BILL ANALYSIS

Senate Research Center	S.B. 2907
89R4299 CS-F	By: West; Bettencourt
	Local Government
	5/2/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

According to the U.S. Bureau of Labor Statistics, food prices have risen sharply over the last two years. In the Dallas-Arlington region alone, the BLS reports that the food price index rose 0.6 percent for the two months ending in January 2025. Prices for food at home (grocery store prices) advanced 1.0 percent over the two-month period, with four of the six major grocery store food group indexes increasing over this period. The meats, poultry, fish, and eggs index rose 2.7 percent, and the other food at home index advanced 1.7 percent. Food prices increased 1.8 percent over the year.

According to the U.S. Department of Agriculture's Economic Research Service, grocery taxes can affect how consumers spend their food dollars. Grocery taxes are associated with reduced food-at-home spending among lower income households. These households tend to spend a smaller share of their overall food budgets at grocery stores, supercenters, and other retail food venues when faced with a grocery tax.

S.B. 2907 and S.J.R. 78 seek to help consumers by removing business personal property taxes on food and medication, allowing food prices to stabilize and potentially even result in lower food and drug costs for consumers.

S.B. 2907 is the enabling legislation for S.J.R. 78, which is a constitutional amendment that would be put before voters at the November 2025 election if passed by the legislature.

As proposed, S.B. 2907 amends current law relating to an exemption from ad valorem taxation of certain perishable inventory held for sale at retail.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter B, Chapter 11, Tax Code, by adding Section 11.38, as follows:

Sec. 11.38. PERISHABLE RETAIL INVENTORY. (a) Defines "perishable inventory."

(b) Provides that, subject to Subsection (c), a person is entitled to an exemption from taxation of the total appraised value of the tangible personal property the person owns that consists of perishable inventory held for sale by the person at retail and for which the person is not otherwise entitled to an exemption from taxation.

(c) Provides that a person is not entitled to an exemption under Subsection (b) for a tax year in which the person owes a delinquent tax to the state or a taxing unit on January 1 of that tax year.

SECTION 2. Makes application of this Act prospective.

SECTION 3. Effective date: January 1, 2026, contingent upon passage of the constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, to authorize the legislature to exempt from ad valorem taxation certain perishable inventory held for sale at retail.