Texas Senate bill by Sen. Hinojosa allows diesel fuel tax credits for auxiliary power units

Passed bill authored by State Sen. Juan Hinojosa aims to amend the Tax Code to provide tax credits or refunds for diesel fuel consumed by auxiliary power units and power take-off equipment, excluding fuel used for climate control or idling, according to the Texas Legislature website.

In the Senate, 11 Democrats and 20 Republicans voted in favor of the bill, with no opposition.

Meanwhile, in the House, 45 Democrats and 79 Republicans voted in favor, also with no opposing votes.

Juan Hinojosa introduced the bill in the Texas Senate on Monday, Jan. 13, during the 89th regular legislative session.

Hinojosa graduated from Pan American University with a BS and again from Georgetown University with a JD.

Hinojosa, a Democrat, was elected to the Texas State Senate in 2003 to represent the state’s 20th Senate district, replacing previous state senator Carlos Truan.

According to the Texas Legislature, the bill’s official text was summarized as follows: ‘Relating to a credit or refund for diesel fuel taxes paid on diesel fuel used in this state by auxiliary power units or power take-off equipment’.

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill amends the Tax Code to allow a credit or refund for diesel fuel taxes paid on diesel fuel utilized by auxiliary power units or power take-off equipment in Texas. License holders can claim a credit on their tax return, while non-license holders can file a refund claim for eligible diesel fuel use. The diesel fuel consumption must be measured accurately while the vehicle is stationary using approved devices, or a credit or refund is given based on a percentage determined by the comptroller. The bill excludes fuel used for climate-control systems or idling from eligibility. The act takes effect Sept. 1, 2025.

The bill received its final legislative approval on Saturday, May 10, and was filed without the Governor’s signature on Saturday, May 24.

Bills in Texas go through a multi-step legislative process, including committee review, debates, and votes in both chambers before reaching a final decision. Each session, there are typically thousands of bills introduced, but only a portion successfully navigate the process to become law.

You can read more about the bills and other measures here.