Texas House Bill HB4407

Texas 2025 - 89th Regular

• Filed: 3/11/25

Caption

Relating to providing property tax relief through the public school finance system and property tax appraisal and administration.

Impact

The enactment of HB4407 is likely to affect various components of the Texas Tax Code, particularly those related to property appraisal and taxation. It establishes a new maximum compressed tax rate for school districts, which is intended to maintain equity across districts and prevent disproportionate increases in property tax rates. Additionally, it allows for property owners to create escrow accounts for tax payments, offering a structured way to manage those financial obligations. Another notable aspect of the bill is the introduction of limitations on the increase in property values for tax purposes, aimed at providing stability for homeowners against rapid market fluctuations.

Summary

House Bill 4407, known as the Property Tax Relief Act, introduces significant revisions to Texas's property tax framework primarily aimed at reducing the financial burden on property owners through adjustments in the public school finance system. The bill specifically establishes parameters for school district tax rate compression for the 2025-2026 academic year, with the intent to lower tax rates by $0.15 per $100 of valuation, thereby easing the overall property tax load on citizens. This gradual introduction of tax rate adjustments reflects an effort to make property taxes more manageable for residential areas struggling with high taxes amid fluctuating property values.

Contention

However, the bill is not without controversy. Critics argue that while the tax rate compression is beneficial in theory, it may lead to decreased funding for schools, as the initial tax revenue may fall short if property valuations do not align with projections. Additionally, amendments that stipulate conditions under which appraisal values can be raised may generate pushback from local appraisal boards. The bill's effectiveness hinges on the broader structure of educational funding in Texas and public perception regarding the impact of potential reductions in school funding against the backdrop of rising real estate values.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 1. General Provisions
  • Section: 12
  • Section: New Section

Government Code

• Chapter 403. Comptroller Of Public Accounts
  • Section: 302

Education Code

• Chapter 48. Foundation School Program
  • Section: New Section