Relating to the limitation on increases in the appraised value of a residence homestead for ad valorem taxation.
Should SB118 be enacted, it will have a significant impact on state laws related to property taxation through the adjustment of limits on how much appraisal values for homesteads can be increased year-over-year. This amendment is essential for ensuring that homeowners are not disproportionately affected by market volatility that leads to sudden spikes in property tax bills. Furthermore, the effective date of this legislation is contingent upon the approval of a constitutional amendment that allows the legislature to establish a lower limit for these appraisals. If the voters reject the amendment, SB118 will not be implemented, leaving the current provisions intact.
Senate Bill 118 (SB118) proposes an amendment to the Texas Tax Code that seeks to limit the increase in the appraised value of a residence homestead for ad valorem taxation purposes. The bill stipulates that the appraised value cannot exceed either the market value determined by the appraisal office in the most recent tax year or a calculated increase based on a capped percentage from the previous year's appraised value. Specifically, the allowable increase would be set at a maximum of 5% per tax year, introducing a lower bar than the previous limit of 10%. The intent behind this legislation is to provide financial relief to homeowners by preventing significant jumps in property taxes due to rapidly increasing market values.
While the bill has garnered support among homeowners and advocacy groups focused on housing affordability, it is also accompanied by contention. Opponents argue that capping property tax increases could limit local governments' revenue and their ability to fund vital services, such as education and public safety. Proponents counter that the legislation is necessary to alleviate the financial burden on residents, especially in areas where property values are escalating rapidly. The discussion around SB118 has seen stakeholders from both sides mobilizing to present their cases to legislative committees, showing that property tax reforms are a polarizing issue within the state's political landscape.