Bill Text: TX SB4 | 2025-2026 | 89th Legislature | Enrolled

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Bill Title: Relating to an increase in the amount of the exemption of residence homesteads from ad valorem taxation by a school district and the protection of school districts against certain losses in local revenue.

Sponsorship: Broadly Bipartisan Bill

Status: (Passed) 2025-06-16 - See remarks for effective date [SB4 Detail]

Download: Texas-2025-SB4-Enrolled.html

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S.B. No. 4

AN ACT
relating to an increase in the amount of the exemption of residence
homesteads from ad valorem taxation by a school district and the
protection of school districts against certain losses in local
revenue.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PROVISIONS CONTINGENT ON CONSTITUTIONAL AMENDMENT
SECTION 1.01. Section 11.13(b), Tax Code, is amended to
read as follows:
(b) An adult is entitled to exemption from taxation by a
school district of $140,000 [$100,000] of the appraised value of
the adult's residence homestead, except that only $5,000 of the
exemption applies to an entity operating under former Chapter 17,
18, 25, 26, 27, or 28, Education Code, as those chapters existed on
May 1, 1995, as permitted by Section 11.301, Education Code.
SECTION 1.02. Section 46.071, Education Code, is amended by
amending Subsections (a-2) and (b-2) and adding Subsections (a-3),
(b-3), (c-3), (d-1), and (d-2) to read as follows:
(a-2) For [Beginning with] the 2023-2024 and 2024-2025
school years [year], a school district is entitled to additional
state aid under this subchapter to the extent that state and local
revenue used to service debt eligible under this chapter is less
than the state and local revenue that would have been available to
the district under this chapter as it existed on September 1, 2022,
if any increase in a residence homestead exemption under Section
1-b(c), Article VIII, Texas Constitution, and any additional
limitation on tax increases under Section 1-b(d) of that article as
proposed by the 88th Legislature, 2nd Called Session, 2023, had not
occurred.
(a-3) Beginning with the 2025-2026 school year, a school
district is entitled to additional state aid under this subchapter
to the extent that state and local revenue used to service debt
eligible under this chapter is less than the state and local revenue
that would have been available to the district under this chapter as
it existed on January 1, 2025, if any increase in the residence
homestead exemption under Section 1-b(c), Article VIII, Texas
Constitution, as proposed by the 89th Legislature, Regular Session,
2025, had not occurred.
(b-2) Subject to Subsections (c-2), (d), and (e),
additional state aid under this section for [beginning with] the
2023-2024 and 2024-2025 school years [year] is equal to the amount
by which the loss of local interest and sinking revenue for debt
service attributable to any increase in a residence homestead
exemption under Section 1-b(c), Article VIII, Texas Constitution,
and any additional limitation on tax increases under Section 1-b(d)
of that article as proposed by the 88th Legislature, 2nd Called
Session, 2023, is not offset by a gain in state aid under this
chapter.
(b-3) Subject to Subsections (c-3), (d), and (e),
additional state aid under this section beginning with the
2025-2026 school year is equal to the amount by which the loss of
local interest and sinking revenue for debt service attributable to
any increase in a residence homestead exemption under Section
1-b(c), Article VIII, Texas Constitution, as proposed by the 89th
Legislature, Regular Session, 2025, is not offset by a gain in state
aid under this chapter.
(c-3) For the purpose of determining state aid under
Subsections (a-3) and (b-3), local interest and sinking revenue for
debt service is limited to revenue required to service debt
eligible under this chapter as of September 1, 2025, including
refunding of that debt, subject to Section 46.061. The limitation
imposed by Section 46.034(a) does not apply for the purpose of
determining state aid under this section.
(d-1) If the amount required to pay debt service on bonds
issued under Subchapter A, Chapter 45, is less than the sum of state
assistance provided under this chapter, including the amount of
additional state aid provided under this section, and the revenue
from the district's interest and sinking tax for a school year, the
commissioner shall, except as provided by Subsection (d-2), reduce
the amount of additional state aid provided under this section by
the difference between:
(1) the sum of state assistance provided under this
chapter, including the amount of additional state aid provided
under this section, and the revenue from the district's interest
and sinking tax for the school year; and
(2) the amount required to pay debt service on bonds
described by this subsection for the school year.
(d-2) The amount of additional state aid provided under this
section may not be reduced under Subsection (d-1) to an amount below
the additional state aid provided under Subsection (a-3).
SECTION 1.03. Section 48.2543, Education Code, is amended
by amending Subsections (a-1) and (b) and adding Subsection (a-2)
to read as follows:
(a-1) For [Beginning with] the 2023-2024 and 2024-2025
school years [year], a school district is entitled to additional
state aid to the extent that state and local revenue under this
chapter and Chapter 49 is less than the state and local revenue that
would have been available to the district under this chapter and
Chapter 49 as those chapters existed on September 1, 2022, if any
increase in a residence homestead exemption under Section 1-b(c),
Article VIII, Texas Constitution, and any additional limitation on
tax increases under Section 1-b(d) of that article as proposed by
the 88th Legislature, 2nd Called Session, 2023, had not occurred.
(a-2) Beginning with the 2025-2026 school year, a school
district is entitled to additional state aid to the extent that
state and local revenue under this chapter and Chapter 49 is less
than the state and local revenue that would have been available to
the district under this chapter and Chapter 49 as those chapters
existed on September 1, 2024, if any increase in a residence
homestead exemption under Section 1-b(c), Article VIII, Texas
Constitution, as proposed by the 89th Legislature, Regular Session,
2025, had not occurred.
(b) The lesser of the school district's currently adopted
maintenance and operations tax rate or the adopted maintenance and
operations tax rate for:
(1) the 2021 tax year is used for the purpose of
determining additional state aid under Subsection (a); [and]
(2) the 2022 tax year is used for the purpose of
determining additional state aid under Subsection (a-1); and
(3) the 2024 tax year is used for the purpose of
determining additional state aid under Subsection (a-2).
SECTION 1.04. Section 11.13, Tax Code, as amended by this
article, applies only to an ad valorem tax year that begins on or
after January 1, 2025.
ARTICLE 2. PROVISIONS NOT CONTINGENT ON CONSTITUTIONAL AMENDMENT
SECTION 2.01. Section 46.071, Education Code, is amended by
adding Subsection (f) to read as follows:
(f) A school district may use additional state aid received
under this section only to pay the principal of and interest on the
bonds for which the district received the aid.
SECTION 2.02. Section 48.2551, Education Code, is amended
by adding Subsections (d-3) and (d-4) to read as follows:
(d-3) In calculating and making available school districts'
maximum compressed rates under this section for the 2025-2026
school year, the agency shall calculate and make available the
rates as if the increase in the residence homestead exemption under
Section 1-b(c), Article VIII, Texas Constitution, as proposed by
the 89th Legislature, Regular Session, 2025, took effect. This
subsection expires September 1, 2026.
(d-4) If the increase in the residence homestead exemption
under Section 1-b(c), Article VIII, Texas Constitution, as proposed
by the 89th Legislature, Regular Session, 2025, does not take
effect, the commissioner may adjust school districts' maximum
compressed rates under this section for the 2025-2026 school year
accordingly. Before making an adjustment under this subsection,
the commissioner shall notify and must receive approval from the
Legislative Budget Board and the office of the governor. This
subsection expires September 1, 2029.
SECTION 2.03. Section 48.283, Education Code, is amended to
read as follows:
Sec. 48.283. ADDITIONAL STATE AID FOR CERTAIN DISTRICTS
IMPACTED BY COMPRESSION. Beginning with the 2023-2024 school year,
a [A] school district that received an adjustment under Section
48.257(b) for the 2022-2023 school year is entitled to additional
state aid for each school year in an amount equal to [the amount of
that adjustment for the 2022-2023 school year less] the difference,
if the difference is greater than zero, between:
(1) [the amount to which the district is entitled
under this chapter for the current school year; and
[(2)] the amount of state and local revenue that would
have been available to [which] the district [would be entitled]
under this chapter and Chapter 49 for the current school year if the
district's maximum compressed tax rate had not been reduced under
Section 48.2555, as added by S.B. 2, Acts of the 88th Legislature,
2nd Called Session, 2023; and
(2) the amount of state and local revenue available to
the district under this chapter and Chapter 49 for the current
school year.
SECTION 2.04. Section 49.004, Education Code, is amended by
adding Subsections (a-1), (b-1), and (c-1) to read as follows:
(a-1) This subsection applies only if the constitutional
amendment proposed by S.J.R. 2, 89th Legislature, Regular Session,
2025, is approved by the voters in an election held for that
purpose. As soon as practicable after receiving revised property
values that reflect adoption of the constitutional amendment, the
commissioner shall review the local revenue level of districts in
the state and revise as necessary the notifications provided under
Subsection (a) for the 2025-2026 school year. This subsection
expires September 1, 2026.
(b-1) This subsection applies only to a district that has
not previously held an election under this chapter.
Notwithstanding Subsection (b), a district that enters into an
agreement to exercise an option to reduce the district's local
revenue level in excess of entitlement under Section 49.002(3),
(4), or (5) for the 2025-2026 school year may request and, as
provided by Section 49.0043(a), receive approval from the
commissioner to delay the date of the election otherwise required
to be ordered before September 1. This subsection expires
September 1, 2026.
(c-1) Notwithstanding Subsection (c), a district that
receives approval from the commissioner to delay an election as
provided by Subsection (b-1) may adopt a tax rate for the 2025 tax
year before the commissioner certifies that the district has
reduced its local revenue level to the level established by Section
48.257. This subsection expires September 1, 2026.
SECTION 2.05. Subchapter A, Chapter 49, Education Code, is
amended by adding Section 49.0043 to read as follows:
Sec. 49.0043. TRANSITIONAL PROVISIONS: INCREASED
HOMESTEAD EXEMPTIONS. (a) The commissioner shall approve a
district's request under Section 49.004(b-1) to delay the date of
an election required under this chapter if the commissioner
determines that the district would not have a local revenue level in
excess of entitlement if the constitutional amendment proposed by
S.J.R. 2, 89th Legislature, Regular Session, 2025, were approved by
the voters.
(b) The commissioner shall set a date by which each district
that receives approval under this section must order the election.
(c) Not later than the 2026-2027 school year, the
commissioner shall order detachment and annexation of property
under Subchapter G or consolidation under Subchapter H as necessary
to reduce the district's local revenue level to the level
established by Section 48.257 for a district that receives approval
under this section and subsequently:
(1) fails to hold the election; or
(2) does not receive voter approval at the election.
(d) This section expires September 1, 2027.
SECTION 2.06. Subchapter A, Chapter 49, Education Code, is
amended by adding Section 49.0121 to read as follows:
Sec. 49.0121. TRANSITIONAL ELECTION DATES. (a) This
section applies only to an election under this chapter that occurs
during the 2025-2026 school year.
(b) Section 49.012 does not apply to a district that
receives approval of a request under Section 49.0043. The district
shall hold the election on a Tuesday or Saturday on or before a date
specified by the commissioner. Section 41.001, Election Code, does
not apply to the election.
(c) This section expires September 1, 2026.
SECTION 2.07. Section 49.154, Education Code, is amended by
adding Subsections (a-2) and (a-3) to read as follows:
(a-2) Notwithstanding Subsections (a) and (a-1), a district
that receives approval of a request under Section 49.0043 shall pay
for credit purchased:
(1) in equal monthly payments as determined by the
commissioner beginning March 15, 2026, and ending August 15, 2026;
or
(2) in the manner provided by Subsection (a)(2),
provided that the district notifies the commissioner of the
district's election to pay in that manner not later than March 15,
2026.
(a-3) Subsection (a-2) and this subsection expire September
1, 2026.
SECTION 2.08. Section 49.308, Education Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) Notwithstanding Subsection (a), for the 2025-2026
school year, the commissioner shall order any detachments and
annexations of property under this subchapter as soon as
practicable after the canvass of the votes on the constitutional
amendment proposed by S.J.R. 2, 89th Legislature, Regular Session,
2025. This subsection expires September 1, 2026.
SECTION 2.09. Section 26.01, Tax Code, is amended by adding
Subsections (a-2) and (a-3) to read as follows:
(a-2) This subsection applies only to the appraisal roll for
a school district for the 2025 tax year. When the chief appraiser
delivers the appraisal roll to the assessor for the school
district, the chief appraiser shall include a provisional appraisal
roll to account for the changes in law made by S.B. 4, Acts of the
89th Legislature, Regular Session, 2025. If the chief appraiser
delivers a supplemental appraisal roll or correction to the
appraisal roll to the assessor for the school district before the
effective date of Article 1 of that Act, the chief appraiser shall
include provisional appraisal roll entries to account for the
changes in law made by that article. If Article 1 of that Act takes
effect:
(1) on the effective date of that article, the
provisional appraisal roll, as supplemented and corrected, becomes
the appraisal roll for the school district; and
(2) as soon as practicable after the effective date of
that article, the chief appraiser shall correct the school
district's appraisal roll as necessary to finally account for the
changes in law made by that article.
(a-3) This subsection and Subsection (a-2) expire December
31, 2026.
SECTION 2.10. Section 26.04, Tax Code, is amended by adding
Subsections (a-1) and (c-1) to read as follows:
(a-1) On receipt of the appraisal roll for the 2025 tax
year, the assessor for a school district shall determine the total
taxable value of property taxable by the district and the taxable
value of new property as if the changes in law made by S.B. 4, Acts
of the 89th Legislature, Regular Session, 2025, were in effect for
that tax year. This subsection expires December 31, 2026.
(c-1) An officer or employee designated by the governing
body of a school district shall calculate the no-new-revenue tax
rate and the voter-approval tax rate of the district for the 2025
tax year as if the changes in law made by S.B. 4, Acts of the 89th
Legislature, Regular Session, 2025, were in effect for that tax
year. This subsection expires December 31, 2026.
SECTION 2.11. Section 26.08, Tax Code, is amended by adding
Subsection (q) to read as follows:
(q) For purposes of this section, the voter-approval tax
rate of a school district for the 2025 tax year shall be calculated
as if the changes in law made by S.B. 4, Acts of the 89th
Legislature, Regular Session, 2025, were in effect for that tax
year. This subsection expires December 31, 2026.
SECTION 2.12. Section 26.09, Tax Code, is amended by adding
Subsection (c-1) to read as follows:
(c-1) The assessor for a school district shall calculate the
amount of tax imposed by the school district on a residence
homestead for the 2025 tax year as if the changes in law made by S.B.
4, Acts of the 89th Legislature, Regular Session, 2025, were in
effect for that tax year and also as if the changes in law made by
that Act were not in effect for that tax year. This subsection
expires December 31, 2026.
SECTION 2.13. Section 26.15, Tax Code, is amended by adding
Subsection (h) to read as follows:
(h) The assessor for a school district shall correct the tax
roll for the district for the 2025 tax year to reflect the results
of the election to approve the constitutional amendment proposed by
S.J.R. 2, 89th Legislature, Regular Session, 2025. This subsection
expires December 31, 2026.
SECTION 2.14. Section 31.01, Tax Code, is amended by adding
Subsections (d-2), (d-3), (d-4), and (d-5) to read as follows:
(d-2) This subsection and Subsections (d-3) and (d-4) apply
only to taxes imposed by a school district on a residence homestead
for the 2025 tax year and only if the changes in law made by S.B. 4,
Acts of the 89th Legislature, Regular Session, 2025, would lower
the taxes imposed by the district on the property for that tax year.
The assessor for the district shall compute the amount of taxes
imposed and the other information required by this section as if the
changes in law made by S.B. 4, Acts of the 89th Legislature, Regular
Session, 2025, were in effect for that tax year. The tax bill or the
separate statement must indicate that the bill is a provisional tax
bill and include a statement in substantially the following form:
"If the Texas Legislature had not enacted property tax relief
legislation during the 2025 legislative session, your tax bill
would have been $____ (insert amount of tax bill if the changes in
law made by S.B. 4, Acts of the 89th Legislature, Regular Session,
2025, were not in effect for that tax year). Because of action by
the Texas Legislature, your tax bill has been lowered by $____
(insert difference between amount of tax bill if the changes in law
made by S.B. 4, Acts of the 89th Legislature, Regular Session, 2025,
were not in effect for that tax year and amount of tax bill if that
Act were in effect for that tax year), resulting in a lower tax bill
of $____ (insert amount of tax bill if the changes in law made by
S.B. 4, Acts of the 89th Legislature, Regular Session, 2025, were in
effect for that tax year), contingent on the approval by the voters
at an election to be held November 4, 2025, of the constitutional
amendment proposed by S.J.R. 2, 89th Legislature, Regular Session,
2025. If that constitutional amendment is not approved by the
voters at the election, a supplemental tax bill in the amount of
$____ (insert difference between amount of tax bill if the changes
in law made by S.B. 4, Acts of the 89th Legislature, Regular
Session, 2025, were not in effect for that tax year and amount of
tax bill if that Act were in effect for that tax year) will be mailed
to you."
(d-3) A tax bill prepared by the assessor for a school
district as provided by Subsection (d-2) and mailed as provided by
Subsection (a) is considered to be a provisional tax bill until the
canvass of the votes on the constitutional amendment proposed by
S.J.R. 2, 89th Legislature, Regular Session, 2025. If the
constitutional amendment is approved by the voters, the tax bill is
considered to be a final tax bill for the taxes imposed on the
property for the 2025 tax year, and no additional tax bill is
required to be mailed unless another provision of this title
requires the mailing of a corrected tax bill. If the constitutional
amendment is not approved by the voters:
(1) a tax bill prepared by the assessor as provided by
Subsection (d-2) is considered to be a final tax bill but only as to
the portion of the taxes imposed on the property for the 2025 tax
year that are included in the bill;
(2) the amount of taxes imposed by each school
district on a residence homestead for the 2025 tax year is
calculated as if the changes in law made by S.B. 4, Acts of the 89th
Legislature, Regular Session, 2025, were not in effect for that tax
year; and
(3) except as provided by Subsections (f), (i-1), and
(k), the assessor for each school district shall prepare and mail a
supplemental tax bill, by December 1 or as soon thereafter as
practicable, in an amount equal to the difference between the
amount of the tax bill if the changes in law made by S.B. 4, Acts of
the 89th Legislature, Regular Session, 2025, were not in effect for
that tax year and the amount of the tax bill if that Act were in
effect for that tax year.
(d-4) Except as otherwise provided by Subsection (d-3), the
provisions of this section other than Subsection (d-2) apply to a
supplemental tax bill mailed under Subsection (d-3).
(d-5) This subsection and Subsections (d-2), (d-3), and
(d-4) expire December 31, 2026.
SECTION 2.15. Section 31.02, Tax Code, is amended by adding
Subsection (a-1) to read as follows:
(a-1) Except as provided by Subsection (b) of this section
and Sections 31.03 and 31.04, taxes for which a supplemental tax
bill is mailed under Section 31.01(d-3) are due on receipt of the
tax bill and are delinquent if not paid before March 1 of the year
following the year in which imposed. This subsection expires
December 31, 2026.
ARTICLE 3. EFFECTIVE DATES
SECTION 3.01. Except as otherwise provided by this article:
(1) this Act takes effect immediately if this Act
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution;
and
(2) if this Act does not receive the vote necessary for
immediate effect, this Act takes effect September 1, 2025.
SECTION 3.02. Article 1 of this Act takes effect on the date
on which the constitutional amendment proposed by S.J.R. 2, 89th
Legislature, Regular Session, 2025, takes effect. If that
amendment is not approved by the voters, Article 1 of this Act has
no effect.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 4 passed the Senate on
February 13, 2025, by the following vote: Yeas 30, Nays 0; and
that the Senate concurred in House amendment on May 29, 2025, by
the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 4 passed the House, with
amendment, on May 21, 2025, by the following vote: Yeas 143,
Nays 0, one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor