The bill amends the Texas Tax Code to redefine how replacement structures are treated for ad valorem tax purposes when the original structures have been rendered uninhabitable or unusable due to casualties, natural disasters declared by the president or governor, or wind or water damage. Specifically, it clarifies that such replacement structures will not be considered improvements unless they exceed the square footage of the original structure or are constructed with higher quality materials. Additionally, if the materials used for the original structure are no longer available, the replacement structure can still be considered an improvement if it uses the most comparable materials.

The bill also introduces new provisions that specify conditions under which a replacement structure is not considered an improvement. These include scenarios where the materials used for the replacement structure are the most comparable in quality to those of the original structure, ensuring that property owners are not penalized for using alternative materials when the original ones are unavailable. 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.

Statutes affected:
Introduced: Tax Code 11.26, Tax Code 11.261, Tax Code 23.23 (Tax Code 23, Tax Code 11)