Bill Text: TX HB398 | 2025-2026 | 89th Legislature | Introduced

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Bill Title: Relating to the limitations on increases in the appraised value of certain property for ad valorem tax purposes.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-11-12 - Filed [HB398 Detail]

Download: Texas-2025-HB398-Introduced.html

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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.