(TEXAS, UNITED STATES) — New Texas laws took effect January 1, 2026, and they will change how many immigrants and mixed‑status families in Texas handle tax records, identity documents, and audit‑proof paperwork during tax year 2026 (returns filed in 2027).
The biggest immediate change is Texas Senate Bill 8 (SB 8), which requires many county sheriffs to pursue formal cooperation agreements with U.S. Immigration and Customs Enforcement (ICE) under the federal 287(g) program. While SB 8 is not a tax statute, it is an enforcement shift that can affect whether immigrants feel safe claiming tax credits, filing amended returns, or responding to IRS notices.
At the same time, Texas enacted major state tax relief measures that can matter for immigrant‑owned small businesses and new homeowners. House Bill 9 raises the business personal property tax exemption from $2,500 to $125,000, and Texas also expanded homestead relief. These state changes can influence cash flow, bookkeeping, and how taxpayers document expenses for federal returns.
Information in this article is current as of January 1, 2026.
What changed on January 1, 2026
Immigration enforcement: SB 8 and local‑federal cooperation
SB 8 requires sheriffs in counties above certain population thresholds to request and enter 287(g) agreements. These agreements can authorize trained local jail personnel to perform certain federal immigration functions.
For tax filers, the most practical effect is indirect but real: more people may interact with the criminal justice system, face detention, or seek legal help quickly. Those events often disrupt tax filing, W‑2 access, and recordkeeping.
Taxes: business property tax exemption jumps to $125,000
House Bill 9 (HB 9) increases the exemption for business personal property from $2,500 to $125,000. For immigrant entrepreneurs, that can reduce local tax bills and free up funds for payroll, estimated taxes, and compliance costs.
Texas also changed other state tax rules, including repealing certain taxes on intangible personal property. These changes are state‑level and do not directly change federal taxable income rules.
Before / After: quick comparison (effective January 1, 2026)
| Topic | Before (through 12/31/2025) | After (starting 1/1/2026) | Who may feel it most |
|---|---|---|---|
| Immigration enforcement cooperation (SB 8) | No statewide mandate for many sheriffs to pursue 287(g) | Many sheriffs must request/sign 287(g) agreements with ICE | Noncitizens in contact with local jails; mixed‑status families |
| TX business personal property exemption (HB 9) | $2,500 exemption | $125,000 exemption | Immigrant‑owned small businesses with equipment, furniture, tools |
| Homestead exemption (property tax relief) | Lower exemption amount | $140,000 general; $200,000 seniors/disabled | New homeowners, including new permanent residents |
Who is affected (tax‑focused)
1) Undocumented immigrants and mixed‑status families in Texas
Many undocumented workers file federal returns using an ITIN (Form W‑7). SB 8 does not change ITIN eligibility. Still, increased local enforcement can raise fear about sharing addresses and employer details.
2) Visa holders and new residents (F‑1, J‑1, H‑1B, L‑1, O‑1, TN)
Federal filing rules remain the same, but enforcement changes can raise the stakes of keeping clean, consistent records.
- F‑1/J‑1 students may still be nonresident aliens for part of their stay under IRS residency rules. See IRS Publication 519 (U.S. Tax Guide for Aliens) at IRS Publication 519 (U.S. Tax Guide for Aliens).
- H‑1B/L‑1 workers are often resident aliens under the Substantial Presence Test. They generally report worldwide income and may need foreign reporting forms.
3) Immigrant entrepreneurs and gig workers
State property tax relief can help Texas businesses, but it does not remove federal duties such as:
– Reporting business income on Schedule C (Form 1040)
– Paying self‑employment tax on Schedule SE
– Making quarterly estimated payments on Form 1040‑ES
Practical tax impact: what to do differently for tax year 2026 (filed in 2027)
1) Treat identity and address consistency as part of tax compliance
The IRS primarily cares about correct taxpayer identification and income reporting. Still, enforcement anxiety often leads to missed mail and unreported notices.
Best practices for 2026:
– Keep your mailing address current with the IRS using Form 8822. See the official form at Form 8822.
– Retain copies of W‑2s, 1099s, prior returns, and ITIN letters.
– Use the IRS international pages for guidance: irs.gov/individuals/international-taxpayers.
⚠️ Warning: Do not ignore IRS letters. Many notices have short response windows. Missing them can lead to assessments or collection activity.
2) If you file with an ITIN, expect extra documentation discipline
ITIN filers should keep:
– Proof of identity and foreign status used for Form W‑7. The official Form W‑7 is available at Form W‑7.
– Copies of returns and acceptance letters
– Wage statements, bank records, and dependent documentation
SB 8 does not change federal ITIN rules, but it may increase the importance of having documents ready if a family faces disruption.
3) If you have foreign accounts, keep FBAR/FATCA on your radar
Texas enforcement changes do not alter federal international reporting obligations. Many immigrants newly classified as U.S. tax residents overlook these filings.
| Filing Status (living in U.S.) | FBAR threshold | Form 8938 threshold (end of year) | Form 8938 threshold (any time) |
|---|---|---|---|
| Single or Married Filing Separately | $10,000 aggregate | $50,000 | $75,000 |
| Married Filing Jointly | $10,000 aggregate | $100,000 | $150,000 |
- FBAR is filed as FinCEN Form 114, not with your tax return. File details at FinCEN Form 114.
- Form 8938 is filed with your Form 1040. See the form at Form 8938.
See IRS international pages at irs.gov/individuals/international-taxpayers and Publication 519 for residency rules.
📅 Deadline Alert: FBAR is due April 15 with an automatic extension to October 15. Individual returns are generally due April 15, with extension to October 15.
4) H‑1B and L‑1 workers: expect full resident filing and payroll withholding
SB 8 does not change federal payroll rules. However, employment disruptions can lead to mismatched W‑2s, mid‑year moves, and withholding mistakes.
For many H‑1B/L‑1 workers who are resident aliens:
– File Form 1040 and report worldwide income. The Form 1040 is available at Form 1040.
– Review whether you must claim foreign tax credits on Form 1116. The Form 1116 is available at Form 1116.
– Confirm W‑2 wages and withholding match pay stubs.
FICA note: Most H‑1B and L‑1 employees pay Social Security and Medicare taxes. F‑1 students may be FICA‑exempt during qualifying periods. See Publication 519 for residency and withholding basics.
Transition rules and “grandfather” points to know
- SB 8 applies based on county and sheriff requirements beginning January 1, 2026. It does not change federal tax law. There is no federal “grandfather” tax rule tied to SB 8.
- For Texas property tax relief, the new exemption amounts apply under Texas rules for 2026. Keep county appraisal paperwork and store receipts and asset lists for your business equipment.
If you change status in 2026 (for example, F‑1 to H‑1B), you may be a dual‑status alien. Dual‑status returns can require Form 1040 with a Form 1040‑NR statement. Publication 519 covers these rules.
What to do now: recommended actions and timeline (tax year 2026)
| Task | When to do it | Why it matters |
|---|---|---|
| Organize 2026 income records (W‑2, 1099, pay stubs) | Now through January 2027 | Prevent mismatches and filing delays |
| Update IRS address using Form 8822 after any move | Within weeks of moving | Avoid missed IRS notices |
| Check residency status under Publication 519 | Before filing 2026 return in 2027 | Determines Form 1040 vs 1040‑NR and worldwide income |
| Track foreign account high balances for FBAR | Throughout 2026 | FBAR triggers at $10,000 aggregate |
| Texas small business owners: inventory equipment list | Before local property tax filings | Supports the $125,000 exemption |
For many immigrants, the smartest move in 2026 is simple: keep records tight, respond quickly to IRS mail, and confirm your residency status before filing. If SB 8 increases enforcement pressure in your area, plan early for who will access your tax documents if you are unavailable.
⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.
Starting 2026, Texas law mandates closer cooperation between local sheriffs and ICE, potentially impacting mixed-status families. Simultaneously, the state provides significant tax relief for small businesses by increasing property exemptions to $125,000 and boosting homestead exemptions for residents. These changes do not alter federal IRS rules, but they necessitate diligent documentation, address updates via Form 8822, and careful monitoring of residency status for visa holders filing in 2027.
