The bill amends the 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, reflecting a decrease from the previous 1.035. Additionally, the bill clarifies the calculation methods for various scenarios involving additional sales and use taxes.

The bill also 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 the unused increment rate and disaster relief rate. The changes are set to 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)