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— a project of the Texas Public Policy Foundation —

Tax Reduction Fund

The Tax Reduction Fund is a special fund that consists of money transferred to it by the legislature and any interest earned on money in the fund that can be used to temporarily reduce a state’s tax rate. The goal of the Tax Reduction Fund is to lower the bottom line of the budget by transferring funds that may be available in the budget that would otherwise be spent and returning those dollars to taxpayers by reducing the broadest state tax.


  • Create the STaR Fund in 2019 to provide a means for reducing the bottom line of the budget while returning those dollars to the taxpayers by reducing taxes.
  • By appropriating dollars that were earmarked for budget growth directly into the STaR Fund along with excess dollars in the to provide tax relief, legislators can restrain the growth of government.

Talking points for liberty fighters

  • The House’s current appropriations process does not allow for funds cut from programs to reduce the budget’s bottom line. Instead, these funds are available to be appropriated to other programs.
  • The Texas Comptroller projects that the ESF will be roughly $11.9 billion by the end of FY2019, reaching toward the cap of $16.9 billion, and could soon reach it.
  • By including taxpayers as a funding constituent, more funds available by reducing the bottom line of the budget can be used to provide tax relief.