Texas House bill by Rep. Meyer modifies tax code provisions affecting tax-exempt entities

Passed bill authored by State Rep. Morgan Meyer aims to adjust tax code provisions to exclude certain costs by tax-exempt entities and public institutions of higher education from depreciation and tax-exempt use rules, according to the Texas Legislature website.

In the House, 55 Democrats and 58 Republicans voted in favor of the bill, while 24 Republicans opposed it.

Meanwhile, in the Senate, 11 Democrats and 14 Republicans voted in favor, while six Republicans voted against it.

Morgan Meyer introduced the bill in the Texas House on Friday, March 7, during the 89th regular legislative session.

Meyer graduated from Southern Methodist University with a BA and again from Washington and Lee University School of Law with a JD.

Meyer, a Republican, was elected to the Texas State House in 2015 to represent the state’s 108th House district, replacing previous state representative Dan Branch.

According to the Texas Legislature, the bill’s official text was summarized as follows: ‘Relating to certain expenditures by public institutions of higher education and university systems that are eligible for certain tax credits’.

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill modifies Section 172.102(b) of the Tax Code to stipulate that the depreciation and tax-exempt use provisions of Section 47(c)(2) of the Internal Revenue Code do not apply to certain costs and expenses incurred by tax-exempt entities or public institutions of higher education. Such costs and expenses will remain eligible if they meet other criteria of Section 47(c)(2). Effective Jan. 1, 2035, the amended provision will exclude only tax-exempt entities from these provisions. The bill takes effect Jan. 1, 2026, impacting costs and expenses incurred on or after that date and altering the criteria again on Jan. 1, 2035.

The bill was co-authored by Rep. Giovanni Capriglione (Republican – District 98), Rep. Trey Martinez Fischer (Democrat – District 116), and Rep. Penny Morales Shaw (Democrat – District 148), along with four other authors.

The bill received its final legislative approval on Sunday, May 25, and was signed into law by Gov. Greg Abbott on Friday, June 20.

Bills in Texas go through a multi-step legislative process, including committee review, debates, and votes in both chambers before reaching a final decision. Each session, there are typically thousands of bills introduced, but only a portion successfully navigate the process to become law.

You can read more about the bills and other measures here.