Texas House Bill HB642

Texas 2025 - 89th Regular

• Filed: 11/12/24

Caption

Relating to a limitation on the total amount of ad valorem taxes that a school district may impose on certain residence homesteads following a substantial school tax increase.

Impact

The implementation of HB 642 would have significant implications for state taxation laws. It expressly allows for limits to be set on tax burdens for qualifying homeowners, ensuring that these individuals are not disproportionately affected by escalated tax rates that may arise from overall district funding needs or market pressures. The bill also includes provisions for surviving spouses to continue benefiting from this tax limitation as long as the property remains their residence, further providing stability and protecting family homes. However, if the property is no longer a residence or if the individual dies and the property is transferred, the limitation would expire.

Summary

House Bill 642 introduces a significant amendment to the Texas Tax Code that seeks to impose a limitation on the total amount of ad valorem taxes that a school district may impose on certain residence homesteads. This policy change is aimed specifically at homeowners who have resided in their properties for at least fifteen consecutive tax years. Under this bill, if the school district taxes increase by 120 percent or more in the 15th year compared to the first year of residency, a cap is placed on further tax increases for that residence. This aims to protect long-term residents from potentially unsustainable tax increases due to rising property values and local tax assessments.

Contention

While supporters argue that this bill provides essential protections for long-standing homeowners against abrupt tax increases, opponents might raise concerns regarding the overall funding for schools. There is apprehension about how school districts will manage to balance their budgets without the ability to raise taxes on these properties that have historically contributed to the school funding mechanism. Moreover, the effectiveness of the bill hinges on the approval of a proposed constitutional amendment, which would also face scrutiny from various stakeholders within the education and legislative community.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 11. Taxable Property And Exemptions
  • Section: New Section

• Chapter 26. Assessment
  • Section: New Section

Government Code

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

Education Code

• Chapter 44. Fiscal Management
  • Section: New Section