By: Bettencourt S.B. No. 2541

(In the Senate - Filed March 13, 2025; April 3, 2025, read first time and referred to Committee on Local Government; April 29, 2025, reported adversely, with favorable Committee Substitute by the following vote: Yeas 4, Nays 2; April 29, 2025, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 2541 By: Paxton

A BILL TO BE ENTITLED

AN ACT

relating to the calculation of the unused increment rate of a taxing unit.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 26.013(a)(3) and (4), Tax Code, are amended to read as follows:

(3) "Year 1" means the second [third] tax year preceding the current tax year.

(4) "Year 2" means the [second] tax year preceding the current tax year.

SECTION 2. Section 26.013(b), Tax Code, is amended to read as follows:

(b) In this chapter, "unused increment rate" means the greater of:

(1) zero; or

(2) the rate expressed in dollars per $100 of taxable value calculated according to the following formula:

UNUSED INCREMENT RATE = (YEAR 1 FOREGONE REVENUE AMOUNT + YEAR 2 FOREGONE REVENUE AMOUNT [+ YEAR 3 FOREGONE REVENUE AMOUNT]) / CURRENT TOTAL VALUE

SECTION 3. Section 26.013(a)(5), Tax Code, is repealed.

SECTION 4. The changes in law made by this Act apply only to the calculation of the unused increment rate, as defined by Section 26.013, Tax Code, as amended by this Act, for a tax year that begins on or after January 1, 2027. The calculation of the unused increment rate for a tax year that begins before January 1, 2027, is governed by the law in effect immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 5. This Act takes effect January 1, 2026.

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