HB4407 - Relating to providing property tax relief through the public school finance system and property tax appraisal and administration.

  89R16235 LHC/KJE-F     By: Phelan H.B. No. 4407       A BILL TO BE ENTITLED   AN ACT   relating to providing property tax relief through the public school   finance system and property tax appraisal and administration.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:   ARTICLE 1. SHORT TITLE          SECTION 1.01.  This Act may be cited as the Property Tax   Relief Act.   ARTICLE 2. SCHOOL DISTRICT TAX RATE COMPRESSION          SECTION 2.01.  Subchapter F, Chapter 48, Education Code, is   amended by adding Section 48.2554 to read as follows:           Sec.   48.2554.     MAXIMUM COMPRESSED TAX RATE FOR 2025-2026   SCHOOL YEAR. (a) Notwithstanding any other provision of this title   or Chapter 26, Tax Code, for the 2025-2026 school year, the   commissioner shall calculate the value of a school district's   maximum compressed tax rate by determining the district's maximum   compressed rate under Section 48.2551 or 48.2552(b), if applicable,   and reducing the tax rate determined under the applicable section   by $0.15.           (b)     If a school district's maximum compressed tax rate as   calculated under Subsection (a) would be less than 90 percent of   another school district's maximum compressed tax rate under   Subsection (a), the district's maximum compressed tax rate is the   value at which the district's maximum compressed tax rate would be   equal to 90 percent of the other district's maximum compressed tax   rate.           (c)     Notwithstanding any other provision of this title or   Chapter 26, Tax Code, for purposes of determining funding for   school districts for the 2025-2026 school year, a reference in any   of the following provisions of law to a school district's maximum   compressed tax rate or maximum compressed rate as determined under   Section 48.2551 means the maximum compressed tax rate determined   for the district under this section:                 (1)  Section 13.054(f);                 (2)  Section 45.003(d);                 (3)  Section 45.0032(a);                 (4)  Section 48.051(a);                 (5)  Sections 48.2553(a) and (e);                 (6)  Section 48.2556; and                 (7)  Section 26.08(n), Tax Code.           (d)     For purposes of Section 30.003(f-1), a reference in that   section to Section 48.2551 includes this section.           (e)     Notwithstanding any other provision of this title, for   purposes of determining a school district's maximum compressed tax   rate under Section 48.2551 for the 2026-2027 school year, the value   of the district's "PYMCR"   is the maximum compressed tax rate   determined for the district under this section for the preceding   school year.           (f)  This section expires September 1, 2027.   ARTICLE 3. ESCROW ACCOUNTS          SECTION 3.01.  Section 31.072(a), Tax Code, is amended to   read as follows:          (a)   At the request of a property owner, the [ The ] collector   for a taxing unit shall [ may ] enter a contract with the [ a ] property   owner under which the property owner deposits money in an escrow   account maintained by the collector to provide for the payment of   property taxes collected by the collector on any property the   person owns.          SECTION 3.02.  Sections 31.072(h) and (i), Tax Code, are   repealed.          SECTION 3.03.  This article applies only to a tax year that   begins on or after the effective date of this article.   ARTICLE 4. LIMITATION ON INCREASES IN VALUE OF REAL PROPERTY          SECTION 4.01.  (a) Section 1.12(d), Tax Code, as amended by   Section 4.01, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd   Called Session, 2023, and effective until January 1, 2027, is   amended to read as follows:          (d)  For purposes of this section, the appraisal ratio of   property to which Section 23.23 [ or 23.231 ] applies is the ratio of   the property's market value as determined by the appraisal district   or appraisal review board, as applicable, to the market value of the   property according to law.  The appraisal ratio is not calculated   according to the appraised value of the property as limited by   Section 23.23 [ or 23.231 ].          (b)  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, effective January 1, 2027, is repealed.          SECTION 4.02.  The heading to Section 23.23, Tax Code, is   amended to read as follows:          Sec. 23.23.  LIMITATION ON APPRAISED VALUE OF REAL PROPERTY   [ RESIDENCE HOMESTEAD ].          SECTION 4.03.  Section 23.23, Tax Code, is amended by   amending Subsections (a), (b), (c), and (e) and adding Subsections   (c-2), (c-3), (c-4), and (h) 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 real   property [ 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)   five [ 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.          (b)  When appraising real property [ a residence homestead ],   the chief appraiser shall:                (1)  appraise the property at its market value; and                (2)  include in the appraisal records both the market   value of the property and the amount computed under Subsection   (a)(2).          (c)  The limitation provided by Subsection (a) takes effect   on January 1 of the tax year following the first tax year in which   the owner owns the property on January 1 [ as to a residence   homestead on January 1 of the tax year following the first tax year   the owner qualifies the property for an exemption under Section   11.13 ]. Except as provided by Subsection (c-2) or (c-3), the [ The ]   limitation expires on January 1 of the first tax year following the   year in which [ that neither ] the owner of the property ceases to own   the property.           (c-2)     If property subject to a limitation under this section   qualifies for an exemption under Section 11.13 when the ownership   of the property is transferred to the owner's spouse or surviving   spouse, the limitation expires on January 1 of the first tax year   following the year in which [ when the limitation took effect nor ]   the owner's spouse or surviving spouse ceases to own the property,   unless the limitation is further continued under this subsection on   the subsequent transfer to a spouse or surviving spouse [ qualifies   for an exemption under Section 11.13 ].           (c-3)     If property subject to a limitation under Subsection   (a), other than a residence homestead, is owned by two or more   persons, the limitation expires on January 1 of the first tax year   following the year in which the ownership of at least a 50 percent   interest in the property is sold or otherwise transferred.           (c-4)     For purposes of applying the limitation provided by   this section, a person who acquired real property in a tax year   before the 2025 tax year, other than property that qualified as the   residence homestead of the person under Section 11.13 in the 2025   tax year, is considered to have acquired the property on January 1,   2025.          (e)  In this section, "new improvement" means an improvement   to real property [ a residence homestead ] 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.           (h)     In this section, "real property" includes a   manufactured home as that term is defined by Section 1201.003,   Occupations Code, that qualifies as a residence homestead under   Section 11.13 of this code, regardless of whether the owner of the   manufactured home elects to treat the manufactured home as real   property under Section 1201.2055, Occupations Code.          SECTION 4.04.  (a) Sections 25.19(b) and (g), Tax Code, as   amended by Section 4.04, Chapter 1 (S.B. 2), Acts of the 88th   Legislature, 2nd Called Session, 2023, and effective until January   1, 2027, are amended to read as follows:          (b)  The chief appraiser shall separate real from personal   property and include in the notice for each:                (1)  a list of the taxing units in which the property is   taxable;                (2)  the appraised value of the property in the   preceding year;                (3)  the taxable value of the property in the preceding   year for each taxing unit taxing the property;                (4)  the appraised value of the property for the   current year, the kind and amount of each exemption and partial   exemption, if any, approved for the property for the current year   and for the preceding year, and, if an exemption or partial   exemption that was approved for the preceding year was canceled or   reduced for the current year, the amount of the exemption or partial   exemption canceled or reduced;                [ (4-a)     a statement of whether the property qualifies   for the circuit breaker limitation on appraised value provided by   Section 23.231; ]                (5)  in italic typeface, the following   statement:  "The Texas Legislature does not set the amount of your   local taxes.  Your property tax burden is decided by your locally   elected officials, and all inquiries concerning your taxes should   be directed to those officials";                (6)  a detailed explanation of the time and procedure   for protesting the value;                (7)  the date and place the appraisal review board will   begin hearing protests;                (8)  an explanation of the availability and purpose of   an informal conference with the appraisal office before a hearing   on a protest; and                (9)  a brief explanation that the governing body of   each taxing unit decides whether or not taxes on the property will   increase and the appraisal district only determines the value of   the property.        &#xA0 [Text truncated for display. 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