Tepper Bill Cuts Homestead Appraisal Cap To 2.5 Percent

The text as introduced · 1,005 words

89R3806 DRS-D

By: Tepper
H.B. No. 398

A BILL TO BE ENTITLED

AN ACT

relating to the limitations on increases in the appraised value of

certain property for ad valorem tax purposes.

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

SECTION 1. Section 23.23(a), Tax Code, is amended 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 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) 2.5 [ 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.

SECTION 2. Sections 23.231(a), (d), and (g), Tax Code, are

amended to read as follows:

(a) In this section:

(1) [ "Consumer price index" means the average over a

state fiscal year of the Consumer Price Index for All Urban

Consumers (CPI-U), U.S. City Average, published monthly by the

United States Bureau of Labor Statistics, or its successor in

function.

[ (2) ] "Disaster recovery program" means a disaster

recovery program funded with community development block grant

disaster recovery money authorized by federal law.

(2) [ (3) ] "New improvement" means an improvement to

real property 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.

(d) 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 to which this section applies 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) eight [ 20 ] 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.

(g) For purposes of Subsection (f) :

(1) [ , ] a person who , before the 2023 tax year,

acquired real property to which this section applied as this

section existed on January 1, 2024, [ applies before the 2023 tax

year ] is considered to have acquired the property on January 1,

2023 ; and

(2) a person who, before the 2025 tax year, acquired

real property, other than property described by Subdivision (1), to

which this section applies is considered to have acquired the

property on January 1, 2025 .

SECTION 3. Section 25.19(o), Tax Code, is amended to read as

follows:

(o) A notice required under Subsection (a) or (g) to be

delivered to the owner of real property other than a single-family

residence that qualifies for an exemption under Section 11.13 must

include the following statement: "Under Section 23.231, Tax Code,

[ for the 2024, 2025, and 2026 tax years, ] the appraised value of

real property other than a residence homestead for ad valorem tax

purposes may not be increased by more than eight [ 20 ] percent each

year, with certain exceptions. " [ The circuit breaker limitation

provided under Section 23.231, Tax Code, expires December 31, 2026.

Unless this expiration date is extended by the Texas Legislature,

beginning in the 2027 tax year, the circuit breaker limitation

provided under Section 23.231, Tax Code, will no longer be in effect

and may result in an increase in ad valorem taxes imposed on real

property previously subject to the limitation." This subsection

expires December 31, 2027. ]

SECTION 4. The following provisions are repealed:

(1) Sections 23.231(b), (j), and (k), Tax Code;

(2) 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, as effective January 1, 2027;

(3) 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, as effective January 1, 2027;

(4) 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, as effective January 1, 2027;

(5) 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, as effective January 1, 2027; and

(6) 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, as effective January 1, 2027.

SECTION 5. This Act applies only to the appraisal of

property for ad valorem tax purposes for a tax year that begins on

or after the effective date of this Act.

SECTION 6. 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 set lower

limits on the maximum appraised value of residence homesteads and

of real property other than a residence homestead for ad valorem tax

purposes and to make permanent the limit on the maximum appraised

value of real property other than a residence homestead is approved

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

this Act has no effect.