TITLE: Relating to the authority of the governing body of a taxing unit to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the appraised value of an individual's residence homestead and to the adjustment of the exemption amount in subsequent years to reflect inflation.

SUMMARY: Relating to the authority of the governing body of a taxing unit to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the appraised value of an individual's residence homestead and to the adjustment of the exemption amount in subsequent years to reflect inflation.

FULL TEXT:
AN ACT relating to the authority of the governing body of a taxing unit to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the appraised value of an individual's residence homestead and to the adjustment of the exemption amount in subsequent years to reflect inflation. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 11.13(n), Tax Code, is amended to read as follows: (n) In addition to any other exemptions provided by this section, an individual is entitled to an exemption from taxation by a taxing unit of a portion, expressed as a dollar amount, [a percentage] of the appraised value of the individual's [his] residence homestead if the exemption is adopted by the governing body of the taxing unit before July 1 in the manner provided by law for official action by the body. For the 2026 tax year, the amount of the exemption may not exceed $100,000. For each subsequent tax year, the comptroller shall calculate the maximum amount of the exemption by multiplying the maximum amount of the exemption under this subsection for the preceding tax year by the inflation rate and adding that amount to the maximum amount of the exemption for the preceding tax year. Each year, not later than March 15, the comptroller shall publish the maximum amount of the exemption in the Texas Register. For purposes of this subsection, "inflation rate" means the positive amount, if any, expressed in decimal form rounded to the nearest thousandth, computed by determining the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U), U.S. City Average, published by the Bureau of Labor Statistics of the United States Department of Labor for the preceding calendar year as compared to the calendar year preceding that calendar year. [If the percentage set by the taxing unit produces an exemption in a tax year of less than $5,000 when applied to a particular residence homestead, the individual is entitled to an exemption of $5,000 of the appraised value. The percentage adopted by the taxing unit may not exceed 20 percent.] SECTION 2. Section 11.13(n-1), Tax Code, is repealed. SECTION 3. This Act applies only to ad valorem taxes imposed for a tax year that begins on or after the effective date of this Act. SECTION 4. This Act takes effect January 1, 2026, but only if the constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, authorizing the governing body of a political subdivision to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the market value of an individual's residence homestead and providing for the adjustment of the exemption amount in subsequent years to reflect inflation is approved by the voters.