Bill > SB2541

This bill modifies the calculation of the "unused increment rate" for taxing units in Texas by changing how tax years are defined and calculated. Specifically, the bill adjusts the definition of "Year 1" from the third tax year preceding the current tax year to the second tax year preceding the current tax year, and removes "Year 3" from the unused increment rate calculation formula. The unused increment rate is a measure that helps determine potential additional tax revenue a taxing unit could have collected but did not, calculated by comparing foregone revenue amounts from previous years against the current total value. The changes will only apply to tax years beginning on or after January 1, 2027, meaning the current calculation method will remain in place for tax years before that date. The bill will take effect on January 1, 2026, giving taxing units and tax authorities time to prepare for the new calculation method. The modifications appear aimed at simplifying the unused increment rate calculation by reducing the number of years considered in the formula.

Budget and Finance, Government Affairs

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=SB2541