H.B. No. 38 amends Section 33.06(d) of the Texas Tax Code to modify the interest rate that accrues during the deferral or abatement of ad valorem tax collection on certain residence homesteads. The bill establishes that the annual interest rate during the deferral or abatement period will be the lower of the five-year Constant Maturity Treasury Rate reported by the Federal Reserve Board as of January 1 of that year or five percent, replacing the previous rate provided by Section 33.01. Additionally, it clarifies that interest and penalties that accrued before the filing of the deferral affidavit or the entry of a judgment abating the suit are preserved, and no penalty under Section 33.01 will be incurred during the deferral or abatement period.

The bill also stipulates that the amended interest provisions will apply to interest that accrued during a deferral or abatement period before December 1, 2025, if the tax remains unpaid as of that date, as well as to interest accruing during any deferral or abatement period on or after that date, regardless of when the period began. The act is set to take effect on December 1, 2025.

Statutes affected:
Introduced: Tax Code 33.06 (Tax Code 33)