89R16235 LHC/KJE-F
By: Phelan H.B. No. 4407
A BILL TO BE ENTITLED
AN ACT
relating to providing property tax relief through the public school
finance system and property tax appraisal and administration.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. SHORT TITLE
SECTION 1.01. This Act may be cited as the Property Tax
Relief Act.
ARTICLE 2. SCHOOL DISTRICT TAX RATE COMPRESSION
SECTION 2.01. Subchapter F, Chapter 48, Education Code, is
amended by adding Section 48.2554 to read as follows:
Sec. 48.2554. MAXIMUM COMPRESSED TAX RATE FOR 2025-2026
SCHOOL YEAR. (a) Notwithstanding any other provision of this title
or Chapter 26, Tax Code, for the 2025-2026 school year, the
commissioner shall calculate the value of a school district's
maximum compressed tax rate by determining the district's maximum
compressed rate under Section 48.2551 or 48.2552(b), if applicable,
and reducing the tax rate determined under the applicable section
by $0.15.
(b) If a school district's maximum compressed tax rate as
calculated under Subsection (a) would be less than 90 percent of
another school district's maximum compressed tax rate under
Subsection (a), the district's maximum compressed tax rate is the
value at which the district's maximum compressed tax rate would be
equal to 90 percent of the other district's maximum compressed tax
rate.
(c) Notwithstanding any other provision of this title or
Chapter 26, Tax Code, for purposes of determining funding for
school districts for the 2025-2026 school year, a reference in any
of the following provisions of law to a school district's maximum
compressed tax rate or maximum compressed rate as determined under
Section 48.2551 means the maximum compressed tax rate determined
for the district under this section:
(1) Section 13.054(f);
(2) Section 45.003(d);
(3) Section 45.0032(a);
(4) Section 48.051(a);
(5) Sections 48.2553(a) and (e);
(6) Section 48.2556; and
(7) Section 26.08(n), Tax Code.
(d) For purposes of Section 30.003(f-1), a reference in that
section to Section 48.2551 includes this section.
(e) Notwithstanding any other provision of this title, for
purposes of determining a school district's maximum compressed tax
rate under Section 48.2551 for the 2026-2027 school year, the value
of the district's "PYMCR" is the maximum compressed tax rate
determined for the district under this section for the preceding
school year.
(f) This section expires September 1, 2027.
ARTICLE 3. ESCROW ACCOUNTS
SECTION 3.01. Section 31.072(a), Tax Code, is amended to
read as follows:
(a) At the request of a property owner, the [The] collector
for a taxing unit shall [may] enter a contract with the [a] property
owner under which the property owner deposits money in an escrow
account maintained by the collector to provide for the payment of
property taxes collected by the collector on any property the
person owns.
SECTION 3.02. Sections 31.072(h) and (i), Tax Code, are
repealed.
SECTION 3.03. This article applies only to a tax year that
begins on or after the effective date of this article.
ARTICLE 4. LIMITATION ON INCREASES IN VALUE OF REAL PROPERTY
SECTION 4.01. (a) Section 1.12(d), Tax Code, as amended by
Section 4.01, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
Called Session, 2023, and effective until January 1, 2027, is
amended to read as follows:
(d) For purposes of this section, the appraisal ratio of
property to which Section 23.23 [or 23.231] applies is the ratio of
the property's market value as determined by the appraisal district
or appraisal review board, as applicable, to the market value of the
property according to law. The appraisal ratio is not calculated
according to the appraised value of the property as limited by
Section 23.23 [or 23.231].
(b) Section 4.02, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Section
1.12(d), Tax Code, effective January 1, 2027, is repealed.
SECTION 4.02. The heading to Section 23.23, Tax Code, is
amended to read as follows:
Sec. 23.23. LIMITATION ON APPRAISED VALUE OF REAL PROPERTY
[RESIDENCE HOMESTEAD].
SECTION 4.03. Section 23.23, Tax Code, is amended by
amending Subsections (a), (b), (c), and (e) and adding Subsections
(c-2), (c-3), (c-4), and (h) to read as follows:
(a) Notwithstanding the requirements of Section 25.18 and
regardless of whether the appraisal office has appraised the
property and determined the market value of the property for the tax
year, an appraisal office may increase the appraised value of real
property [a residence homestead] for a tax year to an amount not to
exceed the lesser of:
(1) the market value of the property for the most
recent tax year that the market value was determined by the
appraisal office; or
(2) the sum of:
(A) five [10] percent of the appraised value of
the property for the preceding tax year;
(B) the appraised value of the property for the
preceding tax year; and
(C) the market value of all new improvements to
the property.
(b) When appraising real property [a residence homestead],
the chief appraiser shall:
(1) appraise the property at its market value; and
(2) include in the appraisal records both the market
value of the property and the amount computed under Subsection
(a)(2).
(c) The limitation provided by Subsection (a) takes effect
on January 1 of the tax year following the first tax year in which
the owner owns the property on January 1 [as to a residence
homestead on January 1 of the tax year following the first tax year
the owner qualifies the property for an exemption under Section
11.13]. Except as provided by Subsection (c-2) or (c-3), the [The]
limitation expires on January 1 of the first tax year following the
year in which [that neither] the owner of the property ceases to own
the property.
(c-2) If property subject to a limitation under this section
qualifies for an exemption under Section 11.13 when the ownership
of the property is transferred to the owner's spouse or surviving
spouse, the limitation expires on January 1 of the first tax year
following the year in which [when the limitation took effect nor]
the owner's spouse or surviving spouse ceases to own the property,
unless the limitation is further continued under this subsection on
the subsequent transfer to a spouse or surviving spouse [qualifies
for an exemption under Section 11.13].
(c-3) If property subject to a limitation under Subsection
(a), other than a residence homestead, is owned by two or more
persons, the limitation expires on January 1 of the first tax year
following the year in which the ownership of at least a 50 percent
interest in the property is sold or otherwise transferred.
(c-4) For purposes of applying the limitation provided by
this section, a person who acquired real property in a tax year
before the 2025 tax year, other than property that qualified as the
residence homestead of the person under Section 11.13 in the 2025
tax year, is considered to have acquired the property on January 1,
2025.
(e) In this section, "new improvement" means an improvement
to real property [a residence homestead] made after the most recent
appraisal of the property that increases the market value of the
property and the value of which is not included in the appraised
value of the property for the preceding tax year. The term does not
include repairs to or ordinary maintenance of an existing structure
or the grounds or another feature of the property.
(h) In this section, "real property" includes a
manufactured home as that term is defined by Section 1201.003,
Occupations Code, that qualifies as a residence homestead under
Section 11.13 of this code, regardless of whether the owner of the
manufactured home elects to treat the manufactured home as real
property under Section 1201.2055, Occupations Code.
SECTION 4.04. (a) Sections 25.19(b) and (g), Tax Code, as
amended by Section 4.04, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, and effective until January
1, 2027, are amended to read as follows:
(b) The chief appraiser shall separate real from personal
property and include in the notice for each:
(1) a list of the taxing units in which the property is
taxable;
(2) the appraised value of the property in the
preceding year;
(3) the taxable value of the property in the preceding
year for each taxing unit taxing the property;
(4) the appraised value of the property for the
current year, the kind and amount of each exemption and partial
exemption, if any, approved for the property for the current year
and for the preceding year, and, if an exemption or partial
exemption that was approved for the preceding year was canceled or
reduced for the current year, the amount of the exemption or partial
exemption canceled or reduced;
[(4-a) a statement of whether the property qualifies
for the circuit breaker limitation on appraised value provided by
Section 23.231;]
(5) in italic typeface, the following
statement: "The Texas Legislature does not set the amount of your
local taxes. Your property tax burden is decided by your locally
elected officials, and all inquiries concerning your taxes should
be directed to those officials";
(6) a detailed explanation of the time and procedure
for protesting the value;
(7) the date and place the appraisal review board will
begin hearing protests;
(8) an explanation of the availability and purpose of
an informal conference with the appraisal office before a hearing
on a protest; and
(9) a brief explanation that the governing body of
each taxing unit decides whether or not taxes on the property will
increase and the appraisal district only determines the value of
the property.
(g) By April 1 or as soon thereafter as practicable if the
property is a single-family residence that qualifies for an
exemption under Section 11.13, or by May 1 or as soon thereafter as
practicable in connection with any other property, the chief
appraiser shall deliver a written notice to the owner of each
property not included in a notice required to be delivered under
Subsection (a), if the property was reappraised in the current tax
year, if the ownership of the property changed during the preceding
year, or if the property owner or the agent of a property owner
authorized under Section 1.111 makes a written request for the
notice. The chief appraiser shall separate real from personal
property and include in the notice for each property:
(1) the appraised value of the property in the
preceding year;
(2) the appraised value of the property for the
current year and the kind of each partial exemption, if any,
approved for the current year;
[(2-a) a statement of whether the property qualifies
for the circuit breaker limitation on appraised value provided by
Section 23.231;]
(3) a detailed explanation of the time and procedure
for protesting the value; and
(4) the date and place the appraisal review board will
begin hearing protests.
(b) Section 4.05, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Sections
25.19(b) and (g), Tax Code, effective January 1, 2027, is repealed.
SECTION 4.05. (a) Section 41.41(a), Tax Code, as amended by
Section 4.07, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
Called Session, 2023, and effective until January 1, 2027, is
amended to read as follows:
(a) A property owner is entitled to protest before the
appraisal review board the following actions:
(1) determination of the appraised value of the
owner's property or, in the case of land appraised as provided by
Subchapter C, D, E, or H, Chapter 23, determination of its appraised
or market value;
(2) unequal appraisal of the owner's property;
(3) inclusion of the owner's property on the appraisal
records;
(4) denial to the property owner in whole or in part of
a partial exemption;
[(4-a) determination that the owner's property does
not qualify for the circuit breaker limitation on appraised value
provided by Section 23.231;]
(5) determination that the owner's land does not
qualify for appraisal as provided by Subchapter C, D, E, or H,
Chapter 23;
(6) identification of the taxing units in which the
owner's property is taxable in the case of the appraisal district's
appraisal roll;
(7) determination that the property owner is the owner
of property;
(8) a determination that a change in use of land
appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
or
(9) any other action of the chief appraiser, appraisal
district, or appraisal review board that applies to and adversely
affects the property owner.
(b) Section 4.08, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Section
41.41(a), Tax Code, effective January 1, 2027, is repealed.
SECTION 4.06. (a) Section 42.26(d), Tax Code, as amended by
Section 4.09, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
Called Session, 2023, and effective until January 1, 2027, is
amended to read as follows:
(d) For purposes of this section, the value of the property
subject to the suit and the value of a comparable property or sample
property that is used for comparison must be the market value
determined by the appraisal district when the property is subject
to the limitation on appraised value imposed by Section 23.23 [or
23.231].
(b) Section 4.10, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Section
42.26(d), Tax Code, effective January 1, 2027, is repealed.
SECTION 4.07. (a) Sections 403.302(d) and (i), Government
Code, as amended by Section 4.11, Chapter 1 (S.B. 2), Acts of the
88th Legislature, 2nd Called Session, 2023, and effective until
January 1, 2027, are amended to read as follows:
(d) For the purposes of this section, "taxable value" means
the market value of all taxable property less:
(1) the total dollar amount of any residence homestead
exemptions lawfully granted under Section 11.13(b) or (c), Tax
Code, in the year that is the subject of the study for each school
district;
(2) one-half of the total dollar amount of any
residence homestead exemptions granted under Section 11.13(n), Tax
Code, in the year that is the subject of the study for each school
district;
(3) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(4) subject to Subsection (e), the total dollar amount
of any captured appraised value of property that:
(A) is within a reinvestment zone created on or
before May 31, 1999, or is proposed to be included within the
boundaries of a reinvestment zone as the boundaries of the zone and
the proposed portion of tax increment paid into the tax increment
fund by a school district are described in a written notification
provided by the municipality or the board of directors of the zone
to the governing bodies of the other taxing units in the manner
provided by former Section 311.003(e), Tax Code, before May 31,
1999, and within the boundaries of the zone as those boundaries
existed on September 1, 1999, including subsequent improvements to
the property regardless of when made;
(B) generates taxes paid into a tax increment
fund created under Chapter 311, Tax Code, under a reinvestment zone
financing plan approved under Section 311.011(d), Tax Code, on or
before September 1, 1999; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(5) the total dollar amount of any captured appraised
value of property that:
(A) is within a reinvestment zone:
(i) created on or before December 31, 2008,
by a municipality with a population of less than 18,000; and
(ii) the project plan for which includes
the alteration, remodeling, repair, or reconstruction of a
structure that is included on the National Register of Historic
Places and requires that a portion of the tax increment of the zone
be used for the improvement or construction of related facilities
or for affordable housing;
(B) generates school district taxes that are paid
into a tax increment fund created under Chapter 311, Tax Code; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(6) the total dollar amount of any exemptions granted
under Section 11.251 or 11.253, Tax Code;
(7) the difference between the comptroller's estimate
of the market value and the productivity value of land that
qualifies for appraisal on the basis of its productive capacity,
except that the productivity value estimated by the comptroller may
not exceed the fair market value of the land;
(8) the portion of the appraised value of residence
homesteads of individuals who receive a tax limitation under
Section 11.26, Tax Code, on which school district taxes are not
imposed in the year that is the subject of the study, calculated as
if the residence homesteads were appraised at the full value
required by law;
(9) a portion of the market value of property not
otherwise fully taxable by the district at market value because of
action required by statute or the constitution of this state, other
than Section 11.311, Tax Code, that, if the tax rate adopted by the
district is applied to it, produces an amount equal to the
difference between the tax that the district would have imposed on
the property if the property were fully taxable at market value and
the tax that the district is actually authorized to impose on the
property, if this subsection does not otherwise require that
portion to be deducted;
(10) the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income;
(11) the appraised value of property the collection of
delinquent taxes on which is deferred under Section 33.06, Tax
Code;
(12) the portion of the appraised value of property
the collection of delinquent taxes on which is deferred under
Section 33.065, Tax Code;
(13) the amount by which the market value of property
to which Section 23.23 [or 23.231], Tax Code, applies exceeds the
appraised value of that property as calculated under that section
[Section 23.23 or 23.231, Tax Code, as applicable]; and
(14) the total dollar amount of any exemptions granted
under Section 11.35, Tax Code.
(i) If the comptroller determines in the study that the
market value of property in a school district as determined by the
appraisal district that appraises property for the school district,
less the total of the amounts and values listed in Subsection (d) as
determined by that appraisal district, is valid, the comptroller,
in determining the taxable value of property in the school district
under Subsection (d), shall for purposes of Subsection (d)(13)
subtract from the market value as determined by the appraisal
district of properties to which Section 23.23 [or 23.231], Tax
Code, applies the amount by which that amount exceeds the appraised
value of those properties as calculated by the appraisal district
under Section 23.23 [or 23.231], Tax Code[, as applicable]. If the
comptroller determines in the study that the market value of
property in a school district as determined by the appraisal
district that appraises property for the school district, less the
total of the amounts and values listed in Subsection (d) as
determined by that appraisal district, is not valid, the
comptroller, in determining the taxable value of property in the
school district under Subsection (d), shall for purposes of
Subsection (d)(13) subtract from the market value as estimated by
the comptroller of properties to which Section 23.23 [or 23.231],
Tax Code, applies the amount by which that amount exceeds the
appraised value of those properties as calculated by the appraisal
district under Section 23.23 [or 23.231], Tax Code[, as
applicable].
(b) Section 4.12, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Sections
403.302(d) and (i), Government Code, effective January 1, 2027, is
repealed.
SECTION 4.08. The following provisions of the Tax Code are
repealed:
(1) Sections 23.23(c-1) and 25.19(o); and
(2) Section 23.231.
SECTION 4.09. This article applies only to the appraisal
for ad valorem tax purposes of real property for a tax year that
begins on or after the effective date of this article.
ARTICLE 5. EFFECTIVE DATES
SECTION 5.01. Except as otherwise provided by this article,
this Act takes effect September 1, 2025.
SECTION 5.02. Article 3 of this Act takes effect January 1,
2026.
SECTION 5.03. Article 4 of this Act takes effect January 1,
2026, but only if the constitutional amendment proposed by the 89th
Legislature, Regular Session, 2025, to authorize the legislature to
limit the maximum appraised value of real property for ad valorem
tax purposes to 105 percent or more of the appraised value of the
property for the preceding tax year is approved by the voters. If
that amendment is not approved by the voters, Article 4 of this Act
has no effect.