Texas Tax Rates and Tax Rate Rollback Elections

Texas property taxpayers are entitled to notice when taxing units are increasing revenue based on either an increase in tax rates or assessed values. This summary gives an overview of the notice requirements and taxpayer rights if the taxing entities ignore them. This document was prepared by the Texas Comptroller and is presented for your convenience.

Tax Rates

Q: How do taxing units determine what tax rate to adopt?

A: State truth-in-taxation laws give taxpayers a voice in decisions that affect their property tax rates. Beginning in early August, taxing units take the first step toward adopting a tax rate by calculating and publishing the effective and rollback tax rates.
The effective tax rate would provide the taxing unit with approximately the same amount of revenue it had the year before on properties taxed in both years. A comparison of the effective tax rate to the taxing unit’s proposed tax rate shows if there will be a tax increase.

Q: What if a taxing unit increases its tax rate?

A: If a governing body — other than a school district, small taxing unit or special water district – proposes to adopt a tax rate that exceeds the lower of the unit’s effective or rollback rate, it must publish a quarter-page notice in a local newspaper to announce two public hearings. The hearings give taxpayers an opportunity to voice their opinion about the proposed tax increase. The taxing unit then publishes another quarter page ad to announce a meeting for the governing body to adopt the tax rate.

A school board must publish a quarter-page ad in a local newspaper for a public meeting to discuss the proposed tax rate and budget. This meeting gives taxpayers an opportunity to voice their opinion about the proposed tax rate.

A small taxing unit may mail a notice of the proposed tax rate to each property owner in the unit or may publish a notice of the proposed rate in the legal section of a newspaper having general circulation in the unit. The unit must provide either notice at least seven days before the meeting to adopt the proposed tax rate.

A special water district must publish a tax rate notice at least seven days before a public hearing to discuss the tax rate. The notice must be in a local newspaper that has general circulation in the district. Or, the water district may mail it to each property owner at least 10 days before the public hearing date.

Q: What can taxpayers do if a taxing unit fails to publish the required notice and hold the required meetings?

A: If a property owner believes that a taxing unit failed to comply in good faith with the truth-in-taxation laws, the owner may file a lawsuit in district court to stop collection of the taxes until the taxing unit complies with the law. The owner must file the lawsuit before substantially all of the tax bills are mailed. The courts must decide if the taxing unit complied in good faith with the laws.

Tax Rate Rollback Elections

Q: What can taxpayers do if a taxing unit adopts a tax rate that is higher than the rollback rate?

A: If a unit — other than a school district — adopts a tax rate higher than the calculated rollback rate, voters in the unit can circulate a petition calling for an election to roll back the adopted tax rate. The taxing unit’s governing body determines if the petition is valid and, if so, calls for an election. If a majority of voters vote to rollback the tax rate, then the unit’s rollback rate becomes the tax rate. Those taxpayers that paid their taxes, receive a refund and the delinquency date is extended.

For school districts, no petition is required. The school board calls for an election if the adopted tax rate exceeds the rollback rate. If a majority voters vote to ratify the adopted rate, the school’s adopted rate stands. If voters disapprove the adopted rate, the school district’s calculated rollback rate is the district’s current tax.