Texas vs. Colorado Business Property Tax Exemption 2026

Texas just made it dramatically cheaper to own business equipment — and Colorado didn’t. Starting with the 2026 tax year, Texas exempts the first $125,000 of a business’s equipment, furniture, and fixtures from property tax at every location it operates. Colorado’s exemption, by contrast, is still capped at $56,000 per county, and it works very differently: go a dollar over that line and the entire amount becomes taxable, not just the excess. For business owners in Houston, The Woodlands, and Denver, the gap between these two rules is now one of the most consequential — and least talked about — differences in what it costs to do business in each state.

What Changed for Texas Business Owners in 2026

Texas voters approved Proposition 9 in November 2025, and its implementing law, House Bill 9, raised the business personal property (BPP) tax exemption from a token $2,500 to $125,000, effective for the tax year beginning January 1, 2026. Unlike a simple cutoff, the exemption works as a true deduction: it reduces every account’s taxable value by $125,000, so tax applies only to the value above that amount. The exemption applies separately at each physical location, so a business with several Houston-area locations can claim it multiple times — though related entities sharing one address still have to combine their property and claim a single exemption for that address.

Why Houston and The Woodlands Business Owners Get a Real Break

Many Small Businesses Will Owe Nothing At All

For most small businesses — a professional office with computers and furniture, a retail shop with fixtures and point-of-sale equipment, a contractor with tools and a work truck — total business personal property rarely exceeds $125,000 per location. Under the new exemption, that means a $0 tax bill and, just as importantly, no annual rendition to file with the county appraisal district. Businesses with equipment above that threshold still benefit, since the first $125,000 of value at each location comes off the top before tax is calculated.

Why Denver Business Owners Aren’t Getting the Same Deal

A Smaller Exemption, and a Cliff Instead of a Deduction

Colorado’s business personal property exemption is set at $56,000 of total actual value per county for the 2025 and 2026 tax years. That is less than half of Texas’s new threshold on its own, but the bigger issue is how it is structured. Texas’s exemption shields the first $125,000 regardless of how much equipment a business owns. Colorado’s does not: the statute does not exempt the first $56,000 of every account — it exempts accounts that are at or below $56,000 entirely. Cross that line, even slightly, and the full value becomes taxable, with a rendition required. A Denver business with $57,000 in equipment gets no exemption at all, while a nearly identical business in Houston would owe tax on only a sliver of that amount. Colorado does offer a separate state income tax credit tied to business personal property tax paid, which can soften the impact for businesses above the threshold — it’s worth asking your advisor whether you qualify. Lawmakers have discussed raising Colorado’s exemption in recent sessions, but proposals have stalled over the hit to local government revenue, so the $56,000 line is likely to hold for now.

What To Do Before Year-End

If you’re in Houston or The Woodlands, inventory the equipment, furniture, and fixtures at each of your locations — if any location is now under $125,000, confirm with your county appraisal district whether you still need to file a rendition for it.
If you operate multiple Texas locations, verify the exemption is being applied separately at each one, and flag any locations that share an address with a related entity.
If you’re in Denver, total your business personal property on a per-county basis now, before year-end purchases push you over the $56,000 line — timing a planned purchase into January could matter.
If your Colorado business is already over the threshold, ask about the state income tax credit for business personal property tax paid before you assume the full amount is a sunk cost.

At Petry Tax & Advisory, we help business owners across Houston, The Woodlands, and Denver sort out exactly which property tax rules apply to their equipment and locations — contact us for a consultation before your rendition is due.

This post is for general informational purposes only and does not constitute legal or tax advice. Consult with a qualified professional about your specific situation.

Sources: Texas Proposition 9 (Ballotpedia) | Colorado Division of Property Taxation — Common Exemptions