Texas Contractors
The Texas $125K BPP Exemption:
A Contractor's Guide for 2026
Texas just raised the business personal property exemption from $2,500 to $125,000. For most contractors that means your truck, trailer, and tools are no longer taxed. Here is exactly what changed and the one form you still need to file.
$125,000 now exempt
Up from just $2,500
01I heard Texas changed the tax on business equipment. Does that mean I stop paying tax on my trucks and tools?
The Quick Answer
Texas BPP Exemption in 2026
- Starting January 1, 2026, the first $125,000 of business personal property is exempt per location.
- That is up from just $2,500, under Proposition 9 (2025) and House Bill 9.
- BPP means your trucks, trailers, tools, equipment, materials, and office gear.
- Most independent contractors now owe $0 in BPP tax.
- Under $125,000: file a one-time certification. Over $125,000: render annually, taxed only on the excess.
- Renditions are due April 15 (extension to May 15 on written request).
- Miss a required rendition and the penalty is 10% of the tax due.
Authority: Texas Proposition 9 (2025), House Bill 9, and the Texas Property Tax Code. Always confirm specifics with your county appraisal district (CAD).
02OK. So what exactly counts, and how does the $125,000 work?
How the Exemption Works
03So which bucket am I in, and what do I actually have to file?
Which Applies to You
| BPP Under $125K | BPP Over $125K | |
|---|---|---|
| Total BPP value at the location | Under $125,000 | Over $125,000 |
| What you owe | $0 BPP tax | Tax on the value above $125,000 only |
| What you file | A one-time short certification | A rendition, filed annually |
| Deadline | By April 15, 2026 | By April 15 each year |
Example: a remodeler with a $48K truck, a $12K trailer, and $25K in tools and equipment at one shop has $85,000 in BPP. That is under $125,000, so the BPP tax is $0. They file a one-time certification with the county and they are done. A larger outfit at $260,000 gets the first $125,000 exempted and is taxed only on $135,000.
04What do contractors trip over here?
Avoid These
What Most Contractors Get Wrong
Thinking "exempt" means "do nothing"
Even if your value is under $125,000 and you owe $0, you generally still must file a one-time certification with your county appraisal district confirming your value is below the exemption. Skip it and you can lose the exemption or get a default assessment.
Missing the April 15 deadline
If you are required to render (value over $125,000), the rendition is due April 15. A written request gets you an extension to May 15. Fail to file a required rendition on time and you face a 10% penalty on the tax due.
Guessing at equipment value
Counties expect a reasonable, good-faith value for your trucks, trailers, and tools. Low-balling invites a challenge; over-reporting costs you money once you are above the threshold. We help you value it correctly and document it.
05That covers the big stuff. What about the other questions Texas contractors always ask?
We File Texas BPP Renditions for Contractors
Whether you owe nothing or you are over the threshold, we handle the certification or the rendition so it is filed right and on time. Free 30-minute call to review your situation.
Tax information disclaimer: This guide is for general educational purposes only and does not constitute tax or legal advice. Texas property tax rules are administered locally and details can vary by county appraisal district. Forms, deadlines, and the treatment of specific property should be confirmed with your CAD or a licensed professional. Trade Tax Pro provides tax preparation services, not legal advice.