House Bill No. 5210 introduces a new exemption from ad valorem taxation for real property owners who prepay their taxes, establishing Section 11.121 in the Tax Code. The bill outlines the process for property owners to enroll and submit payments to the comptroller, who will issue a certificate of prepayment. This exemption remains valid even if the property is sold or ownership changes, but it does not extend to new improvements made during the tax year unless a supplemental prepayment is made. Additionally, if a new taxing unit is created that imposes taxes on the property, the exemption will only apply if a supplemental prepayment is also made.

Furthermore, the bill adds Section 403.030 to the Government Code, requiring the comptroller to determine and publish an annual ad valorem tax prepayment rate for computing tax prepayments on exempt properties. Eligible taxing units can request distributions from a newly established fund based on the appraised value of exempt properties, with provisions for proportional reductions if the fund balance is insufficient. The bill also introduces new definitions related to property tax exemptions and specifies that it will take effect on January 1, 2026, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature in 2025. If the amendment is not approved, the bill's provisions will not take effect.

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