Article VIII, Section 1 of the Texas Constitution

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As amended November 5, 2019:

(a) Taxation shall be equal and uniform.

(b) All real property and tangible personal property in this State, unless exempt as required or permitted by this Constitution, whether owned by natural persons or corporations, other than municipal, shall be taxed in proportion to its value, which shall be ascertained as may be provided by law.

(c) The Legislature may provide for the taxation of intangible property and may also impose occupation taxes, both upon natural persons and upon corporations, other than municipal, doing any business in this State. The Legislature may also tax incomes of corporations other than municipal. Persons engaged in mechanical and agricultural pursuits shall never be required to pay an occupation tax.

(d) The Legislature by general law shall exempt from ad valorem taxation household goods not held or used for the production of income and personal effects not held or used for the production of income. The Legislature by general law may exempt from ad valorem taxation: (1) all or part of the personal property homestead of a family or single adult, "personal property homestead" meaning that personal property exempt by law from forced sale for debt; (2) subject to Subsections (e) and (g) of this section, all other tangible personal property, except structures which are substantially affixed to real estate and are used or occupied as residential dwellings and except property held or used for the production of income; (3) subject to Subsection (e) of this section, a leased motor vehicle that is not held primarily for the production of income by the lessee and that otherwise qualifies under general law for exemption; and (4) one motor vehicle, as defined by general law, owned by an individual that is used in the course of the individual's occupation or profession and is also used for personal activities of the owner that do not involve the production of income.

(e) The governing body of a political subdivision may provide for the taxation of all property exempt under a law adopted under Subdivision (2) or (3) of Subsection (d) of this section and not exempt from ad valorem taxation by any other law. The Legislature by general law may provide limitations to the application of this subsection to the taxation of vehicles exempted under the authority of Subdivision (3) of Subsection (d) of this section.

(f) The occupation tax levied by any county, city or town for any year on persons or corporations pursuing any profession or business, shall not exceed one half of the tax levied by the State for the same period on such profession or business.

(g) The Legislature may exempt from ad valorem taxation tangible personal property that is held or used for the production of income and has a taxable value of less than the minimum amount sufficient to recover the costs of the administration of the taxes on the property, as determined by or under the general law granting the exemption.

(h) The Legislature may exempt from ad valorem taxation a mineral interest that has a taxable value of less than the minimum amount sufficient to recover the costs of the administration of the taxes on the interest, as determined by or under the general law granting the exemption.

(i) Notwithstanding Subsections (a) and (b) of this section, the Legislature by general law may limit the maximum appraised value of a residence homestead for ad valorem tax purposes in a tax year to the lesser of the most recent market value of the residence homestead as determined by the appraisal entity or 110 percent, or a greater percentage, of the appraised value of the residence homestead for the preceding tax year. A limitation on appraised values authorized by this subsection: (1) takes effect as to a residence homestead on the later of the effective date of the law imposing the limitation or January 1 of the tax year following the first tax year the owner qualifies the property for an exemption under Section 1-b of this article; and (2) expires on January 1 of the first tax year that neither the owner of the property when the limitation took effect nor the owner's spouse or surviving spouse qualifies for an exemption under Section 1-b of this article.

(j) The Legislature by general law may provide for the taxation of real property that is the residence homestead of the property owner solely on the basis of the property's value as a residence homestead, regardless of whether the residential use of the property by the owner is considered to be the highest and best use of the property.

Editor Comments

As adopted in 1876, this section read: "Taxation shall be equal and uniform. All property in this State, whether owned by natural persons or corporations, other than municipal, shall be taxed in proportion to its value, which shall be ascertained as may be provided by law. The Legislature may impose a poll tax. It may also impose occupation taxes, both upon natural persons and upon corporations, other than municipal, doing any business in this State. It may also tax incomes of both natural persons and corporations, other than municipal, except that persons engaged in mechanical and agricultural pursuits shall never be required to pay an occupation tax; provided, that two hundred and fifty dollars worth of household and kitchen furniture, belonging to each family in this State, shall be exempt from taxation, and provided further that the occupation tax levied by any county, city or town, for any year, on persons or corporations pursuing any profession or business, shall not exceed one-half of the tax levied by the State for the same period on such profession or business."

The section has been amended fourteen times. All of those amendments have been approved since 1978. The most recent amendment made a conforming change related to the repeal of Article VIII, Section 24.

The Texas Attorney General, in Tex. Att'y Gen. Op. GA-653 (2008), opined that: "Texas courts have long recognized that absolute equality and uniformity in taxation is an unattainable ideal and not required by the constitution. . . . Thus, article VIII, section 1(a) is satisfied when the tax classification is not unreasonable, arbitrary, or capricious and when it operates equally on persons or property within the class."

—Attorney Steve Smith

Recent Decisions

  • EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554 S.W.3d 572, 577 (Tex. 2018) ("If our case law contradicts the constitution’s plain text, our case law is wrong. But we do not believe any of our decisions warrant the conclusion that 'value' must be constitutionally attached to 'market value.' And while many of the tax code’s valuation methodologies are based on market value, the code also provides for alternative valuation methods in some circumstances. In any event, the legislature’s reliance on market valuation for the vast majority of property does not create a constitutional imperative that it do so in all instances. We first address the tax code and then discuss our case law.")
  • In re Nestle USA, Inc., 387 S.W.3d 610, 623 (Tex. 2012) ("Nestle argues that no classification or differentiation in the application of the franchise tax, unrelated to the value of the privilege of doing business in Texas, is permitted by the Equal and Uniform Clause. While we agree that a classification in a tax must be related to the object of the tax, we believe that the Legislature must have discretion . . . . This is especially true when the object of the tax—occupations or the privilege of doing business in the state—is not easily or exactly valued. 'There is always a presumption of constitutional validity with regard to legislation and it is especially strong in respect to statutes relating to taxation.'")
  • Texas Boll Weevil Eradication Foundation v. Lewellen, 952 S.W.2d 454, 462 (Tex. 1997) ("Here, the growers do not argue that the Foundation's assessments exceed the amount needed for eradication. Rather, they argue that eradication of the boll weevil does not constitute 'regulation of the cotton industry' for purposes of applying the primary purpose test. We disagree. . . . We hold that eradication of the boll weevil is a proper subject for regulation by the State pursuant to its police power. Because the Foundation's assessments are levied in an amount needed to fund the eradication programs, and are used for that purpose, we hold that they are regulatory fees, not occupation taxes.")
  • Enron Corp. v. Spring I.S.D., 922 S.W.2d 931, 936-37 (Tex. 1996) (citations omitted) ("It provides only that value is to be 'ascertained as may be provided by law.' We conclude that the Legislature may constitutionally draw distinctions in the manner in which market value of property is determined for ad valorem tax purposes, as long as the classifications . . . . The requirements of uniformity and equality under section 1(a) of article VIII of the Texas Constitution and those under the Fourteenth Amendment to the United States Constitution are similar. Accordingly, decisions examining the constitutionality of classifications for tax purposes under the Fourteenth Amendment can offer guidance.")

Historic Decisions

  • Conlen Grain & Mercantile, Inc. v. Tex. Grain Sorghum Producers Bd., 519 S.W.2d 620, 624 (Tex. 1975) ("An occupation tax is a form of excise tax imposed . . . . The subject of taxation is the business or occupation of producing sorghum grain for commercial purposes. The tax must be paid only by those who engage in that occupation, and that it must be paid by all so engaged except with respect to grain that is consumed in the producer's operations without having been processed or handled in a commercial transaction. In our opinion the assessment is an occupation tax on a person engaged in an agricultural pursuit within the meaning of Article VIII, Section 1, of our Constitution.")
  • State v. Fed. Land Bank of Houston, 329 S.W.2d 847, 850 (Tex. 1959) ("But while the Land Bank did prove an arbitrary and illegal scheme of ad valorem taxation, that fact alone under the facts here does not of itself entitle it to relief. This is not a direct attack on the scheme of taxation or a suit to prevent the initiation or operation of an illegal scheme. No relief was sought by mandamus or injunction. . . . The point is made only after the county-wide valuations have been fixed and adjusted in the board of equalization, the taxes levied, assessed, and presumably paid by the other taxpayers in the county. Under those circumstances, the Land Bank must assume a very heavy and onerous burden.")
  • Lively v. Missouri, K. & T. Ry. Co. of Texas, 120 S.W. 852, 857 (Tex. 1909) ("The fact that appellee was not required to pay more than it should does not satisfy the constitutional right to have all others owning property in the same territory and subject to like taxation to bear their equal portion . . . . This may be done either by increasing the assessment of each property owner in the county to its full value and to collect from each the taxes upon this full value, or to reduce the assessment of the intangible assets of the railroad company to 66 2/3 per cent. on the $100 of its assessed value. The court will adopt that plan which is most feasible and calculated to secure justice to the parties.")
  • Texas Co. v. Stephens, 103 S.W. 481, 484 (Tex. 1907) ("Had the statute simply defined the businesses and imposed . . . ; in other words, an occupation tax. The fact that the amount of the tax is to be determined in prescribed methods from the value, or extent, or magnitude of the businesses done, cannot convert it into an ad valorem tax upon the property of the persons conducting them. We could only hold that it does by disregarding not only the nature of the provisions themselves and the language in which they are expressed, but the course of judicial decision here and elsewhere and of former legislation in this state, by which such laws have been treated as imposing occupation taxes.")
  • Missouri, K. & T. Ry. Co. of Texas v. Shannon, 100 S.W. 138, 144 (Tex. 1907) ("Our Constitution, after declaring that 'taxation shall be equal and uniform,' and that property shall be taxed in proportion to its value (evidently alluding to ad valorem . . . . This would seem to leave the Legislature free to adopt the mode of ascertaining the value of any class of property by such method as it might deem best. If such was the intention, we think it a wise provision. Property is so various and ascertainment of its value in some cases is so difficult that no mode of such ascertainment absolutely uniform in every respect could effect the important end of equalizing the burden upon all property owners alike.")

Library Resources

Online Resources

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