Leased vehicles in Texas are not subject to property taxes unless they are used primarily to generate income. While Texas starts with the premise that all property is taxable, unless exempt by state or federal law, Texas exempts leased vehicles from property tax, unless they are used primarily to generate income.
Texas does exempt leased vehicles that are not held for the primary purpose of income production by the lessee. These vehicles include passenger cars or trucks with a shipping weight of not more than 9,000 pounds and leased for personal use. Personal use would mean using the vehicle for more than 50 percent of its use (based on mileage) for activities that do not involve the production of income. The exemption applies only to vehicles subject to a lease entered on or after Jan. 2, 2001. Any leased vehicles contracted before Jan. 2, 2001, would continue to be taxed. In addition, cities that passed an ordinance before Jan. 1, 2002, could opt to tax personal leased vehicles. The law was effective on Jan
