House Bill No. 5210 introduces an exemption from ad valorem taxation for real property owners who prepay their taxes, establishing a new section, Section 11.121, in the Tax Code. This section outlines the process for property owners to enroll and submit payment to the comptroller, who will issue a certificate of prepayment. The exemption remains valid even if the property is sold or transferred, but it does not apply to new improvements made during the tax year unless a supplemental prepayment is made. Additionally, if a new taxing unit is created that imposes taxes on the property, the exemption will also require a supplemental prepayment to remain in effect.

The bill further adds Section 403.030 to the Government Code, which requires the comptroller to determine and publish an annual ad valorem tax prepayment rate for computing tax prepayments on exempt properties. Eligible taxing units can request distributions from a newly established fund based on the appraised value of exempt properties, with provisions for proportional reductions if the fund balance is insufficient. The bill also amends existing definitions related to taxable value and introduces new definitions to clarify property tax calculations. It is set to take effect on January 1, 2026, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature in 2025, which aims to exempt the total market value of prepaid properties from ad valorem taxation.

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