H.B. No. 375 proposes significant amendments to the Texas Tax Code concerning the appraisal of real property for ad valorem tax purposes. The bill changes the terminology from "residence homestead" to "real property," thereby expanding the range of properties subject to appraisal limitations. It reduces the maximum allowable increase in appraised value from 10% to 3.5% of the previous year's value and introduces new provisions regarding the expiration of appraisal limitations upon changes in property ownership, particularly in transfers to spouses. Additionally, the bill clarifies the definition of "new improvement" to exclude ordinary maintenance and establishes that appraisal limitations will expire if at least a 50% interest in the property is sold or transferred.

The bill also repeals several sections of the Tax Code and certain amendments set to take effect on January 1, 2027. It specifies that the new provisions will apply only to tax years beginning on or after January 1, 2026. Importantly, the enactment of this bill is contingent upon the approval of a constitutional amendment proposed by the 89th Legislature in 2025, which would allow the legislature to limit the maximum appraised value of real property to 103.5% or more of the previous year's appraised value. If the amendment is not approved by voters, the provisions of this bill will not take effect.

Statutes affected:
Introduced: Tax Code 1.12, Tax Code 23.23 (Tax Code 23, Tax Code 1)