What Changes January 1: Major New Texas Laws East Texans Should Know About

As 2026 begins, a wave of new state and federal laws is set to take effect, bringing changes that will touch nearly every corner of daily life in East Texas. From business taxes and employment to schools, law enforcement, and emerging technology, these measures carry real-world consequences for residents, employers, and local governments.

Here’s a breakdown of the most significant laws taking effect in the coming weeks — and what they mean locally.

Federal “Big Beautiful Bill” Brings Tax Changes for Texans

Although it is a federal law, President Donald Trump’s One Big Beautiful Bill Act, signed July 4, 2025, will have a direct financial impact on Texas workers and businesses.

The legislation makes permanent a 20% pass-through deduction for small business owners, reducing taxable income for many locally owned operations. For individuals, the law includes temporary tax deductions for tips, overtime pay, and auto loan interest. Those deductions expire on December 31, 2028, creating a limited window for working Texans to benefit.

The bill also expands accelerated depreciation for business equipment. Any qualifying equipment placed in service after January 19, 2025, is eligible for enhanced write-offs — a provision with immediate implications for East Texas manufacturers, contractors, and agricultural businesses planning equipment purchases or facility upgrades heading into 2026.

$125,000 Business Inventory Tax Exemption Begins January 1

One of the most consequential changes for Texas small businesses arrives January 1, 2026, with the implementation of House Bill 9.

The law raises the business personal property tax exemption from $2,500 to $125,000, meaning most small businesses will no longer pay property taxes on inventory, furniture, equipment, or supplies valued under that threshold. Retailers, manufacturers, and agricultural supply stores across East Texas stand to benefit.

The measure was approved by voters through Proposition 9 last November and applies to all taxing entities, including cities, counties, school districts, and special districts. While local governments will lose revenue, the state has committed to covering school district losses, shifting the cost to the state budget instead of local taxpayers.

Industry estimates suggest the exemption could save Texas businesses more than $500 million annually.

Sheriff Cooperation With ICE Required Under New Law

Senate Bill 8 — the immigration enforcement measure — takes effect January 1, 2026, and will reshape how county sheriff’s offices interact with federal immigration authorities.

The law requires sheriffs who operate county jails to enter into formal agreements with U.S. Immigration and Customs Enforcement under the federal 287(g) program. Participating deputies may receive federal training to verify immigration status for individuals booked into county jails.

Sheriffs can choose between two models: a jail-based enforcement model focused on inmates with criminal charges, or a task-force model allowing officers to exercise immigration authority during routine duties.

Departments have until December 1, 2026, to comply. Texas lawmakers also created a grant program through the state comptroller to reimburse local agencies for costs not covered by the federal government.

For East Texas counties, the law represents a significant operational and budgetary change and is likely to generate discussion among law enforcement, county officials, and community members.

Bathroom Restrictions in Public Facilities Already in Effect

Another Senate Bill 8 — separate from the immigration measure — took effect December 4, 2025, and imposes restrictions on multi-occupancy bathrooms, showers, and changing rooms in public facilities.

The law applies to government-owned buildings, including schools, universities, courthouses, libraries, prisons, and family violence shelters. It does not apply to private businesses.

Facilities must restrict use based on biological sex assigned at birth. Penalties are steep: $25,000 for a first violation and $125,000 per day for subsequent violations. The law does not specify an enforcement agency, requiring institutions only to take “every reasonable step” to comply — a provision that has left many school districts and local governments seeking clarification.

STAAR Test Replaced With New Assessment Model

House Bill 8, effective December 4, 2025, eliminates the long-criticized STAAR exam and replaces it with a series of shorter assessments administered throughout the school year.

Education officials say the change addresses concerns that STAAR testing consumed excessive instructional time and increased stress for students and teachers. The new testing system will begin rolling out in the next academic year, affecting every public school district in East Texas.

New Property Tax Transparency Requirements

Senate Bill 1023 increases transparency in how local governments calculate property tax rates.

The law requires tax rate calculation documents to include direct hyperlinks to supporting data, such as certified property value estimates from county appraisal districts. While technical, the change gives taxpayers — and journalists — improved tools to scrutinize tax rate decisions.

Limits on School District Tax Rate Increases

Senate Bill 1502 prevents school districts from raising property tax rates above voter-approved levels without holding a new election. The law also restricts rate increases following certain disaster declarations.

Supporters say the measure strengthens voter oversight, while critics warn it could limit school districts’ flexibility during emergencies.

Texas Adopts Comprehensive AI Regulation

House Bill 149, the Texas Responsible Artificial Intelligence Governance Act, places Texas among the first states to adopt a broad artificial intelligence regulatory framework.

The law requires disclosure when consumers interact with AI systems, prohibits discriminatory uses of AI, and restricts government agencies from collecting biometric data through untargeted internet scraping. It also creates a regulatory “sandbox” allowing companies to test AI systems for up to 36 months under state supervision.

The Texas Attorney General will enforce the law, with civil penalties of up to $100,000 per violation.

App Age Verification Law on Hold

Senate Bill 2420, which would require app stores to verify users’ ages and obtain parental consent for minors, has been blocked by a federal judge. The law remains unenforced while constitutional challenges proceed.

Disaster Recovery and Unemployment Changes

House Bill 30 creates a new “Disaster Debris Rate” allowing local governments to recover emergency cleanup costs, while still prohibiting tax increases above voter-approved limits without an election — even after disasters. This provision is particularly relevant for hurricane- and flood-prone East Texas communities.

House Bill 3699 streamlines unemployment claims by recognizing only the official employer rather than requiring claimants to identify individual supervisors, simplifying processing for both workers and the Texas Workforce Commission.

Why It Matters Locally

Together, these laws represent some of the most significant policy changes Texas will see in years, with impacts that will be felt not in Austin, but in East Texas classrooms, courthouses, workplaces, and homes.

Local officials, school administrators, business owners, and residents across East Texas are expected to navigate these changes as implementation begins in 2026.