Texas Proposition 10 is a constitutional amendment approved by voters in November 2023 that creates a property tax exemption for tangible personal property used in medical and biomedical manufacturing. It added Section 1-n to Article VIII of the Texas Constitution and is implemented through Texas Tax Code Section 11.36, enacted by Senate Bill 2289 of the 88th Legislature.1State of Texas. Texas Constitution Article VIII Section 1-n2Texas Legislature Online. Texas Code – S.B. No. 2289 The exemption removes the full market value of qualifying equipment and inventory from the local tax rolls, so eligible manufacturers pay zero property tax on those items rather than a reduced amount. The measure passed with roughly 55 percent of the vote.
What Property Qualifies
Only tangible personal property is covered. The constitutional text limits the benefit to personal property “stored, used, or consumed” by a medical or biomedical manufacturer, which leaves land and buildings on the tax rolls.1State of Texas. Texas Constitution Article VIII Section 1-n A factory itself is still taxed; the production equipment inside it and the inventory on its shelves are what the exemption reaches.
The implementing statute defines “medical or biomedical property” to include property used in manufacturing or processing medical products and items intended for diagnosis, treatment, or prevention of disease and for medical research. The law specifically lists:2Texas Legislature Online. Texas Code – S.B. No. 2289
- Devices and therapeutics such as surgical instruments, implants, diagnostic tools, and their component parts or accessories
- Pharmaceuticals, including medicines, vaccines, and biological products
- Personal protective equipment used in patient treatment
- Manufacturing inventories, including finished goods, work-in-process, and raw materials destined to become medical products
- Property already exempt under Section 151.318 (manufacturing machinery and equipment eligible for the sales tax exemption)
The scope goes beyond the final product. Equipment used during manufacturing qualifies alongside the goods being produced. A vaccine maker’s bioreactors, a device company’s injection-molding machines, and the raw polymers waiting to become catheter tubing can all fall under the exemption.
Who Qualifies
Two things have to line up. The property must meet the definition above, and it must sit in a “medical or biomedical manufacturing facility,” which the statute describes as a facility where a person manufactures or processes medical products for commercialization to advance public health.2Texas Legislature Online. Texas Code – S.B. No. 2289 The person claiming the exemption must own or lease both the property and the facility.3State of Texas. Texas Tax Code Section 11.36 – Medical or Biomedical Property
The “owns or leases” language matters. A manufacturer leasing its production equipment, or operating in a leased building, still qualifies as long as both are under its control. That is a meaningful departure from some other Texas property tax exemptions that reach only owned property.
Companies that only distribute, warehouse, or sell finished medical products do not qualify. Actual manufacturing or processing has to happen at the facility. A regional distribution center for a pharmaceutical company would not meet the definition even though medical products are stored there. The exemption is written to encourage production, not logistics.
No Local Opt-Out
Local governments cannot override the exemption. Section 11.36(c) prohibits the governing body of any taxing unit from taxing medical or biomedical property that qualifies.4Texas Legislature Online. Texas Code – S.B. No. 2289 – Analysis Counties, school districts, cities, and special districts must all honor it once an application is approved.
That sets Prop 10 apart from the Freeport exemption for goods in transit, which taxing units can decline to adopt and some school districts do. With the medical and biomedical exemption there is no such discretion, so manufacturers get uniform treatment across every jurisdiction. For a company evaluating where to build or expand, that predictability shows up directly in the financial analysis.
How to Claim the Exemption
File an application with the appraisal district in each county where the exempt property is located. The Texas Comptroller publishes a dedicated form, Form 50-842, “Application for Exemption of Medical or Biomedical Personal Property.”5Texas Comptroller of Public Accounts. Application for Exemption of Medical or Biomedical Personal Property The application goes to the appraisal district, not to the Comptroller.
The general deadline for property tax exemption applications in Texas is before May 1.6Texas Comptroller of Public Accounts. Property Tax Exemptions Qualification is tested as of January 1, so the property has to be in qualifying use on that date to receive the exemption for that tax year.7Texas Comptroller of Public Accounts. Property Tax Law Deadlines The chief appraiser is solely responsible for deciding whether the property qualifies.
The applicant has to certify under oath that every fact in the application is true and that the described property meets the statutory requirements.5Texas Comptroller of Public Accounts. Application for Exemption of Medical or Biomedical Personal Property Keep thorough documentation of your manufacturing operations, equipment inventories, and product classifications. If the chief appraiser questions eligibility, those records are what separate a clean approval from a long dispute.
If Your Application Is Denied
You can protest a denial to your county’s appraisal review board. Texas Tax Code Section 41.41 lists denial of a partial exemption as a protestable action.8State of Texas. Texas Tax Code TAX 41.41
The usual deadline is May 15, or 30 days after the appraisal district mails a notice of appraised value, whichever is later. A late protest is possible on a showing of good cause, but the ARB decides whether the reason is sufficient, and late protests are not accepted once the ARB has approved the appraisal records for the year.
Hearings are informal. You can appear in person, by phone or video, or by sworn affidavit, and both sides must exchange evidence before or at the start of the hearing. If you plan to appear remotely or by affidavit, say so on your notice of protest at least 10 days before the hearing.
Penalty for False Claims
Claiming the exemption on property that doesn’t qualify carries real exposure. Under Texas Tax Code Section 22.29, if a court finds that someone filed a false statement with intent to commit fraud or evade taxes, the chief appraiser imposes an additional penalty equal to 50 percent of the total taxes all participating taxing units imposed on the property for the year in question.9State of Texas. Texas Tax Code Section 22.29 – Penalty for Fraud or Intent to Evade Tax The same penalty reaches destroying records, presenting altered documents, or otherwise acting fraudulently to influence the appraisal.
Enforcement actions are brought by the district or county attorney on behalf of the appraisal district. In deciding liability, courts weigh factors such as the business’s compliance history, the completeness of its records, the size and sophistication of its operations, and whether guidance from the appraisal district itself contributed to the violation.9State of Texas. Texas Tax Code Section 22.29 – Penalty for Fraud or Intent to Evade Tax An honest mistake is not fraud, but the line between sloppy records and intentional misrepresentation is one worth staying well clear of. Document the basis for every category of property you claim, and correct errors promptly if you discover that something you listed does not actually qualify.