Proposing a constitutional amendment authorizing the legislature to provide that the appraised value of a parcel of real property for ad valorem tax purposes for the first tax year in which the owner owns the property on January 1 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 property for subsequent tax years based on the inflation rate.

89th Legislature (2025) Introduced by Cody Vasut

Texas constitutional amendment would cap property tax appraisal increases to inflation rate annually, using purchase price as initial value, reducing taxes but potentially cutting school and local government funding.

Referred to s/c on Property Tax Appraisals by Speaker

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Legislative bill overview

HJR 173 proposes a constitutional amendment that would allow Texas to use the purchase price as the initial appraised value for property tax purposes when an owner first acquires property, then cap annual increases in appraised value to the inflation rate in subsequent years. This would replace the current system where properties are reassessed at market value every two years, potentially regardless of purchase price.

Why is this important

Property tax appraisals directly affect how much homeowners and commercial property owners pay in taxes annually. This change could significantly reduce tax bills for newly purchased properties and limit tax increases for long-term owners, but it would also reduce revenue available to local governments, schools, and taxing entities that depend on property tax funding.

Potential points of contention

Revenue impact on public services: Capping appraisal increases reduces tax revenue to schools, counties, and municipalities, potentially requiring service cuts or alternative funding sources

Fairness and inequity: Neighbors with identical properties could pay vastly different taxes based on purchase price and timing, creating situations where newer residents pay far less than long-term owners

Market value disconnect: Using purchase price rather than current market value means tax assessments become increasingly disconnected from actual property values, potentially creating funding crises as property values appreciate significantly