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 provisions for 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 rates reflect any sales tax gain or loss.

Additionally, the bill specifies that the voter-approval tax rate calculated for municipalities or counties with populations under 75,000 must be the lesser of the rate calculated for special taxing units or a new formula that incorporates a disaster relief rate. The changes will take effect on January 1, 2026, and will apply to ad valorem taxes imposed for tax years beginning on or after that date. Overall, the bill aims to provide a more equitable and clear framework for calculating tax rates for smaller taxing units in Texas.

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