Texas House Bill HB 5226

Texas 2025 - 89th Regular

• Filed: 3/14/25

Caption

Relating to the calculation of the no-new-revenue tax rate.

Summary

HB 5226 revises the Tax Code formulas used to calculate a taxing unit’s no-new-revenue tax rate and voter-approval tax rate. The bill updates Section 26.04 to change how those rates are computed for special taxing units and other taxing units, including adjustments to the formulas that account for debt rates, unused increment rates, and the treatment of maintenance-and-operations language. It also modifies the calculations for years in which a taxing unit begins imposing, continues imposing, or stops imposing an additional sales and use tax. The bill adds new concepts such as a “sales tax gain rate,” “sales tax revenue rate,” and “sales tax loss rate,” which are used to incorporate additional sales and use tax revenue into the property tax rate calculations. It specifies how those sales tax amounts are to be reflected in the no-new-revenue and voter-approval tax rate formulas, and it takes effect September 1, 2025.

Impact

HB 5226 would amend Chapter 26 of the Texas Tax Code, changing the statutory formulas local taxing units use to calculate and publish property tax rates. The practical effect is to alter how cities, counties, special taxing units, and other local governments factor in additional sales and use tax revenue when determining the no-new-revenue tax rate and voter-approval tax rate, which are central to Texas property tax notice and rollback/voter-approval procedures. Local tax assessors and governing bodies would need to use the revised formulas beginning with the bill’s effective date.

Sentiment

The available record shows no committee transcript and no recorded votes, so there is no direct evidence of debate or formal support/opposition in the provided materials. Based on the bill text, the measure appears technical and administrative in nature, focused on recalibrating tax-rate formulas rather than changing tax policy broadly. Its referral to the House Ways & Means Committee suggests it was treated as a tax administration measure.

Contention

The main points of potential contention are the formula changes themselves, especially the way additional sales tax revenue is credited against property tax rate calculations and the revised treatment of voter-approval thresholds. Local governments that rely on property tax revenue may view the changes as affecting their revenue capacity or compliance burden, while taxpayers and tax-limit advocates may scrutinize whether the revisions make tax-rate growth easier or harder to understand. Because no committee discussion or vote history is provided, no specific individual or group positions can be confirmed from the record.