Morales Bill Doubles The School Homestead Exemption To $200K

The text as introduced · 786 words

89R2444 LHC/MM-D

By: Morales of Harris
H.B. No. 378

A BILL TO BE ENTITLED

AN ACT

relating to an increase in the amount of the exemption of residence

homesteads from ad valorem taxation by a school district and the

protection of school districts against the resulting loss in local

revenue.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 11.13(b), Tax Code, is amended to read as

follows:

(b) An adult is entitled to exemption from taxation by a

school district of $200,000 [ $100,000 ] of the appraised value of

the adult's residence homestead, except that only $5,000 of the

exemption applies to an entity operating under former Chapter 17,

18, 25, 26, 27, or 28, Education Code, as those chapters existed on

May 1, 1995, as permitted by Section 11.301, Education Code.

SECTION 2. Section 46.071, Education Code, is amended by

adding Subsection (a-3) and amending Subsections (b-2) and (c-2) to

read as follows:

(a-3) Beginning with the 2026-2027 school year, in addition

to state aid a school district is entitled to under Subsection

(a-2), a school district is also entitled to additional state aid

under this subchapter to the extent that state and local revenue

used to service debt eligible under this chapter is less than the

state and local revenue that would have been available to the

district under this chapter as it existed on September 1, 2025, if

any increase in the residence homestead exemption under Section

1-b(c), Article VIII, Texas Constitution, as proposed by the 89th

Legislature, Regular Session, 2025, had not occurred.

(b-2) Subject to Subsections (c-2), (d), and (e),

additional state aid under this section beginning with the

2023-2024 school year is equal to the amount by which the loss of

local interest and sinking revenue for debt service attributable to

any increase in a residence homestead exemption under Section

1-b(c), Article VIII, Texas Constitution, and any additional

limitation on tax increases under Section 1-b(d) of that article as

proposed by the 88th Legislature, 2nd Called Session, 2023, and any

increase in the residence homestead exemption under Section 1-b(c),

Article VIII, Texas Constitution, as proposed by the 89th

Legislature, Regular Session, 2025, is not offset by a gain in state

aid under this chapter.

(c-2) For the purpose of determining state aid under

Subsection [ Subsections ] (a-2) or (a-3) [ and (b-2) ], local interest

and sinking revenue for debt service is limited to revenue required

to service debt eligible under this chapter as of September 1, 2023,

or as of September 1, 2025, respectively, or authorized by the

voters but not yet issued as of September 1, 2023, or as of

September 1, 2025, respectively, that later becomes eligible under

this chapter, including refunding of the applicable [ that ] debt,

subject to Section 46.061. The limitation imposed by Section

46.034(a) does not apply for the purpose of determining state aid

under Subsection (a-2) or (a-3) [ this section ].

SECTION 3. Section 48.2543, Education Code, is amended by

adding Subsection (a-2) and amending Subsection (b) to read as

follows:

(a-2) Beginning with the 2026-2027 school year, in addition

to state aid a school district is entitled to under Subsection

(a-1), a school district is entitled to additional state aid to the

extent that state and local revenue under this chapter and Chapter

49 is less than the state and local revenue that would have been

available to the district under this chapter and Chapter 49 as those

chapters existed on September 1, 2025, if any increase in the

residence homestead exemption under Section 1-b(c), Article VIII,

Texas Constitution, as proposed by the 89th Legislature, Regular

Session, 2025, had not occurred.

(b) The lesser of the school district's currently adopted

maintenance and operations tax rate or the adopted maintenance and

operations tax rate for:

(1) the 2021 tax year is used for the purpose of

determining additional state aid under Subsection (a); [ and ]

(2) the 2022 tax year is used for the purpose of

determining additional state aid under Subsection (a-1) ; and

(3) the 2025 tax year is used for the purpose of

determining additional state aid under Subsection (a-2) .

SECTION 4. Section 11.13, Tax Code, as amended by this Act,

applies only to an ad valorem tax year that begins on or after

January 1, 2026.

SECTION 5. This Act takes effect January 1, 2026, but only

if the constitutional amendment proposed by the 89th Legislature,

Regular Session, 2025, to increase the amount of the exemption of

residence homesteads from ad valorem taxation by a school district

is approved by the voters. If that amendment is not approved by the

voters, this Act has no effect.