TPTRP Texas Living Exemption Set Act | Will Campbell

TPTRP TEXAS LIVING EXEMPTION SET ACT

House Bill · Texas Living Exemption Set

Establishes 13 categories of essential living expenses exempt from the sales and use tax, including one primary vehicle, bought or leased, for each licensed Texas driver.

Pre-Filing Draft October 2026 Will Campbell, Republican Candidate, Texas House of Representatives, House District 109 90th Legislature, Regular Session, 2027

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By: ______________________

H.B. No. ______

A BILL TO BE ENTITLED

AN ACT relating to the designation of essential household living expenditures as exempt transactions under the sales and use tax imposed under the TPTRP Sales and Use Tax Act; providing a mechanism for the Comptroller of Public Accounts to administer and enforce those exemptions; establishing citizen enforcement standing for wrongful exemption claims and wrongful tax collection.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. FINDINGS AND PURPOSE.

(a) The Legislature finds that:

(1) the Texas Constitution authorizes the Legislature to designate as exempt from the sales and use tax imposed under the TPTRP Sales and Use Tax Act only those categories of transactions that directly and primarily affect the cost of living of individual Texas citizens and their immediate families;

(2) the categories designated in this Act represent the Legislature's determination, at the time of enactment, of the essential household expenditure categories that meet the constitutional Cost of Living Standard, and the Legislature retains full authority to add or remove categories by statute at any time, subject to that Standard;

(3) these exemptions must apply uniformly to all individual Texas citizens and their families without distinction as to income, wealth, or other personal characteristics; and

(4) clear, constitutionally grounded, and citizen-enforceable definitions are necessary to prevent the corruption and special-interest exemption pipeline that has characterized prior Texas sales tax law, and citizens have standing under this Act to challenge in court any exemption added by the Legislature that does not meet the constitutional Cost of Living Standard.

(b) The purpose of this Act is to establish the Texas Living Exemption Set — the statutory designation of the transaction categories that the Legislature votes to exempt from the TPTRP sales and use tax that meet the constitutional Cost of Living Standard.

SECTION 2. DEFINITIONS.

In this Act:

(1) "Comptroller" means the Comptroller of Public Accounts of the State of Texas.

(2) "Cost of Living Standard" means the constitutional standard for exemption of essential household living transactions established by Article VIII, Section 1-r(a), of the Texas Constitution, which provides:

"The Legislature may exempt from the sales and use tax imposed under this article only those transaction classes that directly and primarily affect the cost of living of individual Texas citizens and their immediate families. No exemption may be granted for any transaction the primary purpose or primary economic effect of which is commercial, business-to-business, income-producing, or profit-oriented, nor for any transaction class defined by the industry, profession, or commercial activity of the parties. Every exemption must apply uniformly to all Texas citizens and their families without distinction as to race, color, creed, religion, national origin, sex, income, or wealth. An exemption that fails this Standard is void."

A category of transaction qualifies for exemption under this Act only if it satisfies the Cost of Living Standard as further elaborated in Article VIII, Section 1-r, Subsections (b) through (h), of the Texas Constitution.

(3) "TLES" means the Texas Living Exemption Set established by this Act, as may be amended from time to time by the Legislature.

(4) "TPTRP tax" means the sales and use tax imposed under the TPTRP Sales and Use Tax Act and the constitutional amendment implementing the Texas Property Tax Replacement Plan.

(5) "Primary residence" means the property that the taxpayer and, if applicable, the taxpayer's immediate family actually occupy as their principal place of residence, determined at the time of a qualifying transaction by the taxpayer's intent and subsequent conduct.

(6) "Immediate family" means the taxpayer's spouse, children, stepchildren, and any other person for whom the taxpayer is the legal guardian or primary financial provider.

(7) "Personal policyholder" means a natural person who holds an insurance policy primarily for the protection of the person's immediate family, as distinguished from a business entity that holds insurance for commercial purposes.

(8) "Sales tax permit" means the permit issued under Section 151A.611, Tax Code, which serves as the mechanism for TLES certification.

(9) "Qualifying occupancy period" means the period of not less than six continuous years during which a natural person and, if applicable, the person's immediate family actually occupied a property as their primary residence prior to a subsequent purchase of a new primary residence.

(10) "Personal-use motor vehicle" means:

(A) a passenger car, as defined by Section 541.201, Transportation Code;

(B) a pickup truck, van, or sport utility vehicle that has a manufacturer's gross vehicle weight rating of 10,000 pounds or less; or

that is not registered under an apportioned, commercial, farm, or for-hire registration under Chapter 502, Transportation Code.

(11) "Primary personal vehicle" means the one personal-use motor vehicle, purchased or leased, that a natural person has designated under TLES-13 of Section 4 and Section 6B of this Act as the vehicle the person uses primarily for the person's own personal, household, or family transportation.

(12) "Motor vehicle seller" means a person engaged in the business of selling motor vehicles, including a dealer licensed under Chapter 2301, Occupations Code, a person who sells motor vehicles remotely for delivery in this state, and a lessor that leases personal-use motor vehicles in the course of business.

(13) "Personal lease" means an agreement, other than a rental, by the owner of a personal-use motor vehicle to give a natural person exclusive use of the vehicle for longer than 180 days for consideration. An agreement to give exclusive use of a motor vehicle for 180 days or less is a rental and is not a personal lease.

SECTION 3. GENERAL RULE.

(a) The categories of transactions constituting the Texas Living Exemption Set are exempt from the TPTRP tax when the transaction is made by or on behalf of an individual Texas citizen or family for personal, household, or family use.

(b) Except as provided by TLES-3(e) of Section 4, a transaction that would otherwise qualify under a TLES category does not qualify if the primary purpose or primary economic effect of the transaction is commercial, business-to-business, income-producing, or profit-oriented.

(c) Each TLES category must be administered uniformly. No exemption within the TLES applies to fewer than all individual Texas citizens and their families.

SECTION 4. THE TEXAS LIVING EXEMPTION SET.

The following categories are the Texas Living Exemption Set as enacted by this Legislature. The Legislature may by statute add or remove categories subject to the constitutional Cost of Living Standard and Section 7 of this Act:

TLES-1: GROCERIES (FOOD AT HOME)

(a) Exempt: Purchases of food and nonalcoholic beverages for home consumption, regardless of the seller, including:

(1) food and food ingredients sold for preparation and consumption at home;

(2) carbonated and noncarbonated soft drinks, juices, milk and milk-based drinks, and other nonalcoholic beverages;

(3) candy and confectionery; and

(4) drinking water sold in bottles, jugs, or other containers or dispensed for home consumption.

(b) Not exempt: Meals and prepared food sold by a restaurant, food service, or other seller for immediate consumption, whether eaten on the premises or taken out; alcoholic beverages; ice; tobacco products; and drugs, medicines, vitamins, and dietary supplements, which are governed by TLES-4 if dispensed by prescription.

TLES-2: RESIDENTIAL RENT

(a) Exempt: Monthly rent payments made by Texas tenants for a primary residential dwelling, including apartments, houses, duplexes, and mobile homes.

(b) Not exempt: Short-term rentals, vacation rentals, commercial leases, and residential rentals of property that is not the tenant's primary residence.

TLES-3: RESIDENTIAL UTILITIES AND HOME FUEL

(a) Exempt: Payments for electricity, natural gas, water, wastewater, solid-waste and recycling collection, and similar utility services provided to any residential property, including an apartment, condominium, townhome, single-family dwelling, multifamily dwelling, or manufactured home, whether the service is billed to the occupant or to the owner of the property, and whether the owner is a natural person or an entity.

(b) Not exempt: Utility service to commercial, industrial, or agricultural property; non-residential solid-waste or recycling contracts; and fuel purchased for use in a motor vehicle, for a farm, ranch, or business, or at a property that is not the purchaser's primary residence. Motor fuel for a personal vehicle is governed by TLES-7.

(c) Water delivered to a residence through a public or private water system is a residential utility under this category. Drinking water purchased at retail for home consumption is a grocery item under TLES-1.

(d) Exempt — home fuel: Any fuel, including heating oil, propane and other liquefied petroleum gas, kerosene, and firewood, purchased for use at a residential property that is the purchaser's primary residence, regardless of its use in the residence. A seller may rely on the delivery address and the purchaser's written attestation that the address is the purchaser's primary residence.

(e) Residential utility service as household use: Utility service under Subsection (a) is a transaction for the personal and family use of the household that occupies or will occupy the residential property, and its primary economic effect is the cost of living of that household, regardless of who is billed or whether the owner holds the property for income. Notwithstanding Sections 3(b) and 5A(a) of this Act, the exemption under Subsection (a) applies to an owner who purchases the service for a residential property, including a vacant unit offered for residential occupancy. The purchase of residential property for rental or investment remains taxable as provided by TLES-9(d).

TLES-4: PRESCRIPTION DRUGS

(a) Exempt: All purchases of prescription medications dispensed pursuant to a valid prescription; prescription medical devices; and home infusion therapy services.

(b) Not exempt: Over-the-counter medications that do not require a prescription are non-prescription retail goods and are part of the general taxable base.

TLES-5: MEDICAL CARE

(a) Exempt: All payments for licensed medical and dental services provided directly to individual patients, including physician visits, hospital care, outpatient services, laboratory and imaging, dental care, vision care, mental health services, physical therapy, home health, hospice, palliative care, skilled nursing facility services, and licensed personal-care attendant services. Health and dental insurance premiums paid by individual policyholders or family units are included within this exemption.

(b) Not exempt: Cosmetic procedures without medical necessity, elective spa or wellness services, veterinary services for non-service animals, and group employer premium payments, which are taxable business-to-business transactions.

TLES-6: EDUCATION

(a) Exempt: Education services that result in a credential, certification, course-completion record, or license, when purchased by or on behalf of an individual Texas resident for the person's own education or career development, including private K-12 tuition, college and university tuition, vocational and trade school programs, professional certification programs, licensing exam fees, workforce training resulting in a completion certificate, standardized test preparation programs, and online courses that issue a completion record.

(b) Not exempt: Hobby and recreational classes that produce no credential, license, or completion record. Corporate training purchased by an employer for employees is a business-to-business transaction and is taxable.

(c) Mixed-transaction reporting: Education providers that offer both exempt and non-exempt programs shall identify the exempt and non-exempt portions on their sales tax permit application. Exemption certification at the transaction level is governed by Section 5 of this Act.

TLES-7: MOTOR FUEL — GASOLINE AND DIESEL (CONSUMER PERSONAL USE)

(a) Exempt: Consumer purchases of gasoline and diesel fuel at retail pumps for use in a personal, non-commercial vehicle, including a primary personal vehicle under TLES-13 and any other vehicle used for commuting and personal transportation.

(b) Not exempt: Commercial fleet fuel purchases, agricultural fuel, and aviation fuel.

TLES-8: CHILDCARE AND EARLY CHILDHOOD EDUCATION

(a) Exempt: All payments for licensed childcare facilities, including daycare centers, licensed home-based childcare providers, pre-kindergarten programs, before- and after-school care, and summer care programs operated by licensed childcare providers.

(b) Not exempt: Adult eldercare services and tutoring services beyond the scope of licensed childcare.

TLES-9: PRIMARY RESIDENCE HOME PURCHASE

(a) Exempt: The purchase price of any home that the buyer designates and actually occupies as the buyer's primary residence. This is a primary residence exemption, not a first-home exemption. The exemption applies to:

(1) first-time home purchases;

(2) move-up or lateral purchases where the buyer intends to occupy the new property as a primary residence; and

(3) relocation purchases where a buyer acquires a new primary home in advance of selling or vacating the current primary residence — the new purchase is exempt because it will serve as the buyer's primary residence, without regard to any transitional overlap period.

(b) Property retention — short qualifying occupancy period (fewer than six years): If a buyer has occupied the prior primary residence for fewer than six continuous years at the time of purchasing a new primary residence, the prior property must be actively listed for sale and not retained for rental or investment purposes for the TLES-9 exemption on the new purchase to apply. During any period in which the prior property is listed for sale and a buyer has not yet been found, the owner may rent the prior property on a month-to-month or short-term basis for a period not to exceed two years from the date of the new primary-residence purchase. If the prior property has not been sold within two years and is not actively listed for sale, the TLES-9 exemption on the new purchase is forfeited and the tax becomes immediately due, together with applicable penalties and interest.

(c) Property retention — qualifying occupancy period of six or more years: A buyer who has occupied the prior primary residence as their primary residence for not less than six continuous years prior to purchasing a new primary home may retain the prior property for any lawful purpose, including making it available for rent or lease, without disqualifying the TLES-9 exemption on the new purchase. This provision recognizes that long-term residential equity is a foundation of family financial stability and generational wealth in Texas, and the Legislature expressly encourages that outcome.

(d) Not exempt — investment purchases: The purchase of a residential property where the buyer's intent at closing is rental income or capital appreciation, and the buyer does not intend to occupy the property as a primary residence for any period of time, does not qualify for the TLES-9 exemption. The governing test is the buyer's intent at the time of closing, evidenced by the Primary Residence Certificate required under Section 6 of this Act.

(e) Citizen standing: Any Texas citizen has standing to bring a civil enforcement action against a buyer who fraudulently obtained a TLES-9 exemption. A prevailing plaintiff is entitled to require the buyer to pay all taxes due on the original purchase, plus penalties and interest, and is entitled to recover reasonable attorney's fees and court costs from the defendant. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff.

(f) Administration: TLES-9 is administered at closing through the Primary Residence Certificate established in Section 6 of this Act.

TLES-10: RESIDENTIAL PROPERTY INSURANCE

(a) Exempt: Premiums on homeowners insurance, renters insurance, flood insurance, and condominium or cooperative owners' insurance — all for primary residential use. The 1.6 percent insurance premium tax on property and casualty insurers under Section 221.002, Insurance Code, is abolished under the TPTRP; residential property insurance premiums are TLES-10 exempt, resulting in an effective state rate of zero on those premiums.

(b) Not exempt: Commercial property insurance, landlord policies on investment or rental properties, and insurance on vacation homes or second homes.

TLES-11: PERSONAL AUTO INSURANCE

(a) Exempt: Personal auto insurance premiums on personal, non-commercial vehicles, including motor vehicle liability coverage meeting the minimum amounts required by Section 601.072, Transportation Code, and comprehensive, collision, uninsured or underinsured motorist, and personal injury protection coverages. The 1.6 percent insurance premium tax on property and casualty insurers under Section 221.002, Insurance Code, is abolished under the TPTRP; personal auto insurance premiums are TLES-11 exempt, resulting in an effective state rate of zero on those premiums.

(b) Not exempt: Commercial fleet insurance, trucking insurance, and specialty vehicle insurance.

TLES-12: INDIVIDUAL LIFE INSURANCE

(a) Exempt: Premiums paid on personal life insurance policies held by a natural person for the benefit of the person's immediate family, including individual term life, whole life, universal life, indexed universal life, and indexed whole life policies. The exemption covers the full premium, including any cash-accumulation component.

(b) Not exempt — fully taxable: Commercial life insurance of any kind, including corporate-owned life insurance (COLI), key-man policies, and similar business instruments. These are selective business expenses purchased by businesses for business financial management — not transactions necessary for any individual Texan to live in Texas. Commercial life insurance products are taxable under the TPTRP as business expenditures, with no exemption or definition-filter carve-out of any kind.

(c) Governing test: If the policyholder is a natural person and the beneficiaries are that person's immediate family, the policy is personal and TLES-12 applies. If the policyholder is a business entity and the policy serves a business purpose, it is a commercial transaction and is fully taxable.

TLES-13: PRIMARY PERSONAL VEHICLE PURCHASE OR LEASE

(a) Exempt: The sales price of one personal-use motor vehicle, new or used, that a natural person purchases from a motor vehicle seller and designates as the person's primary personal vehicle, and the periodic payments, down payment, and capitalized cost reduction under a personal lease of a personal-use motor vehicle that the lessee designates as the lessee's primary personal vehicle. The exemption is available to each eligible person independently, so that each eligible member of a household may designate one primary personal vehicle.

(b) Eligibility: A person may designate a primary personal vehicle only if the person:

(1) is a resident of this state;

(2) holds a driver's license issued under Chapter 521, Transportation Code; and

(3) is the owner of the vehicle, alone or jointly with a member of the person's immediate family, as shown on the title issued under Chapter 501, Transportation Code, or is the lessee of the vehicle under a personal lease.

(c) One vehicle per person: A person may have only one primary personal vehicle at a time, whether purchased or leased. A newly purchased or leased vehicle may be designated at any time if, on completion of the transaction, it is the only personal-use motor vehicle the person owns or leases, other than a vehicle designated as another person's primary personal vehicle, including when the person's prior vehicle is traded in or returned as part of the transaction. Designating a vehicle ends the designation of any vehicle the person previously designated. A vehicle may be designated by only one person at a time.

(d) Not exempt: The following purchases, leases, and rentals are taxable:

(1) a vehicle titled or registered to a business entity, trust, or governmental entity;

(2) a vehicle registered under an apportioned, commercial, farm, or for-hire registration, or used primarily for a business, commercial, agricultural, for-hire, or income-producing purpose;

(3) a vehicle acquired while the person owns or leases another personal-use motor vehicle, other than a vehicle described by the exception in Subsection (c);

(4) a vehicle purchased for resale, lease, or rental, including a lessor's purchase of a vehicle that is the subject of a personal lease;

(5) parts, accessories, service contracts, warranties, and repairs, which remain taxable unless another category of this Act applies; and

(6) a rental of a motor vehicle for 180 days or less.

(e) Change of use: If, within 12 months after the date of purchase or the beginning of a personal lease, a vehicle for which the exemption was claimed is transferred to a business entity, is registered under a registration described by Subsection (d)(2), or is used primarily for a commercial purpose, the exemption is forfeited and the TPTRP tax on the original sales price or on the lease payments, plus interest, becomes due from the purchaser or lessee.

(f) Private-party sales: A sale of a used motor vehicle by an individual to another individual that is not made in the course of a trade or business is an occasional sale excluded from the TPTRP tax under the TPTRP Sales and Use Tax Act and does not require a designation under this category.

(g) Citizen standing: Any Texas citizen has standing to bring a civil enforcement action against a purchaser or lessee who fraudulently obtained a TLES-13 exemption. A prevailing plaintiff is entitled to require the purchaser or lessee to pay all taxes due on the original purchase or lease, plus penalties and interest, and is entitled to recover reasonable attorney's fees and court costs from the defendant. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff.

(h) Administration: TLES-13 is administered at the time of sale or lease signing, and at titling or registration, through the Primary Personal Vehicle Certificate established in Section 6B of this Act.

SECTION 5. COMPTROLLER ADMINISTRATION AND PERMIT MECHANISM.

(a) The Comptroller shall administer the exemptions established by Section 4 of this Act through the existing Texas sales tax permit system, as amended to encompass the TPTRP tax. Every business operating in Texas is required by law to hold a sales tax permit. The permit application process is the universal mechanism through which businesses certify their TLES status and governs all TLES categories equally. This is not a new administrative concept — it mirrors the multi-category reporting already required under current Texas sales tax law for businesses that sell a mix of taxable and exempt goods.

(b) The sales tax permit application shall include a designated section listing all currently enacted TLES-eligible transaction categories. Each permit applicant shall select, under oath, which of the applicant's products or services fall within a TLES-exempt category, certifying that those transaction types will not have the TPTRP tax collected at the point of sale. The permit, once issued, binds the holder to those certifications. A permit holder is not required to apply for a new or amended permit solely because the Legislature has added or removed a TLES category; however:

(1) When the Legislature removes a TLES category, the Comptroller shall promptly notify all affected sales tax permit holders in writing of the removal and the effective date on which the previously exempt transactions become taxable. Permit holders must begin collecting the TPTRP tax on those transactions on the effective date of the change, regardless of whether they have received updated permit documentation.

(2) When the Legislature adds a TLES category, a permit holder whose transactions qualify under the new exemption may submit an amended permit application to certify those transactions as TLES-exempt. Until an amended permit is issued, the permit holder must continue collecting the TPTRP tax on those transactions. No permit holder is required to claim a new exemption; the decision to apply for the exemption is voluntary.

(1) Comptroller audit authority: The Comptroller has audit authority over every sales tax permit holder. A business found to be exempting non-qualifying transactions is liable for all back taxes, penalties, and interest. A business found to have collected the TPTRP tax on a transaction that qualifies under a TLES category is liable for a full refund of all amounts wrongfully collected, plus interest.

(2) District attorney and attorney general authority: District attorneys and the Office of the Attorney General of Texas each retain independent authority to pursue criminal prosecution and civil back-tax collection from businesses found to have fraudulently claimed TLES status or wrongfully collected the TPTRP tax on an exempt transaction. The attorney general may bring suit on behalf of the state; a district attorney may bring suit on behalf of the state within the district attorney's jurisdiction. These authorities are concurrent and non-exclusive.

(3) Citizen standing — wrongful exemption claim: Any Texas citizen has standing to bring a civil enforcement action against a business that improperly claims a TLES exemption on a non-qualifying transaction. A prevailing plaintiff is entitled to reasonable attorney's fees and court costs. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff.

(4) Citizen standing — wrongful tax collection: Any Texas citizen who has been charged the TPTRP tax on a transaction that qualifies under a TLES category has standing to bring a civil enforcement action against the business that collected the tax. A prevailing plaintiff is entitled to a full refund of the wrongfully collected tax, plus reasonable attorney's fees and court costs. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff.

(d) Mixed-transaction businesses: A business that sells both TLES-exempt and non-exempt products or services shall collect the TPTRP tax on non-exempt transactions and shall not collect it on TLES-certified transactions, tracking at the transaction level.

(e) The Comptroller shall adopt rules necessary to implement this section, including rules defining the categories in Section 4 with sufficient precision for permit certification purposes, and rules establishing the notification procedures required under Subsection (b)(1).

SECTION 5A. COMMERCIAL-VERSUS-RESIDENTIAL PERMIT-LEVEL ACCOUNTING.

(a) Except as provided by TLES-3(e) of Section 4, the exemptions established by this Act apply only to transactions in which the ultimate purchaser is a household purchasing for a cost-of-living purpose. Commercial, industrial, agricultural, government, and other non-household purchases of goods and services in the categories designated by this Act remain taxable transactions under the TPTRP Sales and Use Tax Act.

(b) The Comptroller shall administer the exemption through the sales tax permit system by:

(1) designing permit categories that identify the goods and services each permit-holder sells across the categories of the Texas Living Exemption Set;

(2) requiring each permit-holder to certify, at initial application and at each renewal, the residential-versus-commercial customer share of its sales in each Texas Living Exemption Set category in which it operates;

(3) prescribing the accounting method for each category (per-transaction certification, aggregate share, or a hybrid) based on the nature of the goods or services and the practicalities of buyer identification;

(4) establishing audit protocols, misclassification penalties, and appeal procedures for permit-holders operating across residential and commercial customer classes; and

(5) coordinating with the Primary Residence Certificate mechanism established under Section 6A for the administration of the Texas Living Exemption Set category for the purchase of a primary residence, and with the Primary Personal Vehicle Certificate mechanism established under Section 6B for the purchase or lease of a primary personal vehicle.

(c) The commercial share of sales in each Texas Living Exemption Set category that touches a constitutional dedication under Article VIII, Section 7-a or 7-c, of the Texas Constitution, or Section 2.02(e) of the constitutional amendment implementing the Texas Property Tax Replacement Plan — including sales of motor fuels, motor vehicles, utilities, medical services, and insurance — remains a taxable transaction under the TPTRP Sales and Use Tax Act and continues to fund the applicable constitutional dedication. The permit-level accounting established under this Section is the operative mechanism for maintaining that dedication.

(d) The specific permit categories, certification procedures, audit protocols, and coordination with the TPTRP Sales and Use Tax Act's implementing article on permit-level accounting are established by the Comptroller by rule under the TPTRP Sales and Use Tax Act. This Section imposes the substantive standard; the TPTRP Sales and Use Tax Act contains the administrative mechanism.

(e) This section implements Article VIII, Section 1-r, of the Texas Constitution.

SECTION 6. PRIMARY RESIDENCE CERTIFICATE — CROSS-REFERENCE.

The Primary Residence Certificate framework is established by Section 6A of this Act. A reference in this Act to the Certificate is a reference to Section 6A.

SECTION 6A. PRIMARY RESIDENCE CERTIFICATE; PORTAL COORDINATION.

(a) The Comptroller shall establish and administer a Primary Residence Certificate (the "Certificate") to be used in connection with TLES-9 exemptions under Section 4 of this Act. The Certificate shall be a plain-language document that, in addition to the attestations required under Subsection (b), sets forth the full text of the exemption conditions under Section 4 TLES-9(b), (c), and (d) so that all parties to the transaction may read, understand, and attest to the applicable rules at closing. The purpose of printing those conditions on the Certificate is to ensure that every buyer, seller, and closing agent has actual notice of the law at the moment of the transaction, further supporting any subsequent enforcement action should the buyer falsely attest to compliance.

(b) At closing, a buyer claiming a TLES-9 exemption shall sign and file the Certificate under penalty of perjury, attesting that:

(1) the property being purchased will serve as the buyer's principal place of residence;

(2) the buyer's intent at the time of closing is primary occupancy and not the generation of rental income or capital appreciation as the primary purpose;

(3) if the buyer is retaining a prior primary residence and has not yet completed a qualifying occupancy period of six continuous years in that prior property, the buyer understands and agrees that:

(A) the prior property must be actively listed for sale;

(B) the buyer may rent the prior property on a transitional basis for a period not to exceed two years while seeking a buyer; and

(C) if the prior property is not sold within two years and is not actively listed for sale, the TLES-9 exemption on the current purchase is forfeited and all taxes, penalties, and interest become immediately due; and

(4) if the buyer has completed a qualifying occupancy period of six or more continuous years in a prior primary residence, the buyer understands that retention of the prior property for any lawful purpose, including rental, does not disqualify this exemption.

(c) The Certificate shall be filed with the deed and becomes part of the public property record, and is publicly accessible to any Texas citizen.

(d) A buyer who obtains the TLES-9 exemption through a fraudulent Certificate is liable for all taxes due on the original purchase, plus penalties and interest, and may be subject to criminal prosecution for filing a false sworn instrument under applicable Texas law.

(e) Any Texas citizen has standing to bring a civil enforcement action against a buyer upon discovering a violation of the conditions attested to in the Certificate. A prevailing plaintiff is entitled to require the buyer to pay all taxes, penalties, and interest due, and is entitled to recover reasonable attorney's fees and court costs. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff.

(f) The Comptroller shall coordinate with closing agents, title companies, and county recorders to receive Primary Residence Certificates as evidence of TLES-9 exemption eligibility, and shall integrate the receipt and indexing of Primary Residence Certificates into the Texas Sales and Use Tax Portal established under Section 490.073, Government Code.

(g) A Primary Residence Certificate filed under this section satisfies, for the transaction to which it relates, the certification otherwise required of a permit-holder under Section 151A.702, Tax Code, and no separate residential-versus-commercial certification is required for that transaction.

(h) The comptroller may adopt rules governing the form, filing method, retention, revocation, and audit of Primary Residence Certificates under this section, and may prescribe an electronic filing method integrated with the Texas Sales and Use Tax Portal.

(i) This section is enacted in coordination with Section 151A.705, Tax Code, which retains a cross-reference to this section to preserve the sourcing and permit-holder framework of the TPTRP Sales and Use Tax Act.

(j) This section implements Article VIII, Section 1-r, of the Texas Constitution.

SECTION 6B. PRIMARY PERSONAL VEHICLE CERTIFICATE.

(a) The Comptroller, in coordination with the Texas Department of Motor Vehicles, shall establish and administer a Primary Personal Vehicle Certificate (the "Vehicle Certificate") to be used in connection with TLES-13 exemptions under Section 4 of this Act. The Vehicle Certificate shall be a plain-language document that sets forth the full text of TLES-13(b) through (e) of Section 4 so that the purchaser or lessee and the motor vehicle seller have actual notice of the conditions at the time of sale or lease signing.

(b) A purchaser or lessee claiming a TLES-13 exemption shall sign the Vehicle Certificate under penalty of perjury at the time of sale or lease signing, attesting that:

(1) the person is a resident of this state who holds a driver's license issued under Chapter 521, Transportation Code, and stating the license number;

(2) the vehicle will be the person's primary personal vehicle, used primarily for the person's own personal, household, or family transportation;

(3) the vehicle will not be titled or registered to a business entity or under a registration described by TLES-13(d)(2);

(4) on completion of the transaction, the vehicle will be the only personal-use motor vehicle the person owns or leases, other than a vehicle designated as another person's primary personal vehicle, and the person has identified, by vehicle identification number, any vehicle traded in, returned, or previously disposed of, and any vehicle the person previously designated; and

(5) the person understands that the exemption is forfeited under TLES-13(e) if the vehicle is converted to commercial use within 12 months.

(c) The motor vehicle seller shall retain the Vehicle Certificate and submit it with the application for title under Chapter 501, Transportation Code, or, for a leased vehicle, with the application for registration under Chapter 502, Transportation Code. The county tax assessor-collector shall record the designation in the title and registration record maintained by the Texas Department of Motor Vehicles, and that record shall identify, for each person, the vehicle currently designated as the person's primary personal vehicle.

(d) A Vehicle Certificate filed under this section satisfies, for the transaction to which it relates, the certification otherwise required of a permit-holder under Section 151A.702, Tax Code.

(e) A purchaser or lessee who obtains the TLES-13 exemption through a fraudulent Vehicle Certificate is liable for all taxes due on the original purchase or lease, plus penalties and interest, and may be subject to criminal prosecution for filing a false sworn instrument under applicable Texas law.

(f) The Comptroller shall integrate the receipt and indexing of Vehicle Certificates into the Texas Sales and Use Tax Portal established under Section 490.073, Government Code.

(g) The Comptroller and the Texas Department of Motor Vehicles may adopt rules governing the form, electronic filing, retention, revocation, and audit of Vehicle Certificates.

(h) This section implements Article VIII, Section 1-r, of the Texas Constitution.

SECTION 7. LEGISLATIVE MODIFICATION OF THE TLES.

(a) The Legislature may, by statute, add or remove categories from the Texas Living Exemption Set at any time. No additional legal requirement beyond enactment by the Legislature is required to remove a category from the TLES.

(b) The Legislature may add a category to the TLES only if the category satisfies the constitutional Cost of Living Standard. A category that does not directly and primarily affect the cost of living of individual Texas citizens and their immediate families, or that does not apply uniformly to all such citizens, may not be added.

(d) Any Texas citizen has standing to bring a civil action challenging a legislative addition to the TLES on the ground that the added category fails to satisfy the constitutional Cost of Living Standard. A prevailing plaintiff is entitled to have the exemption invalidated and to recover reasonable attorney's fees and court costs. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff. Citizens do not have standing under this Act to challenge the removal of a category from the TLES; that remedy lies with the electorate through the selection of representatives.

SECTION 8. RELATIONSHIP TO OTHER TPTRP IMPLEMENTING LEGISLATION.

This Act is intended to operate in conjunction with: (1) the constitutional amendment implementing the Texas Property Tax Replacement Plan; (2) the TPTRP Sales and Use Tax Act; and (3) any other TPTRP implementing legislation. If a conflict exists between this Act and another TPTRP implementing Act, the provision more specifically applicable to the TLES governs. If the TPTRP Texas Living Exemption Set Act — Standalone Edition is also enacted, this Act governs on and after the implementation date of the constitutional amendment, the two Acts shall be construed as establishing the same Texas Living Exemption Set, and Articles 5, 6, and 7 of the Standalone Edition expire as provided by Section 8.01 of that Act.

SECTION 9. TRANSITION.

This Act applies to all TPTRP tax transactions occurring on or after the effective date of this Act. Any transaction occurring before the effective date is governed by the law in effect on the date of that transaction, and the former law is continued in effect for that purpose.

SECTION 10. SEVERABILITY.

If any provision of this Act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable.

SECTION 11. EFFECTIVE DATE.

This Act takes effect on the same date that the constitutional amendment implementing the Texas Property Tax Replacement Plan takes effect. If that amendment does not take effect, this Act has no effect.

Formatted per Texas Legislative Council Drafting Manual, 89th Legislature

Author: Will Campbell, Republican Candidate, Texas House of Representatives, House District 109

Status: Pre-Filing Draft, October 2026

willcampbellfortexas.com

TPTRP TEXAS LIVING EXEMPTION SET ACT — STANDALONE EDITION

House Bill · Works With or Without the Constitutional Amendment

Makes the 13 Texas Living Exemption Set categories the only exemptions from state and local sales and use taxes, under current law or the TPTRP, and repeals every other exemption except those federal law requires.

Pre-Filing Draft October 2026 Will Campbell, Republican Candidate, Texas House of Representatives, House District 109 90th Legislature, Regular Session, 2027

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By: ______________________

H.B. No. ______

A BILL TO BE ENTITLED

AN ACT relating to the designation of the Texas Living Exemption Set as the exclusive set of exemptions from state and local sales and use taxes and from the motor vehicle sales and use tax for a primary personal vehicle; defining taxable transactions and agent transactions; repealing other sales and use tax exemptions; providing for administration and citizen enforcement; and providing for coordination with the constitutional amendment implementing the Texas Property Tax Replacement Plan.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. GENERAL PROVISIONS

SECTION 1.01. SHORT TITLE.

This Act may be cited as the TPTRP Texas Living Exemption Set Act — Standalone Edition.

SECTION 1.02. FINDINGS AND PURPOSE.

(a) The Legislature finds that:

(1) the sales and use tax laws of this state contain more than 100 exemptions, most of which benefit particular industries, organizations, or classes of sellers rather than the cost of living of individual Texans;

(2) the transaction categories designated in this Act represent the Legislature's determination of the essential household expenditure categories that directly and primarily affect the cost of living of individual Texas citizens and their immediate families;

(3) these exemptions must apply uniformly to all individual Texas citizens and their families without distinction as to income, wealth, or other personal characteristics;

(4) a sales and use tax applied once to every exchange of goods and services, with a single set of household exemptions, is more transparent and less susceptible to special-interest carve-outs than a tax with many exemptions; and

(5) this Act operates under the sales and use tax laws in effect on its effective date and, if the constitutional amendment is approved by the voters, under the sales and use tax imposed under that amendment, without further amendment.

(b) The purpose of this Act is to establish the Texas Living Exemption Set as the exclusive set of exemptions from the covered tax, to define the transactions subject to the covered tax, and to repeal every other exemption from the covered tax except as required by federal law or the United States Constitution.

SECTION 1.03. DEFINITIONS.

In this Act:

(1) "Agent transaction" has the meaning assigned by Section 2.02 of this Act.

(2) "Comptroller" means the comptroller of public accounts.

(3) "Constitutional amendment" means the constitutional amendment implementing the Texas Property Tax Replacement Plan proposed by the 90th Legislature, Regular Session, 2027.

(4) "Cost of Living Standard" means the standard established by Section 1.04 of this Act.

(5) "Covered tax" means:

(A) the sales and use tax imposed by Chapter 151, Tax Code;

(B) for TLES-13 only, the tax imposed by Chapter 152, Tax Code;

(C) a local sales and use tax imposed under Chapter 321, 322, or 323, Tax Code, or under any other law that authorizes a political subdivision of this state to impose a sales and use tax; and

(D) on and after the TPTRP implementation date, the sales and use tax imposed by Chapter 151A, Tax Code.

(6) "Immediate family" means the taxpayer's spouse, children, stepchildren, and any other person for whom the taxpayer is the legal guardian or primary financial provider.

(7) "Motor vehicle seller" means a person engaged in the business of selling motor vehicles, including a dealer licensed under Chapter 2301, Occupations Code, a person who sells motor vehicles remotely for delivery in this state, and a lessor that leases personal-use motor vehicles in the course of business.

(8) "Personal lease" means an agreement, other than a rental, by the owner of a personal-use motor vehicle to give a natural person exclusive use of the vehicle for longer than 180 days for consideration. An agreement to give exclusive use of a motor vehicle for 180 days or less is a rental and is not a personal lease.

(9) "Personal policyholder" means a natural person who holds an insurance policy primarily for the protection of the person's immediate family, as distinguished from a business entity that holds insurance for commercial purposes.

(10) "Personal-use motor vehicle" means:

(A) a passenger car, as defined by Section 541.201, Transportation Code;

(B) a pickup truck, van, or sport utility vehicle that has a manufacturer's gross vehicle weight rating of 10,000 pounds or less; or

that is not registered under an apportioned, commercial, farm, or for-hire registration under Chapter 502, Transportation Code.

(11) "Primary personal vehicle" means the one personal-use motor vehicle, purchased or leased, that a natural person has designated under TLES-13 of Section 3.01 and Section 4.04 of this Act as the vehicle the person uses primarily for the person's own personal, household, or family transportation.

(12) "Primary residence" means the property that the taxpayer and, if applicable, the taxpayer's immediate family actually occupy as their principal place of residence, determined at the time of a qualifying transaction by the taxpayer's intent and subsequent conduct.

(13) "Qualifying occupancy period" means the period of not less than six continuous years during which a natural person and, if applicable, the person's immediate family actually occupied a property as their primary residence prior to a subsequent purchase of a new primary residence.

(14) "Sales tax permit" means a permit issued under Subchapter F, Chapter 151, Tax Code, or, after the TPTRP implementation date, Section 151A.611, Tax Code, which serves as the mechanism for TLES certification.

(15) "Taxable transaction" has the meaning assigned by Section 2.01 of this Act.

(16) "TLES" means the Texas Living Exemption Set established by Section 3.01 of this Act, as amended by the Legislature.

(17) "TPTRP implementation date" means the implementation date of the constitutional amendment, if the constitutional amendment is approved by the voters.

SECTION 1.04. COST OF LIVING STANDARD.

(a) The Legislature may exempt from the covered tax only those transaction classes that directly and primarily affect the cost of living of individual Texas citizens and their immediate families. No exemption may be granted for any transaction the primary purpose or primary economic effect of which is commercial, business-to-business, income-producing, or profit-oriented, nor for any transaction class defined by the industry, profession, or commercial activity of the parties. Every exemption must apply uniformly to all Texas citizens and their families without distinction as to race, color, creed, religion, national origin, sex, income, or wealth.

(b) No exemption may be granted on the basis of the identity of the seller, the industry to which a transaction belongs, or the commercial purpose asserted by the buyer. An exemption authorized under this Act attaches to the transaction made by the citizen, not to the person or entity that sells the exempt product or service.

(c) This section is adapted from Article VIII, Section 1-r(a) and (b), of the constitutional amendment. If the constitutional amendment takes effect, Article VIII, Section 1-r, of the Texas Constitution governs, and this section shall be construed consistently with it.

SECTION 1.05. GENERAL RULE.

(a) The categories of transactions constituting the Texas Living Exemption Set are exempt from the covered tax when the transaction is made by or on behalf of an individual Texas citizen or family for personal, household, or family use.

(b) Except as provided by TLES-3(e) of Section 3.01 of this Act, a transaction that would otherwise qualify under a TLES category does not qualify if the primary purpose or primary economic effect of the transaction is commercial, business-to-business, income-producing, or profit-oriented.

(c) Each TLES category must be administered uniformly. No exemption within the TLES applies to fewer than all individual Texas citizens and their families.

ARTICLE 2. TAXABLE TRANSACTIONS, AGENT TRANSACTIONS, AND THE DEFINITION FILTER

SECTION 2.01. TAXABLE TRANSACTION.

(a) A transaction is a taxable transaction subject to the covered tax when a clear product is being purchased or a service is being rendered as part of the exchange or sale. This definition applies at every point in the supply chain, including:

(1) business-to-business transactions at every stage of production, distribution, and delivery;

(2) business-to-consumer transactions for goods, services, digital products, and any other item of economic value;

(3) transactions in which goods or services are delivered remotely, electronically, digitally, or through any other medium, where the buyer is located in this state or receives the economic benefit of the transaction in this state;

(4) transactions in which a seller is located outside this state, in another state of the United States or in a foreign country, where the buyer is located in this state or the economic benefit of the transaction is received in this state; and

(5) transactions in which the seller knew or reasonably should have known, at the time of contracting or delivery, that the goods or services would be used, consumed, or primarily benefiting operations or persons located in this state.

(b) The point at which the buyer takes possession of the good, receives the service, or otherwise obtains the right to use, consume, or enjoy the taxable good or service governs whether a transaction is subject to the covered tax. A transaction in which the buyer takes possession of the good or first receives the service in this state is subject to the covered tax, regardless of where the buyer is domiciled or resides. A transaction in which the buyer takes possession of the good or first receives the service outside this state is not subject to the covered tax, regardless of where the seller is located. Where a good or service is delivered remotely, electronically, digitally, or by common carrier, possession is deemed taken at the location to which the good is delivered or at which the service is first received by the buyer, and Subdivisions (a)(3), (4), and (5) continue to govern taxability where a Texas buyer receives the good or service or the economic benefit of the transaction in this state.

(1) the conveyance of fee simple title to real property, in accordance with Article VIII, Section 29, of the Texas Constitution; and

(2) a securities transaction described by Article VIII, Section 30, of the Texas Constitution, except to the extent that Section 30(c) of that article permits a sales and use tax on tangible personal property or services.

(d) The compensation paid by an employer to an employee for services performed by the employee in the course of employment is not a taxable transaction. This subsection does not apply to a service provided by an independent contractor or by one legal entity to another.

SECTION 2.02. AGENT TRANSACTION.

(a) An agent transaction occurs when a person acting as an agent on behalf of a principal purchases a product or service on the principal's behalf and separately renders the agent's own labor or product to the principal. In an agent transaction:

(1) products or services purchased by the agent on behalf of the principal are taxed once at the point of purchase by the agent and are passed through to the principal at the documented reimbursement amount without additional tax;

(2) the agent's own labor, product, or service rendered to the principal is a separate taxable transaction, taxed once at the point of the agent's billing to the principal; and

(3) no single dollar of economic value is taxed more than once.

(b) A product or service purchased by an agent on behalf of a principal whose transaction is exempt under the TLES is exempt to the same extent.

(c) The comptroller shall adopt rules for documenting agent transactions. The agent-transaction rule replaces the sale-for-resale exemption, resale certificates, and the manufacturing-input exemption repealed by Article 5 of this Act. The comptroller may not reinstate a resale certificate system, manufacturing-input exemption, or intercorporate services exemption by rule.

SECTION 2.03. DEFINITION FILTER.

The following categories of transactions are excluded from the covered tax base:

(1) Category G-1 — Federal Government Transactions. Transactions in which the federal government of the United States is the buyer or principal are excluded. Transactions in which a federal contractor is the buyer for its own account, not as an agent of the federal government, are taxable transactions and are not excluded by this category.

(2) Category F — Financial Flows. The following financial flows are excluded because they do not constitute the purchase of a product or the rendition of a service:

(A) mortgage principal and interest payments on real estate loans;

(B) interest income credited on personal deposit accounts, savings accounts, and certificates of deposit;

(D) insurance claim payouts and loss reimbursements paid in satisfaction of a covered loss. A premium paid for a policy of insurance is not a financial flow under this paragraph, and an exemption for a policy of personal insurance may be granted only as part of the TLES;

(E) purchases and sales of equity interests, partnership interests, membership units, bonds, notes, and other financial instruments representing ownership or debt interests;

(F) intra-family and personal gift transfers made for non-commercial purposes, including inheritances and personal charitable contributions;

(G) personal inter-account fund transfers representing the movement of existing value between accounts of the same person or entity; and

(H) government grants, entitlement payments, welfare disbursements, and other transfer payments from a governmental entity to an individual or organization where no product is purchased and no service is rendered.

(3) Category I-1 — Intra-Company Transfers. Internal ledger entries, inter-divisional accounting transfers, and other internal financial movements between departments or divisions of the same legal entity that do not involve the purchase of a product or the rendition of a service by one legal entity to another are excluded.

(4) Category IA — Internet Access Service. Internet access service, including any directly bundled telecommunications service used to provide the access connection, is excluded to the extent required by the Internet Tax Freedom Act (47 U.S.C. Section 151 note). Content, applications, and services delivered over the Internet are not Internet access service.

(5) Category CP — Pure Currency and Payment-Medium Exchanges. A transaction consisting solely of the exchange of one form of money, legal tender, or digital payment medium for another, without the purchase of a separate product or service, is excluded. The use of any payment medium to purchase a taxable product or service does not exclude the underlying taxable transaction.

SECTION 2.04. STRUCTURAL DEFINITIONS.

(a) Credit for tax previously paid. A taxable item is not subject to the covered tax to the extent that the covered tax, or a sales or use tax of another state or political subdivision of another state, was legally due and paid on the same item, as provided by Section 151.303, Tax Code, as amended by this Act. No item is taxed more than once by this state.

(b) Occasional sale. An occasional sale, as defined by Section 151.304, Tax Code, as amended by this Act, is not a taxable transaction. A person engaged in business in selling taxable items is not making an occasional sale.

(c) Transfer of common interests. A transfer of a common interest in property described by Section 151.306, Tax Code, is not a sale.

(d) Coordination with other taxes. While a tax imposed by a chapter listed in Section 151.308, Tax Code, as amended by this Act, is in effect, an item subject to that tax is not subject to the tax imposed by Chapter 151, Tax Code. When another law repeals the tax imposed by a listed chapter, this subsection ceases to apply to items subject to that tax on the effective date of the repeal, and the items become subject to the covered tax under the definitions then in effect.

(e) Each definition in this section applies only while the provision of the Tax Code it describes is in effect, and does not limit a later act of the Legislature that applies different transaction definitions to the covered tax.

SECTION 2.05. FEDERAL LAW.

(a) The covered tax does not apply to a transaction to the extent that federal law or the United States Constitution prohibits this state from taxing the transaction, as provided by Section 151.307, Tax Code.

(b) The covered tax does not apply to food or food products purchased with benefits under the supplemental nutrition assistance program or the special supplemental nutrition program for women, infants, and children, as provided by Section 151.3141, Tax Code, to the extent required for this state's participation in those programs under 7 U.S.C. Section 2013(a) and related federal law.

(c) The covered tax does not apply to a transaction by or with an Indian tribe to the extent provided by Section 151.337, Tax Code, and federal law.

SECTION 2.06. EXCLUSIVITY; NO RECLASSIFICATION.

(a) The only exemptions from the covered tax are the TLES categories established by Section 3.01 of this Act. The exclusions in Sections 2.01(c) and (d), 2.03, 2.04, and 2.05 of this Act are not exemptions; they define transactions that are not part of the covered tax base.

(b) No law, rule, or administrative determination may create a class-wide exemption, exclusion, deduction, or special treatment from the covered tax for:

(1) business inputs, manufacturing inputs, business purchases for resale, or business-to-business services;

(2) intercorporate or affiliated-group services;

(3) data processing, information services, cloud computing, digital automation, call-center operations, accounting, legal support, engineering support, or other outsourced services; or

(4) any product or service based solely on the identity, industry, organizational form, domicile, or political influence of the buyer or seller.

(c) A financial flow, intra-company transfer, or federal-government transaction excluded by Section 2.03 may not be reclassified as a taxable product or service by rule.

(d) A law enacted after the effective date of this Act that creates an exemption from the covered tax other than by amending Section 3.01 of this Act is effective only if the law expressly states that it amends or overrides this section.

(e) Section 151.423 (reimbursement to taxpayer for tax collections) and Section 151.424 (discount for prepayments), Tax Code, are compensation to sellers for collecting the covered tax and are not exemptions.

ARTICLE 3. THE TEXAS LIVING EXEMPTION SET

SECTION 3.01. THE TEXAS LIVING EXEMPTION SET.

The following categories are the Texas Living Exemption Set as enacted by this Legislature. The Legislature may by statute add or remove categories subject to the Cost of Living Standard under Section 1.04 and Section 4.05 of this Act:

TLES-1: GROCERIES (FOOD AT HOME)

(a) Exempt: Purchases of food and nonalcoholic beverages for home consumption, regardless of the seller, including:

(1) food and food ingredients sold for preparation and consumption at home;

(2) carbonated and noncarbonated soft drinks, juices, milk and milk-based drinks, and other nonalcoholic beverages;

(3) candy and confectionery; and

(4) drinking water sold in bottles, jugs, or other containers or dispensed for home consumption.

TLES-2: RESIDENTIAL RENT

(a) Exempt: Monthly rent payments made by Texas tenants for a primary residential dwelling, including apartments, houses, duplexes, and mobile homes.

(b) Not exempt: Short-term rentals, vacation rentals, commercial leases, and residential rentals of property that is not the tenant's primary residence.

TLES-3: RESIDENTIAL UTILITIES AND HOME FUEL

(e) Residential utility service as household use: Utility service under Subsection (a) is a transaction for the personal and family use of the household that occupies or will occupy the residential property, and its primary economic effect is the cost of living of that household, regardless of who is billed or whether the owner holds the property for income. Notwithstanding Sections 1.05(b) and 4.02(a) of this Act, the exemption under Subsection (a) applies to an owner who purchases the service for a residential property, including a vacant unit offered for residential occupancy. The purchase of residential property for rental or investment remains taxable as provided by TLES-9(d).

TLES-4: PRESCRIPTION DRUGS

(a) Exempt: All purchases of prescription medications dispensed pursuant to a valid prescription; prescription medical devices; and home infusion therapy services.

(b) Not exempt: Over-the-counter medications that do not require a prescription are non-prescription retail goods and are part of the general taxable base.

TLES-5: MEDICAL CARE

TLES-6: EDUCATION

TLES-7: MOTOR FUEL — GASOLINE AND DIESEL (CONSUMER PERSONAL USE)

(b) Not exempt: Commercial fleet fuel purchases, agricultural fuel, and aviation fuel.

TLES-8: CHILDCARE AND EARLY CHILDHOOD EDUCATION

(b) Not exempt: Adult eldercare services and tutoring services beyond the scope of licensed childcare.

TLES-9: PRIMARY RESIDENCE HOME PURCHASE

(1) first-time home purchases;

(2) move-up or lateral purchases where the buyer intends to occupy the new property as a primary residence; and

(f) Administration: TLES-9 is administered at closing through the Primary Residence Certificate established in Section 4.03 of this Act.

TLES-10: RESIDENTIAL PROPERTY INSURANCE

(a) Exempt: Premiums on homeowners insurance, renters insurance, flood insurance, and condominium or cooperative owners' insurance — all for primary residential use.

(b) Not exempt: Commercial property insurance, landlord policies on investment or rental properties, and insurance on vacation homes or second homes.

TLES-11: PERSONAL AUTO INSURANCE

(b) Not exempt: Commercial fleet insurance, trucking insurance, and specialty vehicle insurance.

TLES-12: INDIVIDUAL LIFE INSURANCE

(b) Not exempt — fully taxable: Commercial life insurance of any kind, including corporate-owned life insurance (COLI), key-man policies, and similar business instruments. These are selective business expenses purchased by businesses for business financial management — not transactions necessary for any individual Texan to live in Texas. Commercial life insurance products are not exempt under this Act, with no exemption or definition-filter carve-out of any kind.

TLES-13: PRIMARY PERSONAL VEHICLE PURCHASE OR LEASE

(a) Exempt: The sales price of one personal-use motor vehicle, new or used, that a natural person purchases from a motor vehicle seller or from any other person and designates as the person's primary personal vehicle, and the periodic payments, down payment, and capitalized cost reduction under a personal lease of a personal-use motor vehicle that the lessee designates as the lessee's primary personal vehicle. The exemption is available to each eligible person independently, so that each eligible member of a household may designate one primary personal vehicle.

(b) Eligibility: A person may designate a primary personal vehicle only if the person:

(1) is a resident of this state;

(2) holds a driver's license issued under Chapter 521, Transportation Code; and

(d) Not exempt: The following purchases, leases, and rentals are taxable:

(1) a vehicle titled or registered to a business entity, trust, or governmental entity;

(2) a vehicle registered under an apportioned, commercial, farm, or for-hire registration, or used primarily for a business, commercial, agricultural, for-hire, or income-producing purpose;

(3) a vehicle acquired while the person owns or leases another personal-use motor vehicle, other than a vehicle described by the exception in Subsection (c);

(4) a vehicle purchased for resale or rental, and a lessor's purchase of a vehicle for lease other than a purchase described by Subsection (f-1);

(5) parts, accessories, service contracts, warranties, and repairs, which remain taxable unless another category of this Act applies; and

(6) a rental of a motor vehicle for 180 days or less.

(e) Change of use: If, within 12 months after the date of purchase or the beginning of a personal lease, a vehicle for which the exemption was claimed is transferred to a business entity, is registered under a registration described by Subsection (d)(2), or is used primarily for a commercial purpose, the exemption is forfeited and the covered tax on the original sales price or on the lease payments, plus interest, becomes due from the purchaser or lessee.

(f) Private-party purchases: The exemption under Subsection (a) applies to a purchase from an individual who is not a motor vehicle seller in the same manner as a purchase from a motor vehicle seller. The purchaser shall file the Vehicle Certificate with the application for title. A private-party purchase that is not designated under this category remains subject to the tax imposed by Chapter 152, Tax Code, while that chapter is in effect.

(f-1) Lessor's purchase as agent transaction: A lessor's purchase of a personal-use motor vehicle for a personal lease to a natural person who designates the vehicle as the lessee's primary personal vehicle is an agent transaction made on behalf of the lessee under Section 2.02 of this Act. The lessor's purchase and the lease payments are exempt under Subsection (a). The lessor's own separately stated charges for services, if any, remain taxable.

ARTICLE 4. ADMINISTRATION AND ENFORCEMENT

SECTION 4.01. COMPTROLLER ADMINISTRATION AND PERMIT MECHANISM.

(a) The Comptroller shall administer the exemptions established by Section 3.01 of this Act through the sales tax permit system under Subchapter F, Chapter 151, Tax Code, and, after the TPTRP implementation date, Chapter 151A, Tax Code. Every seller engaged in business in this state is required by law to hold a sales tax permit. The permit application process is the universal mechanism through which businesses certify their TLES status and governs all TLES categories equally. This is not a new administrative concept — it mirrors the multi-category reporting already required under current Texas sales tax law for businesses that sell a mix of taxable and exempt goods.

(b) The sales tax permit application shall include a designated section listing all currently enacted TLES-eligible transaction categories. Each permit applicant shall select, under oath, which of the applicant's products or services fall within a TLES-exempt category, certifying that those transaction types will not have the covered tax collected at the point of sale. The permit, once issued, binds the holder to those certifications. A permit holder is not required to apply for a new or amended permit solely because the Legislature has added or removed a TLES category; however:

(1) When the Legislature removes a TLES category, the Comptroller shall promptly notify all affected sales tax permit holders in writing of the removal and the effective date on which the previously exempt transactions become taxable. Permit holders must begin collecting the covered tax on those transactions on the effective date of the change, regardless of whether they have received updated permit documentation.

(2) When the Legislature adds a TLES category, a permit holder whose transactions qualify under the new exemption may submit an amended permit application to certify those transactions as TLES-exempt. Until an amended permit is issued, the permit holder must continue collecting the covered tax on those transactions. No permit holder is required to claim a new exemption; the decision to apply for the exemption is voluntary.

(1) Comptroller audit authority: The Comptroller has audit authority over every sales tax permit holder. A business found to be exempting non-qualifying transactions is liable for all back taxes, penalties, and interest. A business found to have collected the covered tax on a transaction that qualifies under a TLES category is liable for a full refund of all amounts wrongfully collected, plus interest.

(2) District attorney and attorney general authority: District attorneys and the Office of the Attorney General of Texas each retain independent authority to pursue criminal prosecution and civil back-tax collection from businesses found to have fraudulently claimed TLES status or wrongfully collected the covered tax on an exempt transaction. The attorney general may bring suit on behalf of the state; a district attorney may bring suit on behalf of the state within the district attorney's jurisdiction. These authorities are concurrent and non-exclusive.

(4) Citizen standing — wrongful tax collection: Any Texas citizen who has been charged the covered tax on a transaction that qualifies under a TLES category has standing to bring a civil enforcement action against the business that collected the tax. A prevailing plaintiff is entitled to a full refund of the wrongfully collected tax, plus reasonable attorney's fees and court costs. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff.

(d) Mixed-transaction businesses: A business that sells both TLES-exempt and non-exempt products or services shall collect the covered tax on non-exempt transactions and shall not collect it on TLES-certified transactions, tracking at the transaction level.

(e) The Comptroller shall adopt rules necessary to implement this section, including rules defining the categories in Section 3.01 with sufficient precision for permit certification purposes, and rules establishing the notification procedures required under Subsection (b)(1). The comptroller shall adopt the initial rules not later than the 90th day after the effective date of this Act.

SECTION 4.02. COMMERCIAL-VERSUS-RESIDENTIAL PERMIT-LEVEL ACCOUNTING.

(a) Except as provided by TLES-3(e) of Section 3.01, the exemptions established by this Act apply only to transactions in which the ultimate purchaser is a household purchasing for a cost-of-living purpose. Commercial, industrial, agricultural, government, and other non-household purchases of goods and services in the categories designated by this Act remain taxable transactions under the law imposing the covered tax.

(b) The Comptroller shall administer the exemption through the sales tax permit system by:

(1) designing permit categories that identify the goods and services each permit-holder sells across the categories of the Texas Living Exemption Set;

(4) establishing audit protocols, misclassification penalties, and appeal procedures for permit-holders operating across residential and commercial customer classes; and

(5) coordinating with the Primary Residence Certificate mechanism established under Section 4.03 for the administration of the Texas Living Exemption Set category for the purchase of a primary residence, and with the Primary Personal Vehicle Certificate mechanism established under Section 4.04 for the purchase or lease of a primary personal vehicle.

(c) The commercial share of sales in each Texas Living Exemption Set category, including sales of motor vehicles, utilities, medical services, and insurance, remains a taxable transaction under the law imposing the covered tax and continues to fund any dedication of that revenue under Article VIII, Section 7-c, 7-d, or 7-e, of the Texas Constitution or other law. The permit-level accounting established under this section is the operative mechanism for maintaining that dedication. The permit-level accounting established under this Section is the operative mechanism for maintaining that dedication.

(d) The specific permit categories, certification procedures, and audit protocols are established by the comptroller by rule under Chapter 151, Tax Code, and, after the TPTRP implementation date, Chapter 151A, Tax Code. This section imposes the substantive standard; the law imposing the covered tax contains the administrative mechanism.

SECTION 4.03. PRIMARY RESIDENCE CERTIFICATE.

(a) The Comptroller shall establish and administer a Primary Residence Certificate (the "Certificate") to be used in connection with TLES-9 exemptions under Section 3.01 of this Act. The Certificate shall be a plain-language document that, in addition to the attestations required under Subsection (b), sets forth the full text of the exemption conditions under TLES-9(b), (c), and (d) of Section 3.01 so that all parties to the transaction may read, understand, and attest to the applicable rules at closing. The purpose of printing those conditions on the Certificate is to ensure that every buyer, seller, and closing agent has actual notice of the law at the moment of the transaction, further supporting any subsequent enforcement action should the buyer falsely attest to compliance.

(b) At closing, a buyer claiming a TLES-9 exemption shall sign and file the Certificate under penalty of perjury, attesting that:

(1) the property being purchased will serve as the buyer's principal place of residence;

(2) the buyer's intent at the time of closing is primary occupancy and not the generation of rental income or capital appreciation as the primary purpose;

(3) if the buyer is retaining a prior primary residence and has not yet completed a qualifying occupancy period of six continuous years in that prior property, the buyer understands and agrees that:

(A) the prior property must be actively listed for sale;

(B) the buyer may rent the prior property on a transitional basis for a period not to exceed two years while seeking a buyer; and

(c) The Certificate shall be filed with the deed and becomes part of the public property record, and is publicly accessible to any Texas citizen.

(f) The Comptroller shall coordinate with closing agents, title companies, and county recorders to receive Primary Residence Certificates as evidence of TLES-9 exemption eligibility, and shall integrate the receipt and indexing of Primary Residence Certificates into the comptroller's electronic filing system and, after the TPTRP implementation date, the Texas Sales and Use Tax Portal established under Section 490.073, Government Code.

(g) A Primary Residence Certificate filed under this section satisfies, for the transaction to which it relates, the certification otherwise required of a permit-holder under Section 151.155, Tax Code, or, after the TPTRP implementation date, Section 151A.702, Tax Code, and no separate residential-versus-commercial certification is required for that transaction.

SECTION 4.04. PRIMARY PERSONAL VEHICLE CERTIFICATE.

(a) The Comptroller, in coordination with the Texas Department of Motor Vehicles, shall establish and administer a Primary Personal Vehicle Certificate (the "Vehicle Certificate") to be used in connection with TLES-13 exemptions under Section 3.01 of this Act. The Vehicle Certificate shall be a plain-language document that sets forth the full text of TLES-13(b) through (e) of Section 3.01 so that the purchaser or lessee and the motor vehicle seller have actual notice of the conditions at the time of sale or lease signing.

(b) A purchaser or lessee claiming a TLES-13 exemption shall sign the Vehicle Certificate under penalty of perjury at the time of sale or lease signing, attesting that:

(1) the person is a resident of this state who holds a driver's license issued under Chapter 521, Transportation Code, and stating the license number;

(2) the vehicle will be the person's primary personal vehicle, used primarily for the person's own personal, household, or family transportation;

(3) the vehicle will not be titled or registered to a business entity or under a registration described by TLES-13(d)(2);

(5) the person understands that the exemption is forfeited under TLES-13(e) if the vehicle is converted to commercial use within 12 months.

(c) The motor vehicle seller, or, for a private-party purchase, the purchaser, shall retain the Vehicle Certificate and submit it with the application for title under Chapter 501, Transportation Code, or, for a leased vehicle, with the application for registration under Chapter 502, Transportation Code. The county tax assessor-collector shall record the designation in the title and registration record maintained by the Texas Department of Motor Vehicles, and that record shall identify, for each person, the vehicle currently designated as the person's primary personal vehicle.

(d) A Vehicle Certificate filed under this section satisfies, for the transaction to which it relates, the certification otherwise required of a permit-holder under Section 151.155, Tax Code, or, after the TPTRP implementation date, Section 151A.702, Tax Code.

(f) The Comptroller shall integrate the receipt and indexing of Vehicle Certificates into the comptroller's electronic filing system and, after the TPTRP implementation date, the Texas Sales and Use Tax Portal established under Section 490.073, Government Code.

(g) The Comptroller and the Texas Department of Motor Vehicles shall adopt rules governing the form, electronic filing, retention, revocation, and audit of Vehicle Certificates.

SECTION 4.05. LEGISLATIVE MODIFICATION OF THE TLES.

(b) The Legislature may add a category to the TLES only if the category satisfies the Cost of Living Standard under Section 1.04 of this Act. A category that does not directly and primarily affect the cost of living of individual Texas citizens and their immediate families, or that does not apply uniformly to all such citizens, may not be added.

(d) Any Texas citizen has standing to bring a civil action challenging a legislative addition to the TLES on the ground that the added category fails to satisfy the Cost of Living Standard under Section 1.04 of this Act. A prevailing plaintiff is entitled to have the exemption invalidated and to recover reasonable attorney's fees and court costs. A defendant who prevails against a frivolous or unfounded action is entitled to recover reasonable attorney's fees and court costs from the plaintiff. Citizens do not have standing under this Act to challenge the removal of a category from the TLES; that remedy lies with the electorate through the selection of representatives.

ARTICLE 5. AMENDMENTS TO CHAPTER 151, TAX CODE

SECTION 5.01. Section 151.010, Tax Code, is amended to read as follows:

Sec. 151.010. TAXABLE ITEM. "Taxable item" means tangible personal property and every service, including a taxable service under Section 151.0101, rendered for consideration in a taxable transaction as defined by Section 2.01 of the TPTRP Texas Living Exemption Set Act — Standalone Edition.

SECTION 5.02. Section 151.0101, Tax Code, is amended to read as follows:

Sec. 151.0101. TAXABLE SERVICES. (a) "Taxable services" means every service performed for consideration, including the services described by this chapter before September 1, 2027, except:

(1) a service exempt under the Texas Living Exemption Set established by Section 3.01 of the TPTRP Texas Living Exemption Set Act — Standalone Edition; and

(2) a transaction excluded by Article 2 of that Act.

(b) A reference in this chapter or in another law to a particular taxable service includes that service as described by this section.

SECTION 5.03. Section 151.313, Tax Code, is amended to read as follows:

Sec. 151.313. PRESCRIPTION DRUGS AND DEVICES. The following are exempted from the taxes imposed by this chapter as provided by TLES-4 of the TPTRP Texas Living Exemption Set Act — Standalone Edition: a drug or medicine dispensed pursuant to a valid prescription, a prescription medical device, and home infusion therapy services. Over-the-counter drugs, medicines, vitamins, and dietary supplements are not exempt.

SECTION 5.04. Section 151.314, Tax Code, is amended to read as follows:

Sec. 151.314. FOOD AND BEVERAGES FOR HOME CONSUMPTION. Food and nonalcoholic beverages for home consumption are exempted from the taxes imposed by this chapter as provided by TLES-1 of the TPTRP Texas Living Exemption Set Act — Standalone Edition, including soft drinks and candy. Meals and prepared food sold for immediate consumption, alcoholic beverages, ice, tobacco products, and drugs, medicines, vitamins, and dietary supplements are not exempt under this section.

SECTION 5.05. Section 151.315, Tax Code, is amended to read as follows:

Sec. 151.315. RESIDENTIAL WATER. Water delivered through a public or private water system to a residential property is exempted from the taxes imposed by this chapter as a residential utility under TLES-3 of the TPTRP Texas Living Exemption Set Act — Standalone Edition. Water delivered to commercial, industrial, or agricultural property is not exempt. Drinking water sold at retail for home consumption is governed by Section 151.314.

SECTION 5.06. Section 151.317, Tax Code, is amended to read as follows:

Sec. 151.317. RESIDENTIAL UTILITIES AND HOME FUEL. (a) Electricity, natural gas, water, wastewater, solid-waste and recycling collection, and similar utility services provided to any residential property, whether billed to the occupant or to the owner and whether the owner is a natural person or an entity, are exempted from the taxes imposed by this chapter as provided by TLES-3 of the TPTRP Texas Living Exemption Set Act — Standalone Edition.

(b) Any fuel, including heating oil, propane and other liquefied petroleum gas, kerosene, and firewood, purchased for use at a residential property that is the purchaser's primary residence is exempted from the taxes imposed by this chapter. A seller may rely on the delivery address and the purchaser's written attestation that the address is the purchaser's primary residence.

(c) Utility service and fuel for commercial, industrial, agricultural, manufacturing, mining, or timber use are not exempt.

SECTION 5.07. Section 151.303, Tax Code, is amended by adding Subsection (h) to read as follows:

(h) This section is a structural definition under Section 2.04(a) of the TPTRP Texas Living Exemption Set Act — Standalone Edition and is not an exemption.

SECTION 5.08. Section 151.304, Tax Code, is amended by adding Subsection (f) to read as follows:

(f) This section is a structural definition under Section 2.04(b) of the TPTRP Texas Living Exemption Set Act — Standalone Edition and is not an exemption. A sale of a motor vehicle remains governed by Chapter 152.

SECTION 5.09. Section 151.308, Tax Code, is amended by adding Subsection (d) to read as follows:

(d) This section is a coordination rule under Section 2.04(d) of the TPTRP Texas Living Exemption Set Act — Standalone Edition and is not an exemption. Each item listed in Subsection (a) is excluded from the tax imposed by this chapter only while the tax imposed by the law listed for that item is in effect.

SECTION 5.10. Subchapter H, Chapter 151, Tax Code, is amended by adding Section 151.3001 to read as follows:

Sec. 151.3001. EXCLUSIVE EXEMPTIONS. (a) The only exemptions from the taxes imposed by this chapter are the categories of the Texas Living Exemption Set established by Section 3.01 of the TPTRP Texas Living Exemption Set Act — Standalone Edition, as implemented by Sections 151.313, 151.314, 151.315, and 151.317.

(b) Sections 151.303, 151.304, 151.306, 151.307, 151.308, 151.3141, 151.330, and 151.337 define transactions that are not part of the tax base or that this state may not tax under federal law, and are not exemptions.

(c) A law enacted after September 1, 2027, that creates an exemption from the taxes imposed by this chapter other than by amending the TPTRP Texas Living Exemption Set Act — Standalone Edition is effective only if the law expressly states that it amends or overrides this section.

SECTION 5.11. The following provisions of the Tax Code are repealed:

(1) Section 151.006 (Sale for resale);

(2) Section 151.151 (Resale certificate);

(3) Section 151.152 (Resale certificate: form);

(4) Section 151.153 (Resale certificate: commingled fungible goods);

(5) Section 151.154 (Resale certificate: liability of purchaser);

(6) Section 151.427 (Deduction for property on which the tax is paid and held for resale);

(7) Section 151.302 (Sales for resale);

(8) Section 151.3021 (Packaging supplies and wrapping);

(9) Section 151.305 (Coin-operated machine sales);

(10) Section 151.3051 (Sales through certain vending machines);

(11) Section 151.3071 (Installation of certain equipment for export);

(12) Section 151.309 (Governmental entities);

(13) Section 151.310 (Religious, educational, and public service organizations);

(14) Section 151.3101 (Amusement services exemptions);

(15) Section 151.3102 (Sale by nonprofit organization at county fair);

(16) Section 151.3105 (Bingo equipment purchased by certain organizations);

(17) Section 151.311 (Taxable items incorporated into or used for improvement of realty of an exempt entity);

(18) Section 151.3111 (Services on certain exempted personal property);

(19) Section 151.312 (Periodicals and writings of religious, philanthropic, charitable, historical, scientific, and similar organizations);

(20) Section 151.3131 (Firearm safety equipment);

(21) Section 151.3132 (Feminine hygiene products);

(22) Section 151.3133 (Maternity clothing);

(23) Section 151.3134 (Breast milk pumping products);

(24) Section 151.3135 (Baby bottles);

(25) Section 151.316 (Agricultural items);

(26) Section 151.3162 (Timber items);

(27) Section 151.3171 (Sulphur);

(28) Section 151.318 (Property used in manufacturing);

(29) Section 151.3181 (Divergent use of property used in manufacturing);

(30) Section 151.3185 (Property used in the production of motion pictures, recordings, and broadcasts);

(31) Section 151.3186 (Property used in cable television, internet access, or telecommunications services);

(32) Section 151.319 (Newspapers and property used in newspaper publication);

(33) Section 151.320 (Magazines);

(34) Section 151.321 (University and college student organizations);

(35) Section 151.322 (Containers);

(36) Section 151.323 (Certain telecommunications services);

(37) Section 151.324 (Equipment used elsewhere for mineral exploration or production);

(38) Section 151.326 (Clothing and footwear for limited period);

(39) Section 151.327 (School supplies and school backpacks before start of school);

(40) Section 151.328 (Aircraft);

(41) Section 151.329 (Certain ships and ship equipment);

(42) Section 151.3291 (Boats and boat motors);

(43) Section 151.331 (Rolling stock; train fuel and supplies);

(44) Section 151.332 (Certain sales by senior citizen organizations);

(45) Section 151.333 (Energy-efficient products);

(46) Section 151.3335 (Water-efficient products);

(47) Section 151.334 (Components of tangible personal property used in connection with sequestration of carbon dioxide);

(48) Section 151.336 (Certain coins and precious metals);

(49) Section 151.338 (Environment and conservation services);

(50) Section 151.340 (Official state coin);

(51) Section 151.341 (Items sold to or used by development corporations);

(52) Section 151.3415 (Items sold to or used to construct, maintain, expand, improve, equip, or renovate certain media production facilities);

(53) Section 151.342 (Agribusiness items);

(54) Section 151.343 (Animals sold by nonprofit animal shelters or nonprofit animal welfare organizations);

(55) Section 151.344 (Post exchanges on state military property);

(56) Section 151.346 (Intercorporate services);

(57) Section 151.347 (Certain lawn and yard service);

(58) Section 151.348 (Cooperative research and development ventures);

(59) Section 151.350 (Labor to restore certain property);

(60) Section 151.3501 (Labor to restore, repair, or remodel certain property);

(61) Section 151.351 (Information services and data processing services);

(62) Section 151.353 (Court reporting services);

(63) Section 151.354 (Services by employees of property management companies);

(64) Section 151.355 (Water-related exemptions);

(65) Section 151.356 (Offshore spill response containment property);

(66) Section 151.3565 (Emergency preparation supplies for limited period);

(67) Section 151.359 (Property used in certain data centers; temporary exemption);

(68) Section 151.3595 (Property used in certain large data center projects; temporary exemption);

(69) Section 151.4292 (Tax refund pilot program for certain persons who employ apprentices);

(70) Section 151.4305 (Tax refunds for oil or gas severance taxpayers);

(71) Section 151.433 (Deduction for certain taxpayers purchasing Texas farm-raised oysters);

(72) Section 151.434 (Deduction for certain taxpayers participating in oyster shell recycling program).

SECTION 5.12. The following provisions of the Tax Code are repealed, subject to Section 9.03 of this Act:

(1) Section 151.429 (Tax refunds for enterprise projects);

(2) Section 151.4291 (Tax refunds for defense readjustment projects);

(3) Section 151.431 (Sales and use tax refund for job retention).

SECTION 5.13. Any reference in Chapter 151, Tax Code, or another law to a sale for resale, a resale certificate, or an exemption repealed by this article is void to the extent the reference would exempt a transaction from the taxes imposed by Chapter 151. A reference to an exemption certificate under Section 151.155, Tax Code, means a certificate claiming a TLES exemption or a transaction excluded by Article 2 of this Act.

ARTICLE 6. AMENDMENTS TO CHAPTER 152, TAX CODE

SECTION 6.01. Subchapter E, Chapter 152, Tax Code, is amended by adding Section 152.0801 to read as follows:

Sec. 152.0801. PRIMARY PERSONAL VEHICLE. (a) The sale, purchase, or use of a personal-use motor vehicle that a natural person designates as the person's primary personal vehicle under TLES-13 of the TPTRP Texas Living Exemption Set Act — Standalone Edition is exempted from the taxes imposed by this chapter, whether the vehicle is purchased from a motor vehicle seller or from a person who is not a motor vehicle seller.

(b) The purchase of a personal-use motor vehicle by a lessor for a personal lease to a natural person who designates the vehicle as the lessee's primary personal vehicle is an agent transaction made on behalf of the lessee and is exempted from the taxes imposed by this chapter.

(c) The exemption is claimed by filing the Primary Personal Vehicle Certificate established by Section 4.04 of the TPTRP Texas Living Exemption Set Act — Standalone Edition with the county tax assessor-collector at titling or registration.

(d) A rental of a motor vehicle for 180 days or less is not exempt under this section.

(e) If an exemption under this section is forfeited under TLES-13(e), the tax imposed by this chapter, plus interest, is due from the purchaser or lessee.

SECTION 6.02. Section 152.082, Tax Code, is amended to read as follows:

Sec. 152.082. SALE OF MOTOR VEHICLE TO OR USE OF MOTOR VEHICLE BY THE UNITED STATES. The taxes imposed by this chapter do not apply to the sale of a motor vehicle to, or the use of a motor vehicle by, the United States or an agency or instrumentality of the United States, as provided by Category G-1 of Section 2.03 of the TPTRP Texas Living Exemption Set Act — Standalone Edition.

SECTION 6.03. The following provisions of the Tax Code are repealed:

(1) Section 152.081 (Driver training motor vehicles);

(2) Section 152.083 (Lease of motor vehicle to public agency);

(3) Section 152.084 (Rental of motor vehicle to public agency);

(4) Section 152.085 (Rental of motor vehicle for purposes of re-rental);

(5) Section 152.086 (Motor vehicles driven by handicapped persons);

(6) Section 152.087 (Fire trucks and emergency medical services vehicles);

(7) Section 152.088 (Motor vehicles used for religious purposes);

(8) Section 152.089 (Exempt vehicles);

(9) Section 152.090 (Certain hydrogen-powered motor vehicles);

(10) Section 152.091 (Farm or timber use);

(11) Section 152.093 (Motor vehicles sold to certain licensed child-care facilities);

(12) Section 152.094 (Motor vehicles used by nonprofit food bank (the section of that number so headed));

(13) Section 152.095 (Motor vehicles used by provider of housing and related services).

SECTION 6.04. Section 152.092, Tax Code (Motor vehicles transported out of state), and Section 152.094, Tax Code (Motor vehicle transferred from decedent), continue in effect as provisions defining transactions outside the taxable base under Sections 2.01(b) and 2.03(2)(F) of this Act, and are not exemptions.

ARTICLE 7. LOCAL SALES AND USE TAXES

SECTION 7.01. Section 321.105, Tax Code, is amended to read as follows:

Sec. 321.105. RESIDENTIAL USE OF GAS AND ELECTRICITY. A municipality may not impose a tax under this chapter on the sale, production, distribution, lease, or rental of, or the use, storage, or other consumption of, gas, electricity, or any other residential utility service or home fuel exempt under TLES-3 of the TPTRP Texas Living Exemption Set Act — Standalone Edition.

SECTION 7.02. Section 321.1055, Tax Code, is repealed.

SECTION 7.03. (a) Notwithstanding any other law, a political subdivision of this state, including a municipality, county, special purpose district, transit authority, or other local taxing authority, may not impose a sales and use tax on a transaction exempt under the Texas Living Exemption Set or excluded by Article 2 of this Act.

(b) A local sales and use tax applies to each taxable transaction subject to the tax imposed by Chapter 151, Tax Code, as amended by this Act, unless the law authorizing the local tax expressly limits the tax to a narrower base.

(c) An ordinance, order, or resolution that imposes a tax prohibited by Subsection (a) is void on and after the effective date of this Act. No political subdivision is entitled to payment or compensation for revenue not collected because of this article.

ARTICLE 8. COORDINATION WITH THE TEXAS PROPERTY TAX REPLACEMENT PLAN

SECTION 8.01. If the constitutional amendment is approved by the voters:

(1) Articles 5, 6, and 7 of this Act expire on the TPTRP implementation date, and the repeal of Chapters 151 and 152, Tax Code, by other law takes effect according to its terms;

(2) Articles 1 through 4 of this Act continue in effect and apply to the sales and use tax imposed by Chapter 151A, Tax Code; and

(3) a reference in this Act to Chapter 151, Tax Code, means Chapter 151A, Tax Code, and a reference to a permit, certificate, or filing system under Chapter 151 means the corresponding provision of Chapter 151A or the Texas Sales and Use Tax Portal.

SECTION 8.02. If the TPTRP Texas Living Exemption Set Act and this Act are both enacted, the TPTRP Texas Living Exemption Set Act governs on and after the TPTRP implementation date, and the two Acts shall be construed as establishing the same Texas Living Exemption Set.

SECTION 8.03. If the constitutional amendment is not approved by the voters, this Act continues in effect under Chapters 151 and 152, Tax Code, and the local sales and use tax laws, without expiration.

ARTICLE 9. TRANSITION

SECTION 9.01. The changes in law made by this Act apply only to a transaction occurring on or after the effective date of this Act. A transaction occurring before the effective date is governed by the law in effect on the date of the transaction, and that law is continued in effect for that purpose.

SECTION 9.02. (a) An exemption repealed by this Act continues to apply to a transaction made under a written contract or bid entered into or submitted before the effective date of this Act, to the extent provided by Section 151.339, Tax Code, until the earlier of the expiration of the contract or September 1, 2030.

(b) This section does not extend the term of a contract by renewal, amendment, or exercise of an option after the effective date of this Act.

SECTION 9.03. A certificate, agreement, or designation issued before the effective date of this Act under Section 151.359 or 151.3595, Tax Code, or a refund eligibility determined before that date under Section 151.429, 151.4291, or 151.431, Tax Code, continues in effect according to its terms until it expires, and the former law is continued in effect for that purpose. No new certificate, agreement, designation, or determination may be issued on or after the effective date of this Act.

SECTION 9.04. The comptroller and the Texas Department of Motor Vehicles shall adopt the rules and forms required by this Act, including the Primary Residence Certificate, the Primary Personal Vehicle Certificate, and the agent-transaction documentation rules, not later than the 90th day after the effective date of this Act.

SECTION 9.05. This Act takes effect September 1, 2027.

ARTICLE 10. SEVERABILITY

SECTION 10.01. If any provision of this Act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable. A holding that the repeal of a particular exemption is invalid does not revive any other exemption repealed by this Act.

Formatted per Texas Legislative Council Drafting Manual, 89th Legislature

Author: Will Campbell, Republican Candidate, Texas House of Representatives, House District 109

Status: Pre-Filing Draft, October 2026

willcampbellfortexas.com

A BILL TO BE ENTITLED

SECTION 1. FINDINGS AND PURPOSE.

SECTION 2. DEFINITIONS.

SECTION 3. GENERAL RULE.

SECTION 4. THE TEXAS LIVING EXEMPTION SET.

TLES-1: GROCERIES (FOOD AT HOME)

TLES-2: RESIDENTIAL RENT

TLES-3: RESIDENTIAL UTILITIES AND HOME FUEL

TLES-4: PRESCRIPTION DRUGS

TLES-5: MEDICAL CARE

TLES-6: EDUCATION

TLES-7: MOTOR FUEL — GASOLINE AND DIESEL (CONSUMER PERSONAL USE)

TLES-8: CHILDCARE AND EARLY CHILDHOOD EDUCATION

TLES-9: PRIMARY RESIDENCE HOME PURCHASE

TLES-10: RESIDENTIAL PROPERTY INSURANCE

TLES-11: PERSONAL AUTO INSURANCE

TLES-12: INDIVIDUAL LIFE INSURANCE

TLES-13: PRIMARY PERSONAL VEHICLE PURCHASE OR LEASE

SECTION 5. COMPTROLLER ADMINISTRATION AND PERMIT MECHANISM.

SECTION 5A. COMMERCIAL-VERSUS-RESIDENTIAL PERMIT-LEVEL ACCOUNTING.

SECTION 6. PRIMARY RESIDENCE CERTIFICATE — CROSS-REFERENCE.

SECTION 6A. PRIMARY RESIDENCE CERTIFICATE; PORTAL COORDINATION.

SECTION 6B. PRIMARY PERSONAL VEHICLE CERTIFICATE.

SECTION 7. LEGISLATIVE MODIFICATION OF THE TLES.

SECTION 8. RELATIONSHIP TO OTHER TPTRP IMPLEMENTING LEGISLATION.

SECTION 9. TRANSITION.

SECTION 10. SEVERABILITY.

SECTION 11. EFFECTIVE DATE.

Texas House of Representatives District 109

Will Campbell for Texas