What Is the Maximum Property Tax Increase Allowed in Texas

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What Is the Maximum Property Tax Increase Allowed in Texas?

Property taxes are a significant source of revenue for local governments in Texas. However, in order to protect property owners from excessive taxation, the state has implemented certain limits on property tax increases. The maximum property tax increase allowed in Texas is governed by the Texas Property Tax Code and is subject to several factors.

The maximum property tax increase in Texas is determined by two primary factors: the rollback rate and the effective tax rate. The rollback rate is the maximum percentage increase in property tax revenue that a local government entity can adopt without triggering a rollback election. A rollback election allows voters to determine whether to roll back the adopted tax rate to the rollback rate. The effective tax rate, on the other hand, is the tax rate that would generate the same amount of revenue as the previous year, taking into account changes in property values.

The rollback rate is typically set at 8% for cities, counties, and junior college districts, and 3.5% for school districts. However, these rates can vary depending on local ordinances or voter-approved changes. To exceed the rollback rate, a local government entity must obtain voter approval through a rollback election.

The effective tax rate, on the other hand, is calculated annually by the local government entity based on the certified appraisal roll and the adopted budget. If the effective tax rate exceeds the rollback rate, property owners can file a petition to require a rollback election. The petition must be signed by at least 10% of the registered voters or 100,000 voters, whichever is less, within the taxing unit.

FAQs:

1. What happens if the maximum property tax increase is exceeded?
If the maximum property tax increase is exceeded, a rollback election is triggered, allowing voters to decide whether to roll back the adopted tax rate.

2. Can local government entities increase property taxes without limit?
No, local government entities in Texas are subject to the maximum property tax increase limits set by the Texas Property Tax Code.

3. Who determines the maximum property tax increase allowed in Texas?
The maximum property tax increase allowed in Texas is determined by the Texas Property Tax Code and can vary depending on local ordinances or voter-approved changes.

4. How often are rollback elections held?
Rollback elections are held when a local government entity exceeds the maximum property tax increase allowed and triggers a rollback election.

5. Can property owners petition for a rollback election?
Yes, property owners can petition for a rollback election if the effective tax rate exceeds the rollback rate.

6. How is the rollback rate calculated?
The rollback rate is typically set at 8% for cities, counties, and junior college districts, and 3.5% for school districts, but can vary depending on local ordinances or voter-approved changes.

7. What happens if voters approve a rollback election?
If voters approve a rollback election, the adopted tax rate is rolled back to the rollback rate.

8. Are there any exemptions to the maximum property tax increase limits?
Certain exemptions exist for disaster areas, economic development projects, or special taxing units, but these exemptions must be approved by the Texas Legislature or local voters.

In conclusion, the maximum property tax increase allowed in Texas is determined by the rollback rate and the effective tax rate. Local government entities must adhere to these limits unless approved by voters through a rollback election. Property owners also have the ability to petition for a rollback election if the effective tax rate exceeds the rollback rate. These measures aim to protect property owners from excessive taxation while ensuring sufficient revenue for local governments.
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