H.B. No. 963 amends the Tax Code to establish new limitations on the increases in the appraised value of a residence homestead for ad valorem tax purposes. The bill specifies that the appraised value for the first tax year that a property owner qualifies for an exemption under Section 11.13 will be equal to the market value of the property. For subsequent tax years, the appraised value will be adjusted based on the previous year's value, reflecting any positive changes in the purchasing power of the dollar. Additionally, if the property is acquired as a bona fide purchase, the purchase price will be considered the market value for the first tax year of exemption. The bill also introduces several new subsections detailing the application process for the limitation, confidentiality of the application, and conditions under which the limitation may not expire.

Furthermore, the bill repeals certain existing provisions and clarifies that the limitation will not expire if ownership changes due to inheritance, provided the new owner qualifies for the exemption. The changes will take effect on January 1, 2026, contingent upon the approval of a related constitutional amendment by voters. If the amendment is not approved, the bill will have no effect.

Statutes affected:
Introduced: Tax Code 23.23 (Tax Code 23)