On May 27, 2025, the Texas Legislature sent SB 1352 to the Governor. The bill tweaks a technical, but costly, problem in the Tax Code that has tripped up countless businesses filing for the Freeport exemption or interstate allocation. Starting September 1, 2025, the rules get simpler, and the penalties get a whole lot smaller.
What changes on September 1?
| Old Rule | New Rule under SB 1352 |
| Separate deadline requests. If you obtained an extension for your business personal property rendition (from April 15 to May 15), you still had to ask, often with “good cause” documentation, for your Freeport or interstate allocation application. | Automatic alignment. When a chief appraiser grants the standard rendition extension to May 15, your Freeport and interstate allocation applications automatically share that May 15 deadline. No extra paperwork. |
| Open-ended late-file penalties. Late filings triggered a charge equal to 10 percent of the tax difference between having and not having the exemption. In extreme cases the penalty dwarfed the actual tax due. | Capped penalties. The late penalty is the lesser of 10 percent of the tax savings or 10 percent of the total tax imposed on the property. |
Other provisions, such as an extra 60-day Freeport extension or 30-day interstate allocation extension for good cause, stay in place.
Why this matters to Texas businesses
- Less red tape. One extension covers both your rendition and your exemption paperwork.
- Predictable risk. The new penalty cap means late filings will never wipe out the benefit of the exemption.
- Cash-flow clarity. Companies can budget around a known 10 percent ceiling rather than an uncapped penalty.
Industries that rely on the Freeport exemption, manufacturing, distribution, and livestock, stand to benefit the most. They often move inventory in and out of Texas quickly and any filing misstep can be expensive.
Quick example
A distributor’s Freeport exemption saves $50,000 in county taxes. Under old law, a late filing could have cost the entire $50,000 and then some. Under SB 1352, the worst-case late penalty tops out at $5,000 (10 percent of the savings), or less if 10 percent of the tax imposed is lower.
Action items before the 2026 filing season
- Update your compliance calendar. Mark May 15 as the unified deadline when you request a rendition extension.
- Review internal workflows. Ensure the exemption application is prepared alongside the rendition, not weeks later.
- Model the new penalty math. Know your downside and plan reserves accordingly.
How KE Andrews Can Help
Our property tax team tracks every legislative development. We can:
- File your renditions and exemption applications in one seamless package.
- Audit prior filings for penalty relief opportunities.
- Provide real-time guidance as county appraisal districts begin implementing SB 1352.
Have questions about how SB 1352 affects your 2025 and 2026 filings? Reach out to the KE Andrews Property Tax group. Let’s make sure the new “automatic” extension works for you.
