The bill amends Section 23.23(a) of the Texas Tax Code to modify the limitations on increases in the appraised value of a residence homestead for ad valorem taxation. Specifically, it allows appraisal offices to increase the appraised value of a residence homestead to an amount not exceeding the lesser of the market value determined in the most recent tax year or a new calculation that includes two percent of the appraised value from the preceding tax year, the appraised value from the preceding year, and the market value of any new improvements made to the property. The change replaces the previous limit of ten percent with a new limit of two percent.

The bill is set to take effect on January 1, 2027, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature, 2nd Called Session, 2025, which would authorize the legislature to establish a lower limit on the maximum appraised value for residence homesteads. If the amendment is not approved by voters, the bill will have no effect.

Statutes affected:
Introduced: Tax Code 23.23 (Tax Code 23)