Texas 2025 - 89th Regular

Texas House Bill HB4407 Compare Versions

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1	1	89R16235 LHC/KJE-F
2	2	By: Phelan H.B. No. 4407
3	3
4	4
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to providing property tax relief through the public school
10	10	finance system and property tax appraisal and administration.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	ARTICLE 1. SHORT TITLE
13	13	SECTION 1.01. This Act may be cited as the Property Tax
14	14	Relief Act.
15	15	ARTICLE 2. SCHOOL DISTRICT TAX RATE COMPRESSION
16	16	SECTION 2.01. Subchapter F, Chapter 48, Education Code, is
17	17	amended by adding Section 48.2554 to read as follows:
18	18	Sec. 48.2554. MAXIMUM COMPRESSED TAX RATE FOR 2025-2026
19	19	SCHOOL YEAR. (a) Notwithstanding any other provision of this title
20	20	or Chapter 26, Tax Code, for the 2025-2026 school year, the
21	21	commissioner shall calculate the value of a school district's
22	22	maximum compressed tax rate by determining the district's maximum
23	23	compressed rate under Section 48.2551 or 48.2552(b), if applicable,
24	24	and reducing the tax rate determined under the applicable section
25	25	by $0.15.
26	26	(b) If a school district's maximum compressed tax rate as
27	27	calculated under Subsection (a) would be less than 90 percent of
28	28	another school district's maximum compressed tax rate under
29	29	Subsection (a), the district's maximum compressed tax rate is the
30	30	value at which the district's maximum compressed tax rate would be
31	31	equal to 90 percent of the other district's maximum compressed tax
32	32	rate.
33	33	(c) Notwithstanding any other provision of this title or
34	34	Chapter 26, Tax Code, for purposes of determining funding for
35	35	school districts for the 2025-2026 school year, a reference in any
36	36	of the following provisions of law to a school district's maximum
37	37	compressed tax rate or maximum compressed rate as determined under
38	38	Section 48.2551 means the maximum compressed tax rate determined
39	39	for the district under this section:
40	40	(1) Section 13.054(f);
41	41	(2) Section 45.003(d);
42	42	(3) Section 45.0032(a);
43	43	(4) Section 48.051(a);
44	44	(5) Sections 48.2553(a) and (e);
45	45	(6) Section 48.2556; and
46	46	(7) Section 26.08(n), Tax Code.
47	47	(d) For purposes of Section 30.003(f-1), a reference in that
48	48	section to Section 48.2551 includes this section.
49	49	(e) Notwithstanding any other provision of this title, for
50	50	purposes of determining a school district's maximum compressed tax
51	51	rate under Section 48.2551 for the 2026-2027 school year, the value
52	52	of the district's "PYMCR" is the maximum compressed tax rate
53	53	determined for the district under this section for the preceding
54	54	school year.
55	55	(f) This section expires September 1, 2027.
56	56	ARTICLE 3. ESCROW ACCOUNTS
57	57	SECTION 3.01. Section 31.072(a), Tax Code, is amended to
58	58	read as follows:
59	59	(a) At the request of a property owner, the [The] collector
60	60	for a taxing unit shall [may] enter a contract with the [a] property
61	61	owner under which the property owner deposits money in an escrow
62	62	account maintained by the collector to provide for the payment of
63	63	property taxes collected by the collector on any property the
64	64	person owns.
65	65	SECTION 3.02. Sections 31.072(h) and (i), Tax Code, are
66	66	repealed.
67	67	SECTION 3.03. This article applies only to a tax year that
68	68	begins on or after the effective date of this article.
69	69	ARTICLE 4. LIMITATION ON INCREASES IN VALUE OF REAL PROPERTY
70	70	SECTION 4.01. (a) Section 1.12(d), Tax Code, as amended by
71	71	Section 4.01, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
72	72	Called Session, 2023, and effective until January 1, 2027, is
73	73	amended to read as follows:
74	74	(d) For purposes of this section, the appraisal ratio of
75	75	property to which Section 23.23 [or 23.231] applies is the ratio of
76	76	the property's market value as determined by the appraisal district
77	77	or appraisal review board, as applicable, to the market value of the
78	78	property according to law. The appraisal ratio is not calculated
79	79	according to the appraised value of the property as limited by
80	80	Section 23.23 [or 23.231].
81	81	(b) Section 4.02, Chapter 1 (S.B. 2), Acts of the 88th
82	82	Legislature, 2nd Called Session, 2023, which amended Section
83	83	1.12(d), Tax Code, effective January 1, 2027, is repealed.
84	84	SECTION 4.02. The heading to Section 23.23, Tax Code, is
85	85	amended to read as follows:
86	86	Sec. 23.23. LIMITATION ON APPRAISED VALUE OF REAL PROPERTY
87	87	[RESIDENCE HOMESTEAD].
88	88	SECTION 4.03. Section 23.23, Tax Code, is amended by
89	89	amending Subsections (a), (b), (c), and (e) and adding Subsections
90	90	(c-2), (c-3), (c-4), and (h) to read as follows:
91	91	(a) Notwithstanding the requirements of Section 25.18 and
92	92	regardless of whether the appraisal office has appraised the
93	93	property and determined the market value of the property for the tax
94	94	year, an appraisal office may increase the appraised value of real
95	95	property [a residence homestead] for a tax year to an amount not to
96	96	exceed the lesser of:
97	97	(1) the market value of the property for the most
98	98	recent tax year that the market value was determined by the
99	99	appraisal office; or
100	100	(2) the sum of:
101	101	(A) five [10] percent of the appraised value of
102	102	the property for the preceding tax year;
103	103	(B) the appraised value of the property for the
104	104	preceding tax year; and
105	105	(C) the market value of all new improvements to
106	106	the property.
107	107	(b) When appraising real property [a residence homestead],
108	108	the chief appraiser shall:
109	109	(1) appraise the property at its market value; and
110	110	(2) include in the appraisal records both the market
111	111	value of the property and the amount computed under Subsection
112	112	(a)(2).
113	113	(c) The limitation provided by Subsection (a) takes effect
114	114	on January 1 of the tax year following the first tax year in which
115	115	the owner owns the property on January 1 [as to a residence
116	116	homestead on January 1 of the tax year following the first tax year
117	117	the owner qualifies the property for an exemption under Section
118	118	11.13]. Except as provided by Subsection (c-2) or (c-3), the [The]
119	119	limitation expires on January 1 of the first tax year following the
120	120	year in which [that neither] the owner of the property ceases to own
121	121	the property.
122	122	(c-2) If property subject to a limitation under this section
123	123	qualifies for an exemption under Section 11.13 when the ownership
124	124	of the property is transferred to the owner's spouse or surviving
125	125	spouse, the limitation expires on January 1 of the first tax year
126	126	following the year in which [when the limitation took effect nor]
127	127	the owner's spouse or surviving spouse ceases to own the property,
128	128	unless the limitation is further continued under this subsection on
129	129	the subsequent transfer to a spouse or surviving spouse [qualifies
130	130	for an exemption under Section 11.13].
131	131	(c-3) If property subject to a limitation under Subsection
132	132	(a), other than a residence homestead, is owned by two or more
133	133	persons, the limitation expires on January 1 of the first tax year
134	134	following the year in which the ownership of at least a 50 percent
135	135	interest in the property is sold or otherwise transferred.
136	136	(c-4) For purposes of applying the limitation provided by
137	137	this section, a person who acquired real property in a tax year
138	138	before the 2025 tax year, other than property that qualified as the
139	139	residence homestead of the person under Section 11.13 in the 2025
140	140	tax year, is considered to have acquired the property on January 1,
141	141	2025.
142	142	(e) In this section, "new improvement" means an improvement
143	143	to real property [a residence homestead] made after the most recent
144	144	appraisal of the property that increases the market value of the
145	145	property and the value of which is not included in the appraised
146	146	value of the property for the preceding tax year. The term does not
147	147	include repairs to or ordinary maintenance of an existing structure
148	148	or the grounds or another feature of the property.
149	149	(h) In this section, "real property" includes a
150	150	manufactured home as that term is defined by Section 1201.003,
151	151	Occupations Code, that qualifies as a residence homestead under
152	152	Section 11.13 of this code, regardless of whether the owner of the
153	153	manufactured home elects to treat the manufactured home as real
154	154	property under Section 1201.2055, Occupations Code.
155	155	SECTION 4.04. (a) Sections 25.19(b) and (g), Tax Code, as
156	156	amended by Section 4.04, Chapter 1 (S.B. 2), Acts of the 88th
157	157	Legislature, 2nd Called Session, 2023, and effective until January
158	158	1, 2027, are amended to read as follows:
159	159	(b) The chief appraiser shall separate real from personal
160	160	property and include in the notice for each:
161	161	(1) a list of the taxing units in which the property is
162	162	taxable;
163	163	(2) the appraised value of the property in the
164	164	preceding year;
165	165	(3) the taxable value of the property in the preceding
166	166	year for each taxing unit taxing the property;
167	167	(4) the appraised value of the property for the
168	168	current year, the kind and amount of each exemption and partial
169	169	exemption, if any, approved for the property for the current year
170	170	and for the preceding year, and, if an exemption or partial
171	171	exemption that was approved for the preceding year was canceled or
172	172	reduced for the current year, the amount of the exemption or partial
173	173	exemption canceled or reduced;
174	174	[(4-a) a statement of whether the property qualifies
175	175	for the circuit breaker limitation on appraised value provided by
176	176	Section 23.231;]
177	177	(5) in italic typeface, the following
178	178	statement: "The Texas Legislature does not set the amount of your
179	179	local taxes. Your property tax burden is decided by your locally
180	180	elected officials, and all inquiries concerning your taxes should
181	181	be directed to those officials";
182	182	(6) a detailed explanation of the time and procedure
183	183	for protesting the value;
184	184	(7) the date and place the appraisal review board will
185	185	begin hearing protests;
186	186	(8) an explanation of the availability and purpose of
187	187	an informal conference with the appraisal office before a hearing
188	188	on a protest; and
189	189	(9) a brief explanation that the governing body of
190	190	each taxing unit decides whether or not taxes on the property will
191	191	increase and the appraisal district only determines the value of
192	192	the property.
193	193	(g) By April 1 or as soon thereafter as practicable if the
194	194	property is a single-family residence that qualifies for an
195	195	exemption under Section 11.13, or by May 1 or as soon thereafter as
196	196	practicable in connection with any other property, the chief
197	197	appraiser shall deliver a written notice to the owner of each
198	198	property not included in a notice required to be delivered under
199	199	Subsection (a), if the property was reappraised in the current tax
200	200	year, if the ownership of the property changed during the preceding
201	201	year, or if the property owner or the agent of a property owner
202	202	authorized under Section 1.111 makes a written request for the
203	203	notice. The chief appraiser shall separate real from personal
204	204	property and include in the notice for each property:
205	205	(1) the appraised value of the property in the
206	206	preceding year;
207	207	(2) the appraised value of the property for the
208	208	current year and the kind of each partial exemption, if any,
209	209	approved for the current year;
210	210	[(2-a) a statement of whether the property qualifies
211	211	for the circuit breaker limitation on appraised value provided by
212	212	Section 23.231;]
213	213	(3) a detailed explanation of the time and procedure
214	214	for protesting the value; and
215	215	(4) the date and place the appraisal review board will
216	216	begin hearing protests.
217	217	(b) Section 4.05, Chapter 1 (S.B. 2), Acts of the 88th
218	218	Legislature, 2nd Called Session, 2023, which amended Sections
219	219	25.19(b) and (g), Tax Code, effective January 1, 2027, is repealed.
220	220	SECTION 4.05. (a) Section 41.41(a), Tax Code, as amended by
221	221	Section 4.07, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
222	222	Called Session, 2023, and effective until January 1, 2027, is
223	223	amended to read as follows:
224	224	(a) A property owner is entitled to protest before the
225	225	appraisal review board the following actions:
226	226	(1) determination of the appraised value of the
227	227	owner's property or, in the case of land appraised as provided by
228	228	Subchapter C, D, E, or H, Chapter 23, determination of its appraised
229	229	or market value;
230	230	(2) unequal appraisal of the owner's property;
231	231	(3) inclusion of the owner's property on the appraisal
232	232	records;
233	233	(4) denial to the property owner in whole or in part of
234	234	a partial exemption;
235	235	[(4-a) determination that the owner's property does
236	236	not qualify for the circuit breaker limitation on appraised value
237	237	provided by Section 23.231;]
238	238	(5) determination that the owner's land does not
239	239	qualify for appraisal as provided by Subchapter C, D, E, or H,
240	240	Chapter 23;
241	241	(6) identification of the taxing units in which the
242	242	owner's property is taxable in the case of the appraisal district's
243	243	appraisal roll;
244	244	(7) determination that the property owner is the owner
245	245	of property;
246	246	(8) a determination that a change in use of land
247	247	appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
248	248	or
249	249	(9) any other action of the chief appraiser, appraisal
250	250	district, or appraisal review board that applies to and adversely
251	251	affects the property owner.
252	252	(b) Section 4.08, Chapter 1 (S.B. 2), Acts of the 88th
253	253	Legislature, 2nd Called Session, 2023, which amended Section
254	254	41.41(a), Tax Code, effective January 1, 2027, is repealed.
255	255	SECTION 4.06. (a) Section 42.26(d), Tax Code, as amended by
256	256	Section 4.09, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
257	257	Called Session, 2023, and effective until January 1, 2027, is
258	258	amended to read as follows:
259	259	(d) For purposes of this section, the value of the property
260	260	subject to the suit and the value of a comparable property or sample
261	261	property that is used for comparison must be the market value
262	262	determined by the appraisal district when the property is subject
263	263	to the limitation on appraised value imposed by Section 23.23 [or
264	264	23.231].
265	265	(b) Section 4.10, Chapter 1 (S.B. 2), Acts of the 88th
266	266	Legislature, 2nd Called Session, 2023, which amended Section
267	267	42.26(d), Tax Code, effective January 1, 2027, is repealed.
268	268	SECTION 4.07. (a) Sections 403.302(d) and (i), Government
269	269	Code, as amended by Section 4.11, Chapter 1 (S.B. 2), Acts of the
270	270	88th Legislature, 2nd Called Session, 2023, and effective until
271	271	January 1, 2027, are amended to read as follows:
272	272	(d) For the purposes of this section, "taxable value" means
273	273	the market value of all taxable property less:
274	274	(1) the total dollar amount of any residence homestead
275	275	exemptions lawfully granted under Section 11.13(b) or (c), Tax
276	276	Code, in the year that is the subject of the study for each school
277	277	district;
278	278	(2) one-half of the total dollar amount of any
279	279	residence homestead exemptions granted under Section 11.13(n), Tax
280	280	Code, in the year that is the subject of the study for each school
281	281	district;
282	282	(3) the total dollar amount of any exemptions granted
283	283	before May 31, 1993, within a reinvestment zone under agreements
284	284	authorized by Chapter 312, Tax Code;
285	285	(4) subject to Subsection (e), the total dollar amount
286	286	of any captured appraised value of property that:
287	287	(A) is within a reinvestment zone created on or
288	288	before May 31, 1999, or is proposed to be included within the
289	289	boundaries of a reinvestment zone as the boundaries of the zone and
290	290	the proposed portion of tax increment paid into the tax increment
291	291	fund by a school district are described in a written notification
292	292	provided by the municipality or the board of directors of the zone
293	293	to the governing bodies of the other taxing units in the manner
294	294	provided by former Section 311.003(e), Tax Code, before May 31,
295	295	1999, and within the boundaries of the zone as those boundaries
296	296	existed on September 1, 1999, including subsequent improvements to
297	297	the property regardless of when made;
298	298	(B) generates taxes paid into a tax increment
299	299	fund created under Chapter 311, Tax Code, under a reinvestment zone
300	300	financing plan approved under Section 311.011(d), Tax Code, on or
301	301	before September 1, 1999; and
302	302	(C) is eligible for tax increment financing under
303	303	Chapter 311, Tax Code;
304	304	(5) the total dollar amount of any captured appraised
305	305	value of property that:
306	306	(A) is within a reinvestment zone:
307	307	(i) created on or before December 31, 2008,
308	308	by a municipality with a population of less than 18,000; and
309	309	(ii) the project plan for which includes
310	310	the alteration, remodeling, repair, or reconstruction of a
311	311	structure that is included on the National Register of Historic
312	312	Places and requires that a portion of the tax increment of the zone
313	313	be used for the improvement or construction of related facilities
314	314	or for affordable housing;
315	315	(B) generates school district taxes that are paid
316	316	into a tax increment fund created under Chapter 311, Tax Code; and
317	317	(C) is eligible for tax increment financing under
318	318	Chapter 311, Tax Code;
319	319	(6) the total dollar amount of any exemptions granted
320	320	under Section 11.251 or 11.253, Tax Code;
321	321	(7) the difference between the comptroller's estimate
322	322	of the market value and the productivity value of land that
323	323	qualifies for appraisal on the basis of its productive capacity,
324	324	except that the productivity value estimated by the comptroller may
325	325	not exceed the fair market value of the land;
326	326	(8) the portion of the appraised value of residence
327	327	homesteads of individuals who receive a tax limitation under
328	328	Section 11.26, Tax Code, on which school district taxes are not
329	329	imposed in the year that is the subject of the study, calculated as
330	330	if the residence homesteads were appraised at the full value
331	331	required by law;
332	332	(9) a portion of the market value of property not
333	333	otherwise fully taxable by the district at market value because of
334	334	action required by statute or the constitution of this state, other
335	335	than Section 11.311, Tax Code, that, if the tax rate adopted by the
336	336	district is applied to it, produces an amount equal to the
337	337	difference between the tax that the district would have imposed on
338	338	the property if the property were fully taxable at market value and
339	339	the tax that the district is actually authorized to impose on the
340	340	property, if this subsection does not otherwise require that
341	341	portion to be deducted;
342	342	(10) the market value of all tangible personal
343	343	property, other than manufactured homes, owned by a family or
344	344	individual and not held or used for the production of income;
345	345	(11) the appraised value of property the collection of
346	346	delinquent taxes on which is deferred under Section 33.06, Tax
347	347	Code;
348	348	(12) the portion of the appraised value of property
349	349	the collection of delinquent taxes on which is deferred under
350	350	Section 33.065, Tax Code;
351	351	(13) the amount by which the market value of property
352	352	to which Section 23.23 [or 23.231], Tax Code, applies exceeds the
353	353	appraised value of that property as calculated under that section
354	354	[Section 23.23 or 23.231, Tax Code, as applicable]; and
355	355	(14) the total dollar amount of any exemptions granted
356	356	under Section 11.35, Tax Code.
357	357	(i) If the comptroller determines in the study that the
358	358	market value of property in a school district as determined by the
359	359	appraisal district that appraises property for the school district,
360	360	less the total of the amounts and values listed in Subsection (d) as
361	361	determined by that appraisal district, is valid, the comptroller,
362	362	in determining the taxable value of property in the school district
363	363	under Subsection (d), shall for purposes of Subsection (d)(13)
364	364	subtract from the market value as determined by the appraisal
365	365	district of properties to which Section 23.23 [or 23.231], Tax
366	366	Code, applies the amount by which that amount exceeds the appraised
367	367	value of those properties as calculated by the appraisal district
368	368	under Section 23.23 [or 23.231], Tax Code[, as applicable]. If the
369	369	comptroller determines in the study that the market value of
370	370	property in a school district as determined by the appraisal
371	371	district that appraises property for the school district, less the
372	372	total of the amounts and values listed in Subsection (d) as
373	373	determined by that appraisal district, is not valid, the
374	374	comptroller, in determining the taxable value of property in the
375	375	school district under Subsection (d), shall for purposes of
376	376	Subsection (d)(13) subtract from the market value as estimated by
377	377	the comptroller of properties to which Section 23.23 [or 23.231],
378	378	Tax Code, applies the amount by which that amount exceeds the
379	379	appraised value of those properties as calculated by the appraisal
380	380	district under Section 23.23 [or 23.231], Tax Code[, as
381	381	applicable].
382	382	(b) Section 4.12, Chapter 1 (S.B. 2), Acts of the 88th
383	383	Legislature, 2nd Called Session, 2023, which amended Sections
384	384	403.302(d) and (i), Government Code, effective January 1, 2027, is
385	385	repealed.
386	386	SECTION 4.08. The following provisions of the Tax Code are
387	387	repealed:
388	388	(1) Sections 23.23(c-1) and 25.19(o); and
389	389	(2) Section 23.231.
390	390	SECTION 4.09. This article applies only to the appraisal
391	391	for ad valorem tax purposes of real property for a tax year that
392	392	begins on or after the effective date of this article.
393	393	ARTICLE 5. EFFECTIVE DATES
394	394	SECTION 5.01. Except as otherwise provided by this article,
395	395	this Act takes effect September 1, 2025.
396	396	SECTION 5.02. Article 3 of this Act takes effect January 1,
397	397	2026.
398	398	SECTION 5.03. Article 4 of this Act takes effect January 1,
399	399	2026, but only if the constitutional amendment proposed by the 89th
400	400	Legislature, Regular Session, 2025, to authorize the legislature to
401	401	limit the maximum appraised value of real property for ad valorem
402	402	tax purposes to 105 percent or more of the appraised value of the
403	403	property for the preceding tax year is approved by the voters. If
404	404	that amendment is not approved by the voters, Article 4 of this Act
405	405	has no effect.