Three Texas Property Tax Laws 2026 That Protect Land Transfers and Energy Production

Three new Texas property tax laws 2026 took effect January 1, creating meaningful protections for landowners navigating ownership transfers, estate settlements, and energy production decisions. HB 1244, HB 3370, and HB 3159 each address specific pain points that have cost Texas families money and created unnecessary administrative burdens during already difficult transitions.

For land professionals, these changes matter. Family farm transfers, timber land inheritance, and oil and gas well economics all operate differently now than they did in December 2025.

Here’s what changed and why it matters for your clients and transactions.

HB 1244: Agricultural Open-Space Appraisal Continuity

The 89th Texas Legislature passed HB 1244 unanimously, 145-0 in the House, 31-0 in the Senate, addressing a longstanding frustration for families restructuring agricultural operations.

Previously, when agricultural land changed ownership, the new owner faced a strict application deadline to maintain the 1-d-1 open-space appraisal. Miss that deadline, and you faced either a 10% penalty or worse, a gap year at market-value taxation while reestablishing agricultural use history.

This created real problems during LLC restructures, family transfers, and estate planning scenarios where the land use never actually changed.

What HB 1244 Changes

Under the new Texas property tax laws 2026 framework, ownership of qualified open-space land is not considered to have changed for appraisal purposes if two conditions are met:

Condition 1: The new owner uses the land in materially the same way as the former owner during the preceding tax year.

Condition 2: The same individuals who oversaw or conducted the agricultural use during the preceding tax year continue to oversee or conduct that use.

When both conditions apply, the agricultural appraisal continues without requiring a new application.

Extended Deadlines and Penalty Waivers

For transfers that don’t meet the automatic continuity test but still involve genuine agricultural operations, HB 1244 provides relief through extended application deadlines. New owners can file applications until the later of:

• The delinquency date for property taxes on the land, or
• The first anniversary of the transfer date

Applications filed under these provisions are exempt from the standard 10% late-filing penalty.

Practical Applications

This law specifically benefits:

Family farm transitions where parents transfer land to children who continue the same cattle or crop operation with the same ranch manager overseeing daily operations.

LLC restructures where a family moves agricultural land from one entity to another for liability protection or estate planning purposes while maintaining identical operations.

Partnership changes where one partner buys out another but the physical agricultural operation—same foreman, same livestock, same practices continues uninterrupted.

The key phrase is “materially the same.” Appraisal districts will look at whether the actual agricultural activity changed, not just whether the deed recorded a new owner.

HB 3370: Timber Land Appraisal Following Owner Death

Timber land owners in East Texas face a specific challenge that row crop and livestock operators don’t: timber production cycles span decades, not seasons. When a timber land owner dies, the family is often dealing with probate proceedings, executor appointments, and estate administration while also facing property tax application deadlines.

HB 3370 addresses this timing mismatch under the new Texas property tax laws 2026 structure.

What HB 3370 Changes

Chief appraisers must now accept late applications for timber land special appraisal when three conditions exist:

1. The land was appraised as qualified timber land in the preceding tax year
2. Ownership changed as a result of the owner’s death during the preceding tax year
3. The application is filed by the delinquency date for property taxes

Who Can File

The law specifically authorizes these parties to submit late applications:

• Surviving spouse of the decedent
• Surviving child of the decedent
• Executor or administrator of the estate
• Fiduciary acting on behalf of the surviving spouse or child

This covers the most common scenarios where families are navigating both grief and complex legal proceedings while trying to maintain the property’s tax status.

Penalty Exemption

Like HB 1244, applications filed under HB 3370’s provisions are exempt from the 10% late-filing penalty that normally applies when agricultural or timber land applications miss the standard deadline.

Why This Matters for Timber Operations

Texas timber land appraisal works differently than agricultural appraisal in several respects. The production cycle, intensity standards, and rollback calculations all reflect the multi-decade nature of growing commercial timber.

When an owner dies mid-cycle, perhaps years before a planned harvest, the family may be focused on legal matters rather than tax applications. Missing the deadline previously meant either paying the penalty or, in some cases, losing the special appraisal entirely for that tax year.

For land professionals working with timber properties, this change removes one administrative trap from an already complicated estate settlement process.

HB 3159: Severance Tax Exemption for Restimulation Wells

The third of the Texas property tax laws 2026 taking effect addresses a different asset class entirely: oil and gas production.

HB 3159 creates a narrowly scoped severance tax exemption for hydrocarbons produced from previously inactive wells that return to production through restimulation treatments. Governor Abbott signed the bill on June 20, 2025, after it passed the House 115-23 and the Senate 29-2.

The Problem HB 3159 Addresses

Texas oil and gas wells decline over time. After years of production, many wells become inactive defined as having no reported production for 12 consecutive months or more.

Operators face a choice: drill new wells with higher production rates, or invest capital in restimulating existing wells to recover trapped hydrocarbons. Modern horizontal shale wells don’t qualify for the Enhanced Oil Recovery (EOR) tax incentive that benefits vertical wells, creating a gap in the incentive structure.

HB 3159 fills that gap.

How the Exemption Works

A “restimulation well” under the law means a previously completed well that became inactive and then received a restimulation treatment specifically, the application of pressurized fluid to initiate or propagate fractures in the target formation.

Hydrocarbons from qualifying wells are exempt from both gas production tax (Chapter 201) and oil production tax (Chapter 202) until the earlier of:

Time cap: The last day of the 36th consecutive month following the month the well first produces after treatment.

Dollar cap: The date when cumulative exempted taxes equal the lesser of actual restimulation costs or $750,000.

Qualification Requirements

Not every reactivated well qualifies. HB 3159 excludes wells that:

• Have less than 60 months of production history before treatment
• Are part of an enhanced oil recovery project
• Were drilled but never completed (no production record)
• Were not inactive immediately before the restimulation treatment

Wells previously certified for high-cost gas production under Section 201.057 cannot claim both benefits simultaneously. During the exemption period, those wells are ineligible for the high-cost gas tax reduction.

Certification Process

Operators apply to the Railroad Commission of Texas for certification that a well qualifies. The application can be submitted any time after the well first produces hydrocarbons following the restimulation treatment.

If approved, the RRC issues a certificate designating the well as a qualifying well. The operator then applies to the Comptroller for the actual tax exemption, providing the RRC certificate and documentation of restimulation costs.

Enforcement Provisions

The law includes teeth. Making false or untrue statements in applications subjects the person to penalties under Chapters 85 and 91 of the Natural Resources Code.

Attempting to claim the exemption for a non-qualifying well triggers civil penalties up to $10,000 plus the difference between taxes paid (or attempted to be paid) and taxes actually due.

Fiscal Impact

According to the Legislative Budget Board analysis, HB 3159 will not result in significant fiscal impact to the state. The volume of production from qualifying restimulation wells is expected to be relatively modest, and the bill encourages recovery of stranded hydrocarbons from existing infrastructure rather than requiring new drilling.

Market Implications for Land Professionals

These three Texas property tax laws 2026 changes create planning opportunities and remove administrative obstacles across different property types.

Agricultural and Timber Transactions

For buyers acquiring land with existing agricultural or timber appraisals, HB 1244 and HB 3370 reduce the risk of losing special appraisal status during ownership transitions.

Transaction attorneys should document the continuity elements HB 1244 requires: same agricultural use, same management personnel. Buyers who can demonstrate materially identical operations may not need to file new applications at all.

For timber properties where the seller died, executors and family members now have clearer authority and extended timelines to file applications without penalty exposure.

Oil and Gas Interests

Mineral rights holders and working interest owners should evaluate inactive wells in their portfolios. Wells meeting the 60-month production history requirement may be candidates for restimulation projects with improved economics under HB 3159.

The $750,000 cap per well and 36-month time limit make this most attractive for wells where restimulation costs are moderate and expected production is sufficient to recover those costs within the exemption period.

Estate Planning Considerations

HB 1244’s provisions regarding same management personnel create new estate planning considerations. Families structuring agricultural operations should document who “oversees or conducts” the agricultural use, as this determination affects whether transfers qualify for automatic continuity.

For timber properties, HB 3370’s specific list of authorized applicants—surviving spouse, surviving child, executor, administrator, or fiduciary—means estate plans should clearly identify who will handle property tax matters during administration.

What Texas Property Tax Laws 2026 Mean Going Forward

These three bills share a common theme: reducing administrative friction when land ownership changes but actual land use remains consistent.

HB 1244 and HB 3370 both recognize that property tax applications filed during ownership transitions—especially transitions involving death or family restructuring often face timing challenges that don’t reflect any actual change in how the land is being used.

HB 3159 takes a different approach, creating incentives for operators to invest in existing infrastructure rather than abandoning idle wells or drilling new ones.

For land professionals, these changes matter most during transaction structuring, due diligence, and client advising. Understanding when automatic continuity applies under HB 1244, who can file under HB 3370, and which wells might qualify under HB 3159 will help clients capture benefits the legislature intended.

All three Texas property tax laws 2026 provisions took effect January 1, 2026, and apply to applications and production occurring on or after that date.

Resources

Official Bill Texts (Texas Legislature)

Texas Comptroller Resources

• HB 1244 – Agricultural Open-Space Land Appraisal Continuity
• HB 3370 – Timber Land Appraisal Following Owner Death
• HB 3159 – Severance Tax Exemption for Restimulation Wells

• Agricultural, Timberland and Wildlife Management Use Special Appraisal
• Manual for the Appraisal of Agricultural Land (PDF)
• Manual for the Appraisal of Timberland (PDF)

Here is a great article on Ag Exemptions In Texas