Proposing a constitutional amendment authorizing the legislature to provide that the appraised value of a residence homestead for ad valorem tax purposes for the first tax year that the owner of the property qualifies the property for a residence homestead exemption is the market value of the property and that, if the owner purchased the property, the purchase price of the property is considered to be the market value of the property for that tax year and to limit increases in the appraised value of the homestead for subsequent tax years based on the inflation rate.

89th Legislature (2025) Introduced by Steve Toth

Constitutional amendment would cap homestead property tax appraisal increases to inflation rate after initial purchase-based assessment, potentially reducing owner taxes while shifting burden to other property classes.

Referred to s/c on Property Tax Appraisals by Speaker

#comptrollerofpublicaccounts(v2608) #propertyinterests--homestead(i0616) #resolutions--constitutionalamendments(i0661) #taxation--property-appraisals&appraisaldistricts(i0792) #taxation--property-exemptions(i0793)

Legislative bill overview

HJR 74 proposes a constitutional amendment that would allow the Texas legislature to establish a new homestead property tax appraisal system. Under this system, a residence homestead's initial appraised value would be set at either its market value or purchase price (whichever applies), and subsequent annual increases would be capped at the inflation rate rather than allowing full market value reassessment.

Why is this important

This amendment directly affects property tax bills for homeowners, potentially locking in lower tax assessments during periods of rapid home value appreciation. Texas property taxes rely heavily on appraised values, so limiting appraisal increases could provide tax stability for homeowners but would shift tax burden implications to other property classes and potentially affect school funding mechanisms that depend on property tax revenues.

Potential points of contention

Revenue impact on schools and local governments: Capping appraisal increases could reduce property tax revenue for schools, counties, and municipalities that depend on these funds, potentially requiring alternative funding sources or service reductions

Market equity concerns: Homeowners with identical properties could pay significantly different taxes based on purchase timing, creating disparities where newer buyers subsidize long-term owners through higher relative tax burdens

Constitutional precedent: Texas property tax law has historically required "equal and uniform" appraisal across similar properties; this amendment would create a deliberate classification system that may complicate legal consistency