SB2520

Regular Session

Relating to the calculation of the limitation on the total amount of ad valorem taxes imposed by a school district on the residence homestead of an individual who is elderly or disabled.

LowStandard timeline

Low Cost

Effective:2026-01-01

Enforcing Agencies

County Appraisal Districts • Local Tax Assessor-Collectors • Texas Comptroller of Public Accounts

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: January 1, 2026
Compliance Deadline: Q4 2025 (Systems must be updated prior to running annual escrow analyses for the 2026 tax year).
Agency Rulemaking: No formal rulemaking is mandated, but the Texas Comptroller will likely update *Truth in Taxation* calculation worksheets and technical advice for Appraisal Districts by late 2025.

Immediate Action Plan

1. Identify Affected Portfolio: Query your servicing database to quantify how many borrowers currently hold or are likely to claim Section 11.13(c) (elderly/disabled) exemptions.
2. Issue Vendor Directives: Send formal notice to your tax service providers immediately, inquiring about their roadmap for SB2520 compliance.
3. Update Algorithms: Task IT with modifying the tax projection logic to include the "lesser of" comparison test for the tax year following a new exemption.
4. Beta Test: Run a sample batch of "newly elderly" loans through the updated escrow analysis model in Q4 2025 to verify the math before the law takes effect.

Operational Changes Required

Contracts

Tax Service Vendors: Review and amend Service Level Agreements (SLAs) with third-party tax data providers (e.g., CoreLogic, Lereta). You must insert a provision requiring them to verify that their data feeds account for the SB2520 "lesser of" calculation logic by January 1, 2026.

Hiring/Training

Escrow Analysis Teams: Train staff to identify "mid-year qualification" accounts. They must understand that the tax ceiling is not static during the first full year of exemption but is subject to a specific comparison test.
Customer Service: Prepare scripts to explain to borrowers why their projected tax payments may differ from the standard "freeze" amount shown on previous estimates.

Reporting & Record-Keeping

Data Field Updates: Servicing platforms must track the specific date an exemption was granted, not just the tax year. The logic trigger is whether the qualification occurred *after* the beginning of the previous tax year.
Audit Trails: Maintain documentation showing the comparison between the standard limitation and the "actual tax imposed" to justify the escrow amount collected in the event of a RESPA audit.

Fees & Costs

IT Remediation: Budget for one-time costs associated with reprogramming internal tax estimation engines and escrow analysis software.
No New Government Fees: The bill does not impose new filing fees.

Strategic Ambiguities & Considerations

Appraisal District Software Lag: There is a high probability that not all 254 County Appraisal Districts (CADs) will update their software simultaneously.
*Risk:* A CAD may certify a tax roll using the old, higher ceiling calculation.
*Operational Check:* Do not rely blindly on the tax certificate provided by the county for these specific borrowers. Your system must independently calculate the SB2520 limit. If the CAD's figure is higher, you must flag the account for protest/correction to avoid over-escrowing.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsAging Disabilities, Persons With Property Interests Property Interests--homestead Taxation Taxation--property-appraisals & Appraisal Districts Taxation--property-exemptions

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

Senate Research Center	S.B. 2520
	By: Bettencourt
	Local Government
	4/11/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Since the late 1990s, the law has authorized a freeze on your homestead ISD taxes in the year you turn 65 or become disabled. Section 11.26(a), Tax Code, previously allowed a two-year comparison for homeowners who become eligible for the 65 and over ceiling, often called a freeze. Homeowners who turned 65 and qualified for the school tax ceiling were allowed to qualify in the year they turned 65 or the subsequent year. Whichever year had the lower amount, that was the amount at which the taxes were limited.

S.B. 2, 88th Legislature, Second Called Session, provided much-needed property tax relief to many Texans. However, after S.B. 2's implementation, the new bill language related to the two-year comparison for over-65 homestead freeze properties caused many jurisdictions confusion. An attorney general opinion was sought to seek clarification and determine whether the two-year comparison was still authorized. Attorney General Opinion No. KP-0470 determined that the two-year comparison provision was changed and no longer authorized under current law. Many property tax administrators have kept the two-year comparison because it benefits the taxpayer.

S.B. 2520 will clarify current law for the two-year comparison under Subsection (a) and will ensure tax rate compression is taken into account in the comparison. This would ensure all property tax administrators treat the calculation the same by ensuring the two-year comparison.

As proposed, S.B. 2520 amends current law relating to the calculation of the limitation on the total amount of ad valorem taxes imposed by a school district on the residence homestead of an individual who is elderly or disabled.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 11.26, Tax Code, by adding Subsection (a-11), as follows:

(a-11) Provides that, in the tax year immediately following the first tax year the individual qualified a residence homestead for an exemption after the beginning of that first year and the residence homestead remains eligible for the same exemption, the limitation on tax increases provided by Section 11.26 (Limitation of School Tax on Homesteads of Elderly or Disabled) is the lesser of the amount of tax imposed by the school district on that homestead in the preceding tax year adjusted as provided for in Subsection (a-10) (relating to providing that if an individual qualifies for a limitation on tax increases on their residence homestead, the limitation is equal to a certain amount) or the amount of ad valorem taxes imposed on the homestead in the tax year immediately following the first year of qualification of a homestead.

SECTION 2. Provides that the change in law made by this Act is intended only to clarify existing law with respect to school district tax limitations.

SECTION 3. Effective date: January 1, 2026.

Senate Authors

Sen. Paul BettencourtRepublican · Primary Author

House Sponsor

Rep. Candy NobleRepublican · Primary Sponsor

Bill Text(with markup)

S.B. No. 2520

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the calculation of the limitation on the total amount of
	ad valorem taxes imposed by a school district on the residence
	homestead of an individual who is elderly or disabled.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 11.26, Tax Code, is amended by adding
	Subsection (a-11) to read as follows:
	(a-11) This subsection applies only in the tax year
	immediately following the first tax year an individual qualifies a
	residence homestead for an exemption under Section 11.13(c) after
	the beginning of that first tax year, provided that the homestead
	remains eligible for that same exemption in that following tax
	year. Notwithstanding Subsection (a-10), the amount of the
	limitation provided by this section on an individual's residence
	homestead for the tax year to which this section applies is equal to
	the lesser of:
	(1) the amount of the limitation as computed under
	Subsection (a-10) for that tax year; or
	(2) the amount of tax imposed by the school district on
	that residence homestead, calculated without regard to the
	limitation on tax increases provided by this section, in that tax
	year.
	SECTION 2. This Act applies only to ad valorem taxes imposed
	for a tax year beginning on or after the effective date of this Act.
	SECTION 3. This Act takes effect January 1, 2026.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 13, 2025

TO:	Honorable Paul Bettencourt, Chair, Senate Committee on Local Government

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB2520 by Bettencourt (Relating to the calculation of the limitation on the total amount of ad valorem taxes imposed by a school district on the residence homestead of an individual who is elderly or disabled.), As Introduced

No significant fiscal implication to the State is anticipated.

The bill would amend Section 11.26 of the Tax Code to clarify that the limitation on tax increases (freeze) is the lesser of the amount of tax imposed by the school district in the preceding tax year adjusted as provided by this section or the amount of tax imposed on the homestead in the tax year immediately following the first tax year the individual qualified a residence homestead for the limitation.

To the extent that appraisal districts have not applied current law in the same way as prescribed in the section added by the bill, there could be an impact on taxable values and to the state through the operation of the school finance formulas, however it is unlikely to be significant.

Local Government Impact

Provisions of the bill apply only to school districts.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, SZ, KK, BRI

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Frequently Asked Questions

Common questions about SB2520

What does Texas SB2520 do?

SB2520 mandates a specific "lesser of" calculation method for determining the school district tax ceiling on residence homesteads for the tax year immediately following a homeowner's mid-year qualification for an elderly or disabled exemption. This legislation primarily impacts mortgage servicers and tax agents, who must update escrow analysis algorithms to prevent systematic over-collection of funds and ensure compliance with RESPA limitations. Implementation Timeline Effective Date: January 1, 2026 Compliance Deadline: Q4 2025 (Systems must be updated prior to running annual escrow analyses for the 2026 tax year).

Who authored SB2520?

SB2520 was authored by Texas Senator Paul Bettencourt during the Regular Session.

When was SB2520 signed into law?

SB2520 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce SB2520?

SB2520 is enforced by County Appraisal Districts, Local Tax Assessor-Collectors and Texas Comptroller of Public Accounts.

How urgent is compliance with SB2520?

The compliance urgency for SB2520 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB2520?

The cost impact of SB2520 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB2520 address?

SB2520 addresses topics including aging, disabilities, persons with, property interests, property interests--homestead and taxation.

Legislative data provided by LegiScanLast updated: November 25, 2025

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