The bill amends the Texas Tax Code to revise the calculation of the voter-approval tax rate for certain taxing units, particularly municipalities and counties with populations under 75,000. It introduces new formulas for calculating the voter-approval tax rate, which now includes an "unused increment rate" and adjusts the multiplier for the no-new-revenue maintenance and operations rate. Specifically, the voter-approval tax rate for these smaller municipalities is set at a rate of 1.035, while other taxing units will use a rate of 1.025. The bill also clarifies the calculation of the voter-approval tax rate in relation to additional sales and use taxes, ensuring that the sales tax gain or loss is factored into the overall tax rate calculations.

Additionally, the bill specifies that the governing body of a taxing unit may direct the calculation of the voter-approval tax rate based on the lesser of two methods: one for special taxing units and another for municipalities or counties with populations under 75,000. The changes aim to provide a more equitable and transparent method for determining tax rates, particularly for smaller jurisdictions. The provisions of this Act will take effect on January 1, 2026, and will apply to ad valorem taxes imposed for tax years beginning on or after that date.

Statutes affected:
Introduced: Tax Code 26.04, Tax Code 26.041 (Tax Code 26)