations. As the Texas Stock Exchange is in the process of being established and other national stock exchanges consider moving to the state, it is important to prevent taxes that would have a detrimental effect on the Texas economy. Financial-transaction taxes raise transaction costs, which can lead to decreased trade volume, lower asset prices, less efficient markets, increases in the cost of capital, and increases in the cost of consumer goods. HJR 4 would benefit Texas taxpayers and assure investors that Texas is committed to providing a low-tax, business-friendly environment.[15]
Opponents of the amendment argue that it “would make it harder for future legislatures to make tax policy by including a prohibition on securities transaction taxes in the state constitution. The state may experience an economic downturn and could benefit from having a securities transaction or occupation tax to raise revenues at that time.”[16]
[1] Tex. Tax Code § 171.001 imposes a franchise tax on each taxable entity that does business in the state or that is chartered or organized in the state.
[2] Tex. Tax Code § 201.051 imposes a tax on the production of tax in the state. Tex. Tax Code § 202.051 imposes a tax on the production of oil in the state.
[3] Tex. Ins. Code § 223.003 imposes a tax of 1.35% on all premiums from the business of title insurance.
[4] Tex. Tax Code § 152.025(a) imposes a tax of $10 on the recipient of a gift of a motor vehicle from the person’s spouse, parent or stepparent; grandparent or grandchild; child or stepchild; sibling; or guardian; and certain trusts. This session’s SB 2064 amends this section to eliminate the gift tax with respect to transfers from an estate to a distributee effective September 1, 2025.
[5] See Tex. Tax Code § 11.01.
[6] This list of taxes that would not be affected by the amendment comes in part from a cross-reference to “a tax described by Section 29(b)” of Article 8 of the Texas Constitution. Section 29(b) also includes “a tax in existence on January 1, 2016.” So presumably the amendment would only apply to taxes enacted after January 1, 2016.
[8] See Tex. Tax Code § 211.051(a) (repealed); Economic Growth and Tax Relief Reconciliation Act of 2001, H.R. 1836, 107th Cong. § 532 (2001).
[9] House Research Organization, Bill Analysis of HJR 2.
[10] Id. Since Texas doesn’t have an individual income tax, it’s unclear how such assets were taxed even once, at least at the state level. This argument seems more applicable to the federal estate tax.
[11] Id.
[12] See Tex. Const. art. 8, §§ 24-a, 25.
[13] House Research Organization, Bill Analysis for HJR 6 (companion bill and identical to SJR 18).
[14] Id.
[15] House Research Organization, Bill Analysis for HJR 4.
[16] Id.
