The bill amends the Texas Tax Code to establish a limitation on increases in the appraised value of real property for ad valorem tax purposes. It modifies Section 23.23 by replacing the term "residence homestead" with "real property," thereby expanding the range of properties eligible for appraisal value limitations. Under the new provisions, appraisal offices can increase the appraised value of real property by a maximum of five percent of the previous year's appraised value, in addition to the market value of any new improvements. The bill also clarifies that the appraisal must reflect the market value determined by the appraisal district.

Furthermore, the legislation introduces new rules regarding the expiration of the appraisal limitation, particularly in cases of property transfer between spouses or among multiple owners, stating that the limitation will expire if there is a significant change in ownership, such as the sale of at least a 50 percent interest in the property. The bill repeals previous amendments set to take effect in 2027, ensuring immediate implementation of the current changes. The Act is scheduled to take effect on January 1, 2026, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature in 2025, which seeks to authorize the legislature to limit the maximum appraised value of real property for ad valorem tax purposes to 105 percent or more of the appraised value from the previous tax year. If the amendment is not approved by voters, the provisions of this Act will not take effect.

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