H.B. No. 177 proposes significant amendments to the Texas Tax Code, specifically targeting the calculation of ad valorem tax rates for certain taxing units, including junior college districts and hospital districts, while excluding school districts. A key insertion is the addition of Subsection (c) to Section 26.013, which establishes that for taxing units with a proposed maintenance and operations tax rate of 2.5 cents or less per $100 of taxable value, the foregone revenue amount will be considered zero for tax years prior to 2026, with this provision set to expire on December 31, 2028. The bill also modifies the formulas for calculating the no-new-revenue tax rate and voter-approval tax rate, including a change in the multiplier used in these calculations.

Additionally, the bill clarifies the voter-approval tax rate calculation process, particularly in disaster situations, and introduces a new definition for "developed district" in the Water Code. It updates the definition of the "voter-approval tax rate" to set the operation and maintenance tax rate at 1.025 times the amount imposed in the previous year, replacing the previous multiplier of 1.08. If a district adopts a tax rate that exceeds this new threshold, an election must be held for approval. The bill also repeals several outdated sections of the Water Code and Tax Code and includes a statement regarding the 86th Texas Legislature's modifications to limit property tax growth. These changes will take effect on January 1, 2026, and will apply to ad valorem taxes for tax years beginning on or after that date.

Statutes affected:
Introduced: Tax Code 26.013, Tax Code 26.04, Tax Code 26.041, Tax Code 26.042, Tax Code 26.063, Tax Code 26.07, Tax Code 26.075, Water Code 49.057, Water Code 49.236, Water Code 49.23601 (Water Code 49, Tax Code 26)