Texas does not charge a separate statewide inventory tax. Inventory is business personal property taxed by local taxing units (county, city, school district and special districts) on its market value as of January 1. For 2026, up to $125,000 of income-producing tangible personal property per location in a taxing unit is exempt. Some inventory can also qualify for the Freeport or goods-in-transit exemptions, and motor vehicle, heavy equipment, vessel and manufactured-housing dealers are valued on prior-year sales under the special inventory rules instead.
This guide covers inventory: how it is valued, what must be filed, and which exemptions and protest rights apply. For general business personal property rules and rate questions, see our business personal property tax guide.
"Inventory tax" is really three different situations. Which one you are in decides how the property is valued, what you file, and when you pay.
| Inventory Type | Who It Covers | How It Is Valued | How and When It Is Handled | Key Forms |
|---|---|---|---|---|
| Ordinary business inventory | Retailers, wholesalers and manufacturers holding raw materials, work-in-process or finished goods for sale | Market value on January 1: the price the inventory would sell for as a unit to a buyer who would continue the business (Tax Code §23.12) | Rendition (generally April 15), notice of appraised value, then a tax bill in the fall with your other business personal property | Form 50-144 (business personal property rendition) |
| Dealer special inventory | Motor vehicle, heavy equipment, vessel and outboard motor dealers, and manufactured housing retailers | Based on prior-year sales, not a January 1 stock count (Tax Code §§23.121, 23.1241, 23.124, 23.127) | Annual declaration to the appraisal district; tax prepaid through periodic statements filed with the tax office | Forms 50-244/50-246 (motor vehicle); 50-265/50-266 (heavy equipment); 50-259/50-260 (vessel and outboard); 50-267/50-268 (manufactured housing) |
| Freeport goods | Goods, wares, ores and merchandise (not oil, gas or petroleum products) acquired in or imported into Texas and forwarded out of state within 175 days | Exempt share is normally based on the percentage of your inventory that qualified the prior year | Annual application to the appraisal district between January 1 and April 30 | Form 50-113 |
| Goods in transit | Property stored under a bailment contract at a public warehouse the owner does not own or control, then shipped within 175 days | Exempt share determined under Tax Code §11.253 | Annual application to the appraisal district between January 1 and April 30 | Form 50-758 |
Sources: Texas Tax Code §§11.251, 11.253, 23.12, 23.121, 23.1241, 23.124 and 23.127; Texas Comptroller special inventory and Freeport/goods-in-transit guidance. Confirmed current as of September 2026. General educational information, not legal advice.
Business personal property is appraised as of January 1 of the tax year, so the stock you are holding that day, not your average or year-end level, drives the value. This is why seasonal retailers, distributors with heavy year-end receipts and manufacturers holding raw materials can see a high value even in a year when the shelves are nearly empty by spring.
A rendition is your report of business personal property to the appraisal district. Rendition statements for most property are due April 15, and a written request generally extends the deadline to May 15. Starting with the 2026 tax year, HB 9 changed who has to file:
Not sure how your county handles renditions? Procedures and forms differ by district. Use our BPP rendition lookup by county to find your appraisal district's requirements, and see our Texas property tax deadlines guide for the full calendar.
| Inventory market value on January 1 | $310,000 |
| Furniture, fixtures and equipment at the same location | $40,000 |
| Total business personal property at the location | $350,000 |
| Less exemption for income-producing property (per location, per taxing unit) | − $125,000 |
| Taxable value | $225,000 |
| Illustrative combined tax rate | 2.10% |
| Illustrative annual tax (compared with $7,350 with no exemption) | $4,725 |
Hypothetical figures for illustration only. In practice each taxing unit applies its own rate, and results depend on your locations, value and district. Not a prediction or guarantee for any business.
| Inventory market value on January 1 | $800,000 |
| Share of inventory that qualified as Freeport goods last year | 30% |
| Approximate Freeport exemption amount | $240,000 |
The Freeport amount is normally based on last year's qualifying percentage, and the chief appraiser can require records to support it. How Freeport and the $125,000 exemption apply together is determined by your appraisal district; confirm before estimating a combined result.
| Qualifying prior-year sales (after removing sales to dealers, fleet sales and subsequent sales) | $2,400,000 |
| Divide by 12 months | ÷ 12 |
| Market value of the dealer's heavy equipment inventory | $200,000 |
Formula per the Texas Comptroller's heavy equipment dealer inventory guidance (Tax Code §23.1241). Figures are hypothetical.
If you sell motor vehicles, heavy equipment, boats and outboard motors, or manufactured homes, your inventory is not appraised from a January 1 count. The law appraises it from your sales in the prior year and collects the tax in advance as you sell. Dealers generally do two things:
Special inventory is not sales tax. It is a property tax on the dealer's inventory, separate from the sales tax buyers pay at purchase (Texas sales tax reaches a combined maximum of 8.25%). Dealer inventory is also excluded from the goods-in-transit exemption. Keep documentation showing the disposition of each unit sold, since the chief appraiser and tax collector may examine dealer records.
Up to $125,000 of income-producing tangible personal property per location in a taxing unit, with separate rules for leased-out property and for property stored where the owner neither owns nor leases the location.
Goods forwarded out of Texas within 175 days of being acquired in or imported into the state. Applied for each year on Form 50-113.
Goods stored at a public warehouse under a bailment contract and moved within 175 days. Applied for each year on Form 50-758.
Total your property by location. List the January 1 value of inventory and equipment at each location in each taxing unit.
Check for related entities. Businesses operating together at one address are combined, so multiple LLCs do not each get a separate $125,000.
Decide render or certify. Over $125,000 at a location means render; under it, you may file the short certification instead.
Track Freeport movements. Record the date goods entered or were acquired in Texas and the date and destination when they left, and confirm the 175-day limit was met.
Confirm goods-in-transit facts. Verify the goods sit under a bailment contract at a public warehouse you do not own or control, and keep the contract.
File exemption applications on time. Freeport and goods-in-transit applications are due each year between January 1 and April 30, and a late application can carry a penalty.
Keep dealers separate. Dealer special inventory is excluded from goods in transit and follows its own declaration and statement forms.
If an exemption is denied, you can protest the denial to the Appraisal Review Board. See the protest section below.
Exemptions are separate claims. The $125,000 exemption is tied to your rendition or certification, while Freeport and goods in transit each have their own applications and deadlines. Filing for one does not claim the others. For the wider exemption landscape, see our Texas property tax exemptions guide.
Inventory on hand and its location on this date drive the appraisal. Take or lock a physical count or perpetual-inventory snapshot.
File Form 50-113 or Form 50-758 with the appraisal district each year you claim the exemption. If your rendition extension to May 15 is granted, the Freeport deadline extends to May 15 as well.
Render business personal property, or file the short certification if you believe your value at each location is under $125,000. A written request generally extends rendition to May 15.
Motor vehicle, vessel and outboard, and manufactured-housing dealers file monthly statements; heavy equipment dealers file quarterly, within 20 days after quarter end.
Review the value, quantity and exemptions on your notice as soon as it arrives.
The normal protest deadline is May 15 or the 30th day after the notice is delivered, whichever is later. Use the date on your notice.
Bills are generally mailed around October 1 and are usually due by January 31 of the following year.
If the appraisal district values your inventory too high, counts stock you do not have, misplaces it, or denies an exemption, you have the same protest rights as any other property owner. The deadline is May 15 or 30 days after the notice is delivered, whichever is later.
File first and organize evidence afterward if you are close to the deadline. For the full filing, informal review and hearing process, see our commercial property tax protest guide and our Appraisal Review Board hearing guide. If the ARB result is still wrong, the routes after the order are covered in our commercial property tax appeal guide.
Texas does not levy a separate statewide inventory tax. Inventory is taxed as business personal property by local taxing units on its market value as of January 1, and dealers' inventory is taxed under special inventory rules based on prior-year sales.
Generally yes, unless it is exempt. For 2026, up to $125,000 of income-producing tangible personal property per location in a taxing unit is exempt, and qualifying Freeport or goods-in-transit inventory may be exempt as well.
It is the property tax on dealers' inventory of motor vehicles, heavy equipment, vessels and outboard motors, and manufactured homes. The inventory is appraised from the prior year's sales, and the dealer prepays the tax through periodic statements filed with the tax office.
It depends on the dealer's prior-year sales and the local tax rates that apply. Because the tax is prepaid through monthly statements as vehicles are sold, dealers should confirm the per-unit amount with their tax office.
No. Inventory tax is a local property tax on inventory a business holds. Sales tax is collected on retail purchases, and the combined state and local rate reaches a maximum of 8.25%.
Freeport exempts goods, wares, ores and merchandise acquired in or imported into Texas and forwarded out of state within 175 days. Goods in transit covers property stored under a bailment contract at a public warehouse the owner does not own or control and moved within 175 days. Each requires its own application each year.
You must render only if your property at a location is worth more than $125,000. If you believe it is below that amount, you may file a short certification instead of a rendition, and that election continues until ownership changes. The chief appraiser can still require a rendition.
It generally runs through the rendition or the short certification rather than a separate exemption application, but districts administer it locally, so confirm what your appraisal district requires. Freeport and goods in transit are separate and must be applied for each year.
File a protest by May 15 or 30 days after your notice is delivered, whichever is later, and support it with your January 1 count, cost records and evidence of slow-moving or obsolete stock. A denied exemption can also be protested to the Appraisal Review Board.
PropertyTaxes.Law helps Texas businesses review inventory valuations, exemption denials and rendition issues, and protest values that look too high.
Talk to a Property Tax AttorneyThis article provides general educational information about Texas inventory and business personal property taxation and is not legal, tax or accounting advice. Rules, forms, deadlines and exemption amounts can change and are administered locally by each appraisal district and tax office. The dollar figures in the worked examples are hypothetical. Confirm current requirements with your appraisal district, tax office or qualified counsel before making a filing decision.
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