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Signed Into Law
Signed May 22, 2025Effective 2025-09-01
SJR2

Regular Session

Proposing a constitutional amendment to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district.

Government Affairs & Regulatory Compliance Analysis

SJR2: Government Affairs Overview

SJR 2 proposes a constitutional amendment increasing the school district residence homestead exemption from $100,000 to $140,000, contingent on November 2025 voter approval but applying retroactively to the tax year beginning January 1, 2025. Mortgage lenders, servicers, and title companies face a significant operational "compliance gap" in Q4 2025, requiring systems capable of handling initial tax bills at the old rate followed by retroactive adjustments and escrow refunds immediately post-election.

Sen. Paul Bettencourt·Senate Bill·Regular Session

Moderate
Low Cost
Effective:2025-09-01
Enforcing Agencies

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

Business Impact

Who SJR2 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2025-09-01). Consider how these changes may affect your operations.

🏢

Real Estate

Affected business types:

  • Property developers
  • Commercial landlords
  • Property managers
  • Real estate investors
View all real estate legislation
🎓

Education

Affected business types:

  • School districts
  • Charter schools
  • Private schools
  • Education service providers
View all education legislation

Key Operational Considerations

  • 1Escrow Analysis: Staff must be trained on short-year statement generation to handle the off-cycle adjustment.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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SJR2
Moderate
Proposing a constitutional amendment to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district.
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
County Appraisal DistrictsSchool District Tax Assessor-Col...Texas Comptroller of Public Acco...
Primary Author: Sen. Paul Bettencourt
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: Retroactive to January 1, 2025 (contingent on voter approval).
  • Compliance Deadline: November 5, 2025. Systems must be ready to process tax adjustments and RESPA refunds immediately following the election.
  • Agency Rulemaking: The Texas Comptroller is expected to issue guidance to Appraisal Districts in Q3 2025 regarding whether October tax bills should reflect current law ($100k) or anticipated law ($140k) with a clawback provision.

Immediate Action Plan

  • Update Escrow Logic: Immediately program servicing platforms to accommodate a "split" tax cycle (initial bill vs. post-election adjustment).
  • Draft Borrower Communications: Prepare templates now to notify borrowers that their October tax bill may be overstated pending the November election results.
  • Review Proration Clauses: Direct outside counsel to draft specific addenda for 2025 residential closings to clarify buyer/seller rights to retroactive tax savings.
  • Commercial Audit: Commercial owners should review NNN lease caps and prepare for 2026 appraisal protests, anticipating a shift in tax burden.

Operational Changes Required

Contracts

  • Real Estate Purchase Agreements: For closings occurring in 2025, proration clauses must be reviewed. Standard language may not adequately address who is entitled to the refund if the seller pays taxes based on the $100k exemption at closing, but the liability is retroactively reduced to the $140k level post-closing.

Hiring/Training

  • Customer Service (Servicing): Train staff to handle borrower confusion in October 2025. Borrowers will likely receive tax bills that do not yet reflect the $140k exemption. Staff must be scripted to explain the "vote-then-adjust" process.
  • Escrow Analysis: Staff must be trained on short-year statement generation to handle the off-cycle adjustment.

Reporting & Record-Keeping

  • Escrow Refunds (RESPA): If the amendment passes, tax liabilities will drop. Servicers must perform off-cycle escrow analyses. Any surplus over $50 created by the retroactive tax cut must be refunded to the borrower within 30 days of the analysis.
  • Closing Disclosures (CDs): For 2025 originations, continue to disclose "Projected Payments" based on current law ($100k exemption) to avoid under-collection, but document the potential reduction in the loan file.

Fees & Costs

  • Administrative Overhead: Budget for increased mailing and processing costs in Q4 2025/Q1 2026 due to the requirement to send corrected escrow statements and refund checks.

Strategic Ambiguities & Considerations

  • The "Billing Gap": The law does not explicitly mandate how Tax Assessor-Collectors should handle the October billing cycle prior to the November vote. Some counties may bill the full amount; others may delay. This lack of uniformity will complicate automated tax disbursements for national servicers.
  • Commercial Cost-Shifting: While this bill benefits homeowners, the "hold harmless" funding (SB 4) may not fully cover district revenue losses. Commercial property owners should anticipate aggressive valuation increases in the 2026 appraisal cycle as districts seek to recover revenue equilibrium.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 6, 2025
Passed Senate
Feb 13, 2025
Passed House
Signed
May 22, 2025
Effective
Sep 1, 2025
TopicsEducationEducation--primary & SecondaryEducation--primary & Secondary--financeResolutionsResolutions--constitutional AmendmentsTaxationTaxation--property-appraisals & Appraisal DistrictsTaxation--property-exemptionsTaxation--school DistrictProperty InterestsProperty Interests--homestead
03

Senate Authors

Sen. Paul BettencourtRepublican · Primary Author
Joint Authors
Coauthors (1)

House Sponsors

Rep. Phil KingRepublican · Primary Sponsor
Joint Sponsors
Cosponsors (101)

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

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More from Sen. Paul Bettencourt

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Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about SJR2

Q

What does Texas SJR2 do?

SJR 2 proposes a constitutional amendment increasing the school district residence homestead exemption from $100,000 to $140,000, contingent on November 2025 voter approval but applying retroactively to the tax year beginning January 1, 2025. Mortgage lenders, servicers, and title companies face a significant operational "compliance gap" in Q4 2025, requiring systems capable of handling initial tax bills at the old rate followed by retroactive adjustments and escrow refunds immediately post-election.

Q

Who authored SJR2?

SJR2 was authored by Texas Senator Paul Bettencourt during the Regular Session.

Q

When was SJR2 signed into law?

SJR2 was signed into law by Governor Greg Abbott on May 22, 2025.

Q

Which agencies enforce SJR2?

SJR2 is enforced by County Appraisal Districts, School District Tax Assessor-Collectors and Texas Comptroller of Public Accounts.

Q

How significant are the changes in SJR2?

The regulatory priority for SJR2 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SJR2?

The cost impact of SJR2 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SJR2 address?

SJR2 addresses topics including education, education--primary & secondary, education--primary & secondary--finance, resolutions and resolutions--constitutional amendments.

Q

What are the key dates for SJR2?

Key dates for SJR2: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by SJR2?

SJR2 primarily affects property owners and real estate professionals. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026