Texas House Bill HB123

Texas 2021 - 87th 2nd C.S.

Caption

Relating to an increase in the amount of the exemption of residence homesteads from ad valorem taxation by a school district, a reduction in the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect the increased exemption amount, and the protection of school districts against the resulting loss in local revenue.

Impact

Alongside the increase in exemption amounts, the bill also seeks to establish a reduction in the limitation on school district ad valorem taxes that can be imposed on these exempt residences. This means that school districts will not be able to increase taxes beyond the amounts set when the exemption first becomes active for the homeowner. Consequently, this measure is expected to alleviate the financial strains on elderly and disabled residents while also imposing restrictions on school districts in terms of their revenue generation capabilities.

Summary

House Bill 123 proposes an increase in the exemption on residence homesteads from ad valorem taxation imposed by school districts. The bill aims to raise the exemption amount from $25,000 to $50,000 for residents, particularly benefiting elderly and disabled homeowners. This significant change is designed to provide greater financial relief to these groups by reducing their property tax burden, making homeownership more affordable and sustainable for vulnerable populations.

Contention

The proposal has sparked discussions regarding its potential impact on school district funding. Critics argue that the increased exemptions could lead to significant revenue losses for school districts, compelling them to seek alternative funding sources or reduce services. However, supporters believe that the state should step in to compensate for these losses with additional state aid. The bill includes provisions to ensure that school districts are protected against revenue losses that stem from the implementation of these increased exemptions, effectively creating a framework for safeguarding educational funding while providing tax relief.